Increasing service fees? What you should consider.
“How dare you!!” is the reaction you may be expecting from clients when they hear that you’ll be raising your prices. You’re anticipating the awkward feeling as you see the betrayal wash over their faces. Well, ignore that thought, that’s the voice of fear and by now you should know not to listen to it when it comes to love, life and even running your business. Ok, that may be a bit melodramatic, but you get the idea.
Along those lines, is the very real concern voiced by many business owners and service providers, “If I raise my prices, my clients might leave”. However, when speaking to health & wellness and other business owners who regularly increase their fees, they commonly agree that any stress is unwarranted. Clients didn’t revolt and occupy their waiting room. Nobody even lit a candle. A small number of owners have commented along the lines of “…maybe one or two clients adjusted their booking habits and rebooked every six weeks rather than every four weeks.” Turns out that it wasn’t a problem after all.
When looking at the big picture, if you raise your fees by $10 you can actually afford to lose a client or two. Let’s do the Math. If you’re seeing 20 clients a week and you charge $80 per session you’re grossing $1600 a week. Even if you loose 2 regular clients, which, is unrealistic, you’d be bringing in around $1620 for the same week. So even if you were to loose 2 clients because you increased your rates, you’re bringing in more revenue that more than compensates, it’s simple math. Now, you’re actually working less and making slightly more, win-win. With the loss of 2 clients, you’ve made room in your schedule for new clients that will pay $90. If a client does stop coming in because of what amounts to a reasonable price increase, chances are they weren’t a good fit and this is a good filter for your client list this spring.
People have different attitudes about how often they should raise prices. Some business owners will say annually to keep up with growing expenses and inflation. Some seasoned business owners or administrators raise prices every 2 years, which is a good time to evaluate and decide if you should raise your prices or hold up for next year. The reality is, it’s not uncommon for prices to go up and if you have regular clients that already pay for and like your services, they most likely expect an increase at some point. If your skills are that good and clients have been repeatedly paying you for your services, they won’t care about a $5 or $10 increase. When you’re running your own business, you’re your own boss and you have to treat yourself the way any good boss would. A raise once a year or every 2 years is not unreasonable to compensate for new skills and greater experience.
It may seem like a bigger deal because you’re dealing with managing the notification and potential reactions of hundreds of clients. From the client’s point of view, they’re just dealing with a single price increase notice. Some people tend to make it a much bigger thing than it actually is.
So, now that we’ve discussed the emotional side of a fee increase, let’s get in to the details of how to go about updating your prices. You want to give clients plenty of warning so that they don’t feel blindsided at the till. If you can, plan a price increase at least two months ahead and for those two months verbally communicate the upcoming increase to your regular clients. If your business sells packages, sweeten the pot by offering a package of appointments at the current fee to carry them over for a few months. This could go a long way in reducing the shock for some.
Along with the verbal notice, you should add a note on the services page of your website showing your current pricing and below it something like “New Pricing in effect as of July 1st” and list your new prices. This will help reduce confusion for anyone visiting your site one week and then seeing different pricing the next. Another important piece in the communication puzzle is to send an email notice. Not every business uses an email marketing service like MailChimp, but the totally should! Most people have email and check it regularly. Email is the most efficient way to get the message out to your clients.
If you’re savvy enough to be using an online booking system, it should have a feature that allows you to setup future fees for promotions and scheduled price increases. A great system will allow you to setup the new fees months in advance and automatically take care of applying the new rate for appointments booked beyond the new fee start date. Some systems will even allow you to collect prepayments at the future rate for bookings made today.
Planning, timing, communication and appointment scheduling software are keys to your success. Consider the fee increase and the reasons for it. Give your clients ample warning of the upcoming change. Add a notice on your website about the increase. Send an email campaign to all your clients. Use an online booking and business management system to reduce the time and effort in setting up, managing and recording future fees.
If you still feel any doubt or fear and are thinking “Will my clients be upset?” or “Will they say anything about it or just stop seeing me?” keep in mind that those clients will be very few, if any, and most will likely respond with “Good for you, you’re services are worth it.”. Communication and timing will go a long way in invoking a positive response versus a negative. Bottom line is, your skills are ever expanding and any reasonable person would expect your fees to align with the value of the service you provide.