Nov 21, 2017
Have you been charging the same price for your services for a long time? If so, it may be time to consider increasing your rates. In this article I’ll discuss how to decide if the time is right, address fears about losing clients, and share some strategies for raising your rates gently.
How do you know if it’s time for a rate increase? If it’s been more than a couple of years, and if your schedule is full, now could be a good time to consider it, or make a plan for several months to a year out. Increasing your rate helps you can stay competitive in the marketplace, and to get the most out of your time, plus of course it helps your bottom line.
I raise my rates every three to five years. Timing is important. If the economy is in the middle of a deep recession, it may not be a good time. Or, if there is an economic downturn going on, but you haven’t raised your rates in five years, consider a small increase. Which brings me to…
A small increase is OK, particularly if the overall financial climate is less than optimal. And small increases add up.
If you have weekly clients, a $1/increase per session, is $40/ year (based on 10 months), or $1200/year for 30 clients. Double that if you increase by $2/session ($2400), and double again if you increase $4/session ($4800).
But again, keep in mind how long it’s been since you last increased rates, and also what the monthly increase is for your clients. An increase of $4 a month is barely noticeable for most clients (it’s barely one cup of coffee!), so it may pay to raise it a bit more than that, so that it makes a bigger difference to your bottom line.
Start with new clients. It’s always easiest to introduce a new rate to new clients. I have often done this about one or two months before a rate increase for current clients goes into effect.
When raising rates for current clients, make sure to give them ample notice — both written and verbal is good.
I usually write a letter with updates about my studio, and explain that the raise is coming (I include a specific date). Do this one or two months ahead of the actual raise, especially if it’s a sizable jump.
Also, let your clients know how long it’s been since your last rise in rates (particularly if it has been several years), and that this small amount for each client adds up to make a difference for you, by helping keep your business strong, and your rates competitive.
It’s OK to “grandfather in” the old rate for some of your long-term clients. In the rate increase letter, I always let my clients know that they are important to me, and that I don’t want to lose them because of a rate increase.
I invite them to talk with me if the increase is a hardship. I usually have a couple of clients who do this, and I gladly offer to keep them at the current rate. Usually after a few months, they voluntarily offer to go to the increased rate.
When I raise rates, I sometimes offer discounts for families with multiple clients (usually siblings or a parent/child). In these cases, I offer to keep them at the old rate for a specific period of time — maybe six months — and offer to revisit the increase then.
Again, when raising rates for current clients, let them know that you appreciate their business and don’t want to lose it! Thank them for choosing you and your services. This can also be a good time to check in and ask for feedback… is there anything you aren’t doing that they would like you to be doing? For my students, this might be additional musical repertoire, etc.
It’s possible, although personally, in 15+ years of doing this, I don’t believe I’ve ever lost a client when I’ve raised my rates, except maybe one or two (out of several hundred) who were considering leaving my studio already.
People expect prices to go up. Of course, although they wish they wouldn’t, it’s a basic economic fact of life. If you’ve done the groundwork of providing an excellent service with a great attitude, and then institute your rate change gently, your clients will most likely remain loyal and stay with you.
Val has been teaching since 2001, and loves helping people follow their dreams of learning to play an instrument.
Discover more about Val at valblaha.com.