Here is an interesting article by Brent Bowers on how to raise your rates without losing clients from the New York Times. I’m not certain I agree with all the advice, though I’m glad to see this sensitive issue raised.

Here is the passage I want to discuss:

As for the consultant who wanted to know how to augment his rates without alienating existing customers, Mr. Jacobs’s counsel was to be gentle. First, he said, increase them for new clients only, and use the exercise to explore how high you can push the rates.
Then, he said, the consultant should inform existing customers in person — not in