How to raise rates (particularly an approach for dealing with legacy clients)

14 Comments

my trick to help you raise rates

If you’ve been doing freelance work for years, then you likely have clients that have anchored on your early prices from way back in the day. That’s not a problem if you don’t mind getting paid way less than you are with new clients, but most people do mind.

So how do you raise rates without annoying those legacy clients? 

That’s the question, isn’t it.

Before I share with you the insight that has helped me, let me share how I came upon it.

Let’s talk haircuts

I normally get my haircut at SuperCuts. You know, the perfect place for people who really don’t care much about haircuts.

Yet, for not caring much, I met a hair stylist there that was awesome. She seemed to do a perfect job every time, which is saying a lot since most of my haircuts weren’t all that consistent.

Anyway, over time I really came to appreciate Suzanne. She was excellent and I started only booking appointments with her.

Then, one day, she let me know she was moving to a different company to cut hair – a salon a few miles away.

Now I had a choice

On the one hand, I could keep paying the same rate I had come to expect, staying at the same place, but change the person cutting my hair (and potentially impact the consistency of my haircuts).

On the other hand, I could start getting my haircut elsewhere – but at a different price.

And that’s when I had an “aha” moment.

The price I was used to was tied to the service, not the person delivering it.

If you think about it, the real issue you have with talking to your legacy clients is that it feels like you’re changing the rules on them. They’ll feel it, and you’ll feel it.

But you don’t need to change the rules. You just need to realize that there were two parts to those original rates:

  • What would be done for that rate
  • Who would do it

And once you realize that the rate is actually tied to the first, and not the second, you’ll see the freedom in how to have the conversation.

Because it’s the same conversation my hair stylist had with me.

You have two options

When I talk with people, especially really old clients, I don’t even talk about a “second” option. Instead, I simply tell them that the service they want (a quick website, a fast logo, etc) is still available at those rates. But it will be with someone else. Not me. That’s when I introduce them to:

  • Someone I’ve hired to do the work at that rate
  • A partner who does that kind of work
  • An online service where they can get it done

The rules aren’t changing. The service is still exactly what it used to cost. Because if they only value a logo for $100, then they should only pay $100. (That’s a whole different discussion, by the way.) But it won’t be me doing a logo for 1994 rates. Instead, I’ll send them to a site with pre-made logos available for $99.

Of course, some people will say “But I want you.” And then we can talk about option two. The option where I do it but I charge my current rate.

See, by decoupling the who from the what, we can have a much easier and better conversation about rates.

I don’t know if it will work for you, but it has worked for me – with both options.

Some folks have chosen to stay with the lower rates and others have moved up. But it’s been their choice and by giving them options, it’s not been an antagonistic conversation.

I hope it helps.

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  • Niels

    Nice take on raising prices. Been having some issues with that as well. I usually take on of two approaches:

    1) Tell the client I’ve raised prices to X and they still Y, what would they be happy to pay. They usually agree to pay somewhere in between X and Y. A lot of clients don’t mind paying X at all so it’s a win-win.
    2) Don’t do hourly jobs but set a fixed price which will be at the new hourly rate. This way the client doesn’t really know it’s more expensive because of rising rates. This one is a bit trickier and you need to communicate everything clearly beforehand or things will get ugly.

    Going to try your approach as well soon!

  • dipakcg

    Hi Chris,

    Awesome article. Thanks for sharing :)

  • http://joecanwrite.com Joe

    This is great. I normally just move on but this has to be worth at least trying.

  • http://blog.ktbyte.com/ BenkappByte

    Hi Chris
    Wonderful article.
    thanks for sharing.
    keep posting

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  • http://thimblefoliopress.com Christine

    Great advice, I had trouble raising my website maintenance rates with a client a while back who still wanted me to be working at Supercuts so to speak. They refused to pay the new rate though and I still gave them the service despite it being too low for the increased work involved- All my other clients accepted the new rates with no problem. still not sure if I made the right decision with them as they were really wierd with me about it.

    • https://www.facebook.com/trishacupra Trisha Cupra

      I’d drop that client like a lead balloon. Tell them to go elsewhere.

    • http://www.WeKanDo.com Karen O

      Fortunately I haven’t had this issue with my clients. They know they’re getting improved service the longer I’m working with them because I know their business better.

      But my husband did. We sat down and looked at his client list, where he spent most of his time, and who gave him the worst ulcer attacks. We determined that his problem people were the ones who wanted to pay the least. He then determined no amount of money was worth his stress, so he dismissed those clients. He’s happier because the better paying, less demanding clients have brought him new work to fill the gap.

  • http://www.limecanvas.com Wil Brown

    Hi Chris,

    Very useful article and I’ve been hit with this since merging with another sole trader to create a new web agency.

    Our prices, as an agency, are higher. The clients we target are bigger. But we still both have legacy clients who we love because they helped us grow and become what we are today.

    We’ve had the same conversations with our clients and while sad to see them go, we’re happy that we can pass on the work to other trusted developers who operate in budget bracket we’ve evolved from.

    Thanks for sharing.

    Cheerz,
    Wil.

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  • http://twitter.com/dhlawrencexvii DavidHLawrence XVII (@dhlawrencexvii)

    I gotta know – did you follow Suzanne to the new salon??

    • http://chrislema.com chrislema

      Yes and no. Sometimes I head there. Other times I go cheap. :)

  • http://www.ferengi.nl JohnnyFeelgood
  • Bob

    I’m a ‘backyard’ WordPresser. I do it more for fun and learning than anything else. BUT, this particular article just hit home with my day job. I’m a Native English speaking English teacher in Poland.

    I just got advice, that seems pretty obvious, from one of my ESL clients. a big firm with a couple hundred employees.

    This year (this week actually) my calendar has gotten so full that I’ve had to turn away new students. Today, when I explained this to my ‘big’ client, he gave me the advice that it’s time to raise the rates on my time.

    I immediately asked him what he thought I should raise his rate to :) He laughed it off.
    When our lesson ended I asked him again, as he was walking out the door…”Wojtek, what should I charge you on your next invoice?” He said, ‘Wait a minute, I was talking about your other students.” We both laughed and went about our day.

    This article really brought it all into perspective on how to go about raising rates on other students and taking on new ones.

    Thanks Chris. Your advice crosses multiple sectors. Much appreciated.