You Are Worth More…How to raise your fees without angst

“How do I raise my fees without offending or upsetting my clients?”

This is probably one of the most common questions I hear being asked by Bookkeeping and Accounting professionals throughout our industry.

We are bold in our choice of going into business. We are brave at defining and developing our area of expertise. We are persuasive in our sales approaches and passionate in our presentations.

But when it comes to talking about money with our clients, far too many of us turn to a quivering bowl of jelly.

I thought of this the other day when an arborist (insert tree professional 🙂 ) came to shape and take dead branches of some mature trees on my property. He was knowledgeable and thoughtful in telling me what had to be done. He was expert in how he handled the equipment and had trained his staff to do the job.

But when he passed me his invoice for services, he was shy and uncertain. I took a quick glance at it and considered it very reasonable, but he stood there and explained a little that it was a big job and he needed to bring a special piece of equipment in etc.

The confident person that secured the job was having trouble asking for the payment required now the job had been successfully completed.

Lack of confidence in securing fair payment is common

All business owners feel fear at some point, and it often revolves around money, including fear of asking for it.

The funny thing is, it’s usually not because we think our fee is too high; we know our skillsets and the amount of work involved and what we need to charge to make a profit. We know that we are qualified to do the work and that it is done to a high standard.

Mostly we fear that the client will object to the fee, or argue with us, and we hate the conflict that follows. We take their question personally and we are hurt because we feel our work is being undervalued. We are uncomfortable talking about money (and for that most of us can thank the culture we were born into) and we are a little shy about sticking up for our own value.

We don’t want to lose a client, we may fear that our price is too high, or we may just want them to pay and stop talking about it.

Whatever the reason, the secret to not being afraid to being paid what your business needs and even to raise your fees at a reasonably rate as your costs grow, is to be armed with information. The secret to confidence is knowing that you are right.

Every year we invest time and money in ourselves – watching webinars, attending conferences and meetings, learning about new apps, upgrading our skills, etc. We do these things to be better at what we do and to add more value to the services we provide so make sure your pricing reflects that extra value.

Start by doing a fair assessment of your fees

When you started your business and built your initial plan, you factored in your costs of overhead, desired profit and salaries and determined what price you needed to charge for goods and services to make your business viable.

If you start to compromise on that because it is upsetting to get into discussions about money, you will be committing self-sabotage.

Instead, understand your pricing strategy. Go back and remind yourself how you arrived at your figures. Research the average fees that others in your area charge for similar services and goods so that you know you are basically in line with public expectations.

That doesn’t mean you can’t charge more. It just means that you know what the baseline is. If you have more experience, more skills and offer a more in-depth service, then you have every right to charge more than others.

It’s a good idea to discuss your customer’s needs before you talk about pricing. That will also increase your comfort zone because you will know realistically what it will cost to meet their needs and still make a profit. If you feel pressured when people throw a big project at you and ask for a quote, it is okay to say that you need to think a bit and consider aspects of the job, and you will be back to them in 24 hours. That will allow you time to get your thoughts in order and really consider what kind of commitment you are looking at. In fact, one of the biggest mistakes you can make is to offer pricing on the spur of the moment without doing your due diligence.

Determine how the process of being paid is going to work for you

If you just cannot have the money conversation, you can always just post your fees on your website and stick to them no matter what. (Bad idea, bad idea. – do not put prices on your website, this makes your services nothing more than a commodity – at least IMHO 🙂 )

Doing so can also be limiting because some contracts will be unique and will require a customized approach to pricing.

The important thing is to be confident when you deliver your proposal and discuss the client’s investment. In fact, I prefer to use the word investment over rate or price or fee because it more accurately reflects the nature of the transaction and indicates from the start that both parties are going to benefit from what happens.

Remember to always have a clear idea of your break-even point on the job and ensure that you have a reasonable profit to enable you to pay your overhead costs and other expenses. Perhaps, even more importantly, remember this must be a win-win, for you and the client, or there will be no long term business relationship.

Go ahead and make the fee adjustment when you need to

The only thing more frightening than asking clients for more money is watching your business slide downhill into insolvency because you can’t find the courage to do it. Keep that in mind every time you realize the necessity of raising your fees.

There are other considerations as well. For example, consider whether you are going to impose a fee increase right across the board, or whether you are going to implement it gradually with new customers and allow your existing clients to be grandfathered for a little longer.

If you delay imposing increasing on existing customers, at some point in the future, you will still have to hike their fees too.

Another strategy is to raise the fees on the customers who give you the least profit. If that sounds cruel, remember that as nice as you want to be, you are not running a non-profit organization. You need to be profitable to sustain yourself, your family, and your employees.

So you may decide to take the 20 or 25 percent of your customers who are least profitable for you and impose the rate increase on them. If they do not absorb it willingly and leave, that leaves you space to seek out more profitable clients.

How to do what must be done

Whatever strategy you elect, the important thing is to announce the rate hike to them, and not simply bury it in their bill, since people feel betrayed when that happens. Instead, send them a letter or make a personal call if you wish, and give them at least two months’ warning before the prices go up.

Every business owner hates this day because they fear there are some clients who may leave them as a result, and undeniably, that is always a risk that you take.

Then the question is: “Did I need this client enough to start to lose money servicing them?” Did they not see value in the goods or services that you provide them? Perhaps it is best that they left and you find a more respectful client. Or perhaps your service or value needs to be upgraded.

Either way, it is an impetus to change and insure long-term improvement, and that is vital to you and your business in the long run.

Thank you for taking the time. Until next time, take care.

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