Raising your rates: five easy steps for women entrepreneurs

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You’ve established yourself – built your reputation, defined your niche, perfected your craft. Your clients keep coming back for more. And you’re starting to feel like they’re getting a really good deal on what you provide.

It’s time to raise your rates.

Renegotiating your rates is an intimidating thought for women entrepreneurs. Whether you are just starting your business or are a seasoned professional who has stellar Google reviews, your mindset will always be the biggest barrier to your own success. And only you can take responsibility for overcoming your own insecurities.

Your whole life, you’ve been encouraged to prove yourself, to prove your worth. You see flaws in your work when others are astonished at your attention to detail, your professionalism. You worry what others will think of you if you set higher rates; after all, you are your brand, and your reputation has been built on relationships.

Depending on where you are in the lifecycle of your business, your relationship with money and your perception of your self-worth will present different barriers.

When you are first starting out, you’ll face the intimidating prospect of setting your rates. Do you charge the same as others in your industry? Do you charge less, because you consider yourself a beginner (even though you might have been doing similar work as an employee for years)? Should you charge less to get some early business? The idea that you are only able to secure clients if you offer a discounted rate is one that almost every woman entrepreneur struggles with. And it always comes back to our own perception of our value and of the quality of what we offer to others.

As you get into a rhythm with your business, you’ll see repeat customers and referral clients who fill your schedule. By this time, your perception will probably have shifted. If you’ve been paying attention, you’ll have noticed you don’t need to discount your services to secure clients. You have a reputation, people know what they’re getting, and so you feel more comfortable in charging market rates.

Cool. But are you still charging your legacy clients your old discounted rates?

I hear this a lot from women entrepreneurs. They’re grateful for their early clients who gave them work when they were just starting out. They talk about how much they learned working with those clients. Some of them go so far as to say, “I feel like I should be paying them. I owe them for my success.”

Whoa!  Stop right there my friend. Listen to what you just said. You owe your clients for your success?

Let me offer a fresh perspective.

A different way to see it

You were a new entrepreneur. You had talent and products that were of value, but you were working out the kinks in your new business. Your early clients benefitted from reduced rates, and also from an entrepreneur who busted her butt to deliver above and beyond what was expected.

Those early clients not only benefitted from the base-level service you provided, but from your deep commitment to leaving no stone unturned, providing exceptional value, and bending over backwards to provide platinum-level service that would help you build relationships, grow your reputation, and drive referrals.

If you were to quantify the actual level of service you provided, I have no doubt that (even with the discount you already gave them) you provided at least 2x the value that the clients paid for. At this point, you don’t owe them. You have provided them with a lifetime of your blood, sweat, and tears. It’s time they started paying you what you’re worth.

Last week, I wrote about how to assess whether it’s time to raise your rates. But how does an entrepreneur go about increasing her prices? Just like in a formal negotiation, there is a process that you can and should follow when setting and communicating your new rates:

  • Review your rates
  • Assess your competitors
  • Determine your new rates
  • Set and communicate an effective rate
  • Refresh your contracts

Review your rates

Pull out your spreadsheets, get a list of all of your services and their prices, and make note of the discounts you regularly offer. Before you go looking at the competition, ask yourself a few questions. What do you know about your clients’ level of satisfaction with your service? What do your feedback forms, Google reviews, and client emails tell you about how happy those customers are with you? What do they tell you about your strengths? And what proportion of your clients balk at your prices?

As you consider these questions, remember that most human behaviour can be displayed in a bell curve. So as you review your client feedback, let me remind you of the most important thing I remember from my university statistics courses. Pay attention to the people in the middle; they will provide you with the most useful and accurate feedback.  As for the 5% of super-negative comments and the 5% of glowing comments – ignore them. Don’t let your best friend’s Google review or that one over-the-top cranky client skew your assessment. This is also a bonus tip for any online shopping you do – be sure to look at the reviews with 3 or 4 stars – they will always give you the best information about where the company or product failed to deliver.

