How to Raise Your Prices Without Second-Guessing Yourself
If you've been trying to figure out how to raise your prices without losing clients, I can probably guess a few reasons you haven't done it yet.
You don't want your current clients to leave. You're worried new clients will see your prices and decide you're too expensive. And even if you know you're probably undercharging, part of you still wonders whether people will really pay more to work with you.
I've had all of those thoughts too.
Raising your prices can bring up a surprising amount of anxiety, even when you know the numbers in your business aren't working anymore.
Maybe you're seeing 20 clients a week and still not making the income you want. Maybe your calendar is already pretty full, so the idea of making more money by adding another 5 clients sounds terrible. Or maybe you've been charging the same prices for several years while everything from your business expenses to your groceries has gotten more expensive.
At some point, getting more clients can't be the only way you increase your income. That's when it's worth looking at what you're charging and whether your current rates can realistically get you to the income you want without requiring you to work more than you want to.
How do I know if I'm undercharging for my services?
One of the easiest ways to tell whether you're undercharging is to work backward from the income and schedule you actually want.
Let's say you want to make $10,000 a month, but at your current rates you'd need to see 30 clients every week to get there. If you only want to see 20 clients a week, that's useful information.
The answer may not be that you need to get better at marketing so you can somehow squeeze those extra 10 clients into your schedule. Your rates may simply not support the income and workload you want.
This is one of the things I look at with my own clients because it's very easy to assume you have a "not enough clients" problem when the numbers are telling us something completely different.
I also pay attention when someone tells me they haven't raised their prices in three, four, or five years. Your business has changed during that time, your expenses have almost certainly increased, and you're probably much more experienced at the work you do. If your rates haven't changed along with any of those things, it's worth running the numbers again.
That doesn't automatically mean you should raise your prices. Sometimes someone comes to me convinced they need to charge more, and when we look at their business, the bigger issue is that they aren't getting enough of the right people reaching out, their consults aren't turning into clients, or they're relying on referral sources that have slowed down.
I don't want someone to raise their prices just because that's what business advice on the internet says to do. I want to know whether their pricing is actually part of what's keeping them from making the income they want.
Why do I feel so nervous about raising my prices?
Because the minute you think about charging more, it's very easy to jump straight to the worst-case scenario. You raise your rates, and all your clients leave. Nobody new reaches out. Someone tells you you're too expensive. You end up lowering your prices again because the whole thing was a terrible idea.
I've been running a business for years, and I still get nervous when I raise my own prices. The difference is that I've gotten much better at separating "this makes me anxious" from "this is a bad business decision."
I encourage my clients to do the same thing when we work together.
If your biggest fear is that all of your clients are going to leave, look at the evidence you have for that. Think about what would happen if one person did leave, then look at how a price increase would affect your income even if your caseload or client roster changed slightly.
Most of my clients are surprised by how uneventful the actual price increase ends up being compared with everything they imagined beforehand. I've had plenty of clients raise their prices with current clients and lose no one. Occasionally someone does lose a client, but that's very different from the mass exodus they were expecting.
The goal isn't to convince yourself there's absolutely no risk. There can be. It's about making decisions based on what's happening in your business, rather than letting the scariest possible outcome decide for you.
How much should I charge for my services?
Please don't start by polling 100 people in a Facebook group.
I know why people do this. You want someone to tell you the correct number so you can feel better about charging it. Unfortunately, you're probably going to end up with 100 different answers from people with different businesses, expenses, experience, markets, schedules, and money beliefs.
Your pricing needs to work with the numbers in your business.
The first number I want you to figure out isn't your dream income goal. It's your minimum viable income, or the minimum amount your business needs to bring in for this to work financially.
Start with what you need to pay yourself to cover your personal expenses, what it costs to run your business, and what you need to set aside for taxes and other expenses that come with being self-employed. This doesn't need to turn into a complicated accounting project (and I am definitely not your accountant). You just need a realistic picture of how much money needs to come into the business before you can decide whether your current pricing makes sense.
Then look at how much you realistically want to work.
