There comes a time in your #business when you feel it’s time to increase your fees for your products or services. The major conundrum that readily comes to mind is how do you increase your fees without losing your current customers while gaining new ones? You must be able to strike the right balance between what you want and/or need to charge for your products or services, and the fees people are willing to pay.

One of the hardest thing to do in business is raise your fees. Even big companies are reluctant to do it. Once a customer gets used to paying a certain price for something, it’s tough to convince them they should pay more for it because of things beyond control i.e. an increase in your cost of doing business, or an increase in the rates your competitors charge. Many customers will be upset, especially business customers, because they probably aren’t free to raise their fees as freely as you are. Also many customers will want to know, “What am I getting extra for the additional fee?”

How Do You Know It’s Time To Raise Your Fees? Here are five pointers:

1. Products and Services are in High Demand
   

   Increasing Graph Meaning Profit Increase And Upward

When the demand for your products and services exceeds your productivity to meet those d

emands, then it’s time to raise your fees. In the process of raising your fees, you might lose some customers but you will gain higher paying clients, who will compensate for the dip in quantity thereby earning at least as much, probably more, while working and producing less.

2. Dip in Profits

The rising cost of expenses can eat up your profits. This will influence you to raise your fees in order to remain profitable.

3. There are no objections

If you’re closing every deal without anybody walking away or having “to think about it” in all likelihood your fees are too low. Most entrepreneurs under-value their products and services as a result of ingrained, self-limiting beliefs about money. They feel that keeping their prices low is the best way to attract business, which is not true.

4. Competitors Charging Higher Fees

Check around and see if there are competitors with similar skill level that are charging more. Checkout what they are doing to justify the higher fees they charge, if anything, and set your fees competitively.

5. Your Value Increases

The bottom line is you increase your fees as your value increases. To increase your value, consistently deliver products and services that your clients want. A simple way to achieve this goal is to periodically conduct surveys to determine what your client’s greatest challenges are and create products and services that provide solutions to their problems.

Picking The Right Time

When you have decided to raise your fees, it is important to choose a time when you’ll encounter the least resistance. Your business’ seasonality, growth stage and sales cycle affect your choice. For example, many retailers raise fees seasonally especially during Christmas when customers pay less attention to prices, however a brand new store early in its growth stage might delay a fee hike in a bid to gain market share. Meanwhile, a computer store business is likely to ignore the holidays and time fees changes to coincide with new model introductions, which are more important to its sales cycle.

It may be tempting to put off raising fees until after a busy season ends. After all, higher volume may make up for lower per-unit revenues. Gouging should never be a part of your fee-raising strategy but the time for a fee hike is when your product or service in demand.

Here are some tips to help you raise your fees:

1. Be Confident

The first thing you need to do when you are considering raising your fees is to be confident that you are worth the amount that you’re charging.

2. Do Your Research

If you are completely unsure about what to charge or how much to increase your fees, you will need to spend some time reviewing the market research you conducted when you started your business.

3. Apply New Rates To New Clients

You can apply your new rates immediately to all new client work. This can be a great way to improve your income without harming any existing customers.

4. Always Keep Clients Informed

Whenever you raise your rates for existing clients, it’s important to keep them informed as to what is happening and when it’s happening so there are no surprises.

In conclusion, no matter what you do, you’ll probably lose a customer or two, as some customers will (irrationally) want to punish you for having the audacity to raise your fees without permission. That way, they’ll punish themselves, as they’ll end up paying more for services than they should, but there’s little you can do about that. It is also important to make sure you raise your fees high enough so you don’t have to increase them again for at least another year or two. Too frequent fee hikes send the wrong message to your customers about you not knowing how to run your business, leading to the loss of confidence in your judgement on the part of your customers.

 

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