Price increases are a normal part of doing business. Whether you need to raise prices to adjust to inflation or you want to offer an upgraded product, few businesses continue to offer the same price for an extended period of time and stagnant prices can kill a business. Customers are typically understanding of a price increase but it’s very important to communicate these prices correctly. Here are some tips for freelancers to help you implement a price increase while maintaining your client relationships:
Tips for increasing your freelance pricing the right way:
The first rule of implementing a price increase is that you must announce it to your customers in a way that allows you to maintain control of the story. You can plan it so that it is told in a way that supports customers rather than alienates them. Here are tools to help you tell your story the right way:
Be transparent - Tell your most important customers about the price increase first. Avoid letting them hear the news second hand. A good rule of thumb is to encourage price increases to be couriered between executives to show respect for their relationships. Explain that you are raising prices and bolster the reason with credible facts. Finally, prevent damaging relationships with your customers by remaining transparent as a business by avoiding price increases rationalized solely by profitability.
Focus on the positive - Tell your customers what they get in exchange for more money. If you are raising prices for a good reason, there is no need to apologize. In an ideal world, you’re asking for money for a better product which benefits your customers. Don’t forget to thank your customers for their continuing business. It cements the positive tone and a future relationship with your customers.
Provide a timeline - Provide a clear time line for the price increase allowing your customers to prepare for it and update their own systems. It will allow you to pad the timeline so that you do not breach any pre-existing agreements and implement strategies that soothe worried customers.
Remind them that you are still offering a valuable product - Focus on reinforcing your key value propositions and remind customers why they do business with you. A price increase allows you to continue to offer a product or service that is still better value than your competitors and continue to offer this service in a sustainable way. When you use small increases to adjust to changing conditions and foster innovation, you protect yourself from getting into trouble and having to bail yourself out with huge price hikes.
How to communicate freelance price increases to your clients:
Give customers a choice - No one wants to pay a higher price -straight off the bat. This increases the chance of sticker shock which can shake even loyal customers. Instead, create a timeline that gives customers a choice regarding which price they pay.
This method works well if you are offering an enhanced product at a more expensive price. You can then transform your product into two different products. The first product is the same old product at the same old price. Make this one available for a limited time, allowing customers to continue to stick with what they know.
However, if you offer the second product with enhanced value, you give them the option to upgrade to the price increase. This
second product demonstrates the value between the packages and allows customers to feel as though the decision is theirs to
Customers will feel good about their decision to pay more money for a better product. It will feel like a smart business choice rather than a forced price increase.
Make the change easy for customers to implement - Help ensure your customers don’t leave by making the changes easier for them to implement. Provide your customers with the correct data to ensure that it is easier to update their systems, as well as, a breakdown of the new prices for customers’ purchasing orders. Keeping frustration down will help prevent the customer from shopping around for other options, even if you do increase your prices in a fair and transparent way!
Price increases often fuel times of uncertainty but you can help prevent turmoil by communicating the increase in the appropriate way.
Jonathan Medows is a certified public accountant licensed in New York, New Jersey, Maryland, and Pennsylvania. He is also a recognized expert in taxation for freelancers and the self-employed—often tapped for his expert knowledge and perspective on self-employment taxation by national and regional publications such as The New York Post, BusinessWeek, Forbes taxation blog, WebCPA, CPA Practice Advisor, and others. You can read some of Jonathan’s press coverage here.
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