Assess your competitors

Now it’s time to look at your closest competitors. Who is out there doing the same thing as you? Find the three competitors that are most similar to you – ideally, they operate within your niche, are of a similar size as your business, and operate within your geographical area.

Start by looking at their public reviews. What do their 2, 3, and 4 star ratings tell you about their business? Comparing your mid-range ratings to theirs, how does your business stack up? Are you about the same? Are their customers happier? Or are your customers more satisfied? Do this assessment for each company BEFORE you review their prices against yours.

Once you pull their prices and stack them against your own, consider their customer feedback to inform your assessment. Here are some questions you can ask. What are clients really looking for – and what makes them happiest in terms of your industry? Is there any noticeable difference in the feedback on higher priced businesses? What about lower priced businesses? Where does your business rank in terms of client experience? What about price? Finally, based on your assessment of the local market and the level of service you provide, where should you be ranking on price? Try to answer that one from the perspective of your ideal clients.

Determine your new rates

Before you make changes to your website and marketing, there’s one more consideration you need to build in. Inflation. How have your business expenses increased over the past year? Based on the increased cost of shipping and logistics, I guarantee it costs more for you to service a client today than it did 12 months ago. You need to calculate that difference and add it into your new rates.

Let me say that a different way. First, you’re going to look at the prices of your competitors and assess where you should rank in terms of price based on the service you provide. That’s step one. Step two is to add in the increased cost of doing business. Yes, this means you may price yourself higher than the highest priced competitor that you assessed. But if they’re a smart entrepreneur, and they read my blog, they will also be raising their prices to account for changes in the market. So if you don’t pay attention to both your level of service and the increased cost of doing business, you will be short-changing yourself. This also does nothing to raise the profile and value of your competitors in the industry. If you’re all competing on cost, and inflation keeps growing, this is not a race you want to win.

Without knowing your business and your market, I can’t tell you exactly how much you should be raising your rates. Based on your assessment, you might be slightly off – like by 15-25% – or you may find that you actually need to double your rates. And if that’s the case, then you need to do it now – because otherwise you are losing money every day.

There is a lot of emotion that comes up when we think about raising our rates, especially if we think about doubling them (gulp). But it’s important to remember that as women, we tend to impose our own values and beliefs on our clients. We tend to undervalue ourselves, and because we see our own flaws, assume others undervalue us as well. That’s why it’s so important to consider your rates through eyes of your clients.

Set and communicate an effective date

Once you have determined your new rates, you have a choice as to when you roll them out. This is completely up to you, though keep in mind that any existing contracts will have to expire before you change your rates with those clients or partners. For non-contractual clients, you can either start quoting and charging your new rates immediately or provide a 30 day notice that your rates are going up. Remember, it’s your business. Just do what feels right to honour the relationship with your existing clients.

Refresh your contracts

You’ll also want to put your contracted partners and clients on notice that you will be raising your rates when the contracts expire. This means starting the renegotiation process early. You need to get your new rates and any other changes you want to make to the terms of your contract on the table for discussion with lots of time to spare. Otherwise, what often happens is that you run out of time and just end up renewing your old contract without any changes. Don’t make that mistake. Go through your contracts, and set reminders in your calendar to begin the renegotiation process early.

Need more help?

I need to be blunt. Changing your rates is never comfortable. It always makes us question our value. It makes us critique every failure we have ever had. And that’s why it’s so important to assess your business not through your own eyes, but through the eyes of your clients.

If this post has you fired up and ready to change your rates, but you’re not sure what to say or how to communicate your changes, then I’m happy to help. I’ve created a short guide for you called Raising Your Rates: Simple Scripts for Women Entrepreneurs. It offers language that you can use to update your website, communicate to clients, and initiate the renegotiation process for your existing contracts. Grab it now for free, and you’ll also get my weekly newsletter.

Keep learning!

Want more? Join me for a free masterclass to learn the secrets of Fearless Negotiation. In this one hour session, I’ll show you the process I use with clients to help them get what they deserve and desire in their businesses. Learn more and register.

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