If you only want to see 20 clients a week or take on 4 projects a month, your pricing needs to cover that minimum viable income within that workload. If you run the numbers and discover you'd need to see 30 clients a week at your current average rate just to cover what you need, but you only want to see 20, getting 10 more clients isn't a particularly useful business plan.
Once you know the minimum income you need, you can build an action plan to reach it.
Maybe you want to make another $2,000 a month so you can save more, take more time off, invest back into the business, or simply have more money left after everything is paid. You can run those numbers too and see what would need to change in your pricing, workload, or services to get there.
And if you have clients paying different rates, don't base any of this on your highest price. Look at what you're actually earning on average. You may charge $250 for one service, but if most of your current work pays you $140, your average rate is much more useful for understanding why your monthly income looks the way it does.
Figure out what you need to charge
My free Consistent Income Generator Toolkit helps you work backward from your expenses, taxes, income needs, and the number of clients you actually want to work with to determine what your rates need to look like.
You can also use it to plan for a higher income goal and see whether you need to raise your rates, increase your average rate, bring in more clients, or make another change to get there.
Do I need to raise the price a lot for it to matter?
No, and I really wish more people knew this so that they don’t waste time overthinking it.
A lot of business advice makes it sound like every pricing decision needs to be dramatic. Double your prices! Charge what you're worth! Make some enormous leap and never look back!
That isn't how I approach pricing with my clients.
One of my clients increased her average rate by only $15 per session as lower-paying clients naturally finished working with her, and she stopped replacing them with other lower-paying clients.
At 20 sessions a week for 48 weeks of the year, that $15 difference adds up to more than $14,000 in additional yearly income.
She didn't need to add another day to her schedule, find 10 new clients, or create another offer. She increased what she was earning from the work she was already doing.
This is why I want you to run the numbers before deciding an increase is "too small to matter." A change that doesn't sound very exciting online can make a real difference when you multiply it across an entire year.
How much should I raise my prices?
This is where I disagree with some of the pricing advice I see. I don't think the goal should always be to make the biggest increase you can possibly justify.
Your new price needs to make sense financially, but you also need to be able to sell it.
I worked with a client several years ago who had been encouraged to charge a much higher rate. Based on her experience and the work she provided, the number wasn't unreasonable. The problem was that she didn't believe it yet.
She was so uncomfortable with the new price that she wasn't taking on clients. She didn't feel good saying the number, and the whole thing had become so overwhelming that the "better" price was making her less money.
So we brought it down a little.
I didn't tell her to go back to dramatically undercharging. We found a number that still felt uncomfortable, but not so uncomfortable that she stopped talking about her services or dreaded every conversation about working together.
She started bringing in clients again, and within a couple of months she was able to move up to the higher price.
You don't get one chance to set your rates. You can raise them again.
I'd much rather see someone make a thoughtful $15 or $25 increase now and continue adjusting their prices than spend another two years doing nothing because they think the only acceptable option is a huge increase they're not ready to make.
How often should I raise my prices?
There isn't a rule that says you can only raise your prices once a year or that you have to wait a certain amount of time between increases. This is one of those imaginary business rules people seem to create for themselves.
I hear things like, "But I just raised my prices six months ago."
Okay, but what's happened since then?
If your new-client spots filled quickly, you're in higher demand, or the numbers tell you another increase makes sense, you can change your rates for future clients again.
Current clients are a little different. I don't recommend changing someone's price every few months because your pricing is evolving, but that doesn't mean you need to keep every current client at the same rate forever either.
This is why I think pricing works better when you review it regularly instead of ignoring it for five years and then realizing you need to make one enormous increase.
Should I raise my prices for existing clients or only new clients?
You don't have to raise your prices for current and new clients at the same time.
For some service providers, the easiest place to start is raising prices for new clients. You can make that decision today, update your website, paperwork, proposals, or wherever you share your pricing, and the next person who comes in pays the new rate.
Then you can decide separately what you want to do with current clients.
Depending on your business, you might increase their rates once a year, give them several months of notice, grandfather certain people in temporarily, or make changes as contracts or packages renew.
If you have a range of rates because of insurance contracts, retainers, older clients, packages, or different services, you can also focus on increasing your average rate instead of trying to make every single client pay exactly the same amount.
That's what the client I mentioned earlier did. As lower-paying clients left, she stopped automatically filling those openings with work at the same lower rate. Her average went up gradually, and so did her income.
It doesn't have to be an all-or-nothing decision.
Will I lose clients if I raise my prices?
You might lose someone, and I don't want to tell you that no client will ever leave after a price increase because I can't promise that.
But I also don't want you making a financial decision based on the assumption that everyone will.
This is where the math becomes really important.
Let's say you have 20 clients and raise your rate by $20. If one client decides not to continue, what happens to your total income?
Depending on your original rate, you may discover that you're making almost the same amount while working one less hour. Once that opening eventually fills at your new rate, you're making more.
That's a much more useful calculation than simply thinking, "I can't afford to lose anybody."
And again, most of the clients I've helped through rate increases haven't experienced the dramatic client loss they were afraid of in the first place.
How do I tell clients I'm raising my prices?
This is another place where anxiety can make things much more complicated than they need to be.
Give people reasonable notice, tell them what the new rate will be and when it takes effect, and give them an opportunity to ask questions. You don't need to write three paragraphs explaining that your software costs increased, your rent went up, you've taken additional training, inflation exists, and you hope they don't think you're a terrible person.
When we overexplain a price increase, we're often trying to manage our own discomfort by getting the other person to reassure us that the increase is okay.
Your client shouldn't have to do that for you.
You can be thoughtful and caring while still communicating a straightforward business decision.
If someone tells you the new rate truly isn't financially possible for them, then you can have that conversation. Depending on the type of service you provide, you might decide to keep them at a different rate temporarily, adjust the way you work together, or help them transition to another option.
But you don't need to solve a problem that hasn't happened yet by apologizing to everyone before you've even told them the new price.
What are the biggest mistakes to avoid when raising your prices?
The biggest one is waiting until you're so frustrated with your income that you feel forced into a huge increase. If you review your pricing regularly, you have much more flexibility to make smaller changes that add up over time.
Another mistake is assuming you have to change every client's rate at exactly the same time. New clients, current clients, different services, packages, and lower-paying work don't necessarily need to be handled the same way.
I also don't recommend choosing your new rate based entirely on what other people tell you to charge. Their business isn't your business, and a number that looks great on paper doesn't help if it doesn't work with your income goals or you're so uncomfortable with it that you stop selling.
And finally, don't assume raising your prices will fix an income problem that has nothing to do with pricing.
If you're only getting one new person reaching out every couple of months, we probably need to look at how people are finding you. If plenty of people are reaching out but very few are becoming clients, we need to look at what happens after they contact you. And if you're booked with the number of clients you want but still not making enough, then pricing and average client value become much more important.
All of those situations can leave you thinking, "I'm not making enough money," but they don't all have the same solution.
Do I need more clients, or do I need to charge more?
When you want to increase your income, it's easy to assume the answer is getting more clients. But if you're already seeing 20 clients a week and would really prefer to see 16, adding 5 more clients to your schedule just to make more money won't get you where you want to be.
You need to look at the whole equation: how much you're charging, what you're averaging per client, how many people you actually want to work with, how consistently new clients are coming in, and what income you want the business to produce.
Sometimes the answer is raising your prices. Sometimes it's replacing lower-paying work as it ends. Sometimes you need more consistent referrals or more people reaching out. And sometimes several smaller changes together can make a much bigger difference than one dramatic change.
The important thing is to stop assuming that making more money automatically means finding more clients. If your current rates only let you reach your income goal by working more hours than you want, your pricing may be one thing that needs to change.
Ready for your income to match how much you're working?
If you're already seeing plenty of clients but still aren't making the income you want, adding more people to your schedule isn't the only option.
Book a free Business Growth Consult, and we'll identify the steps you need to take to increase your income without working more hours or relying on a constantly full schedule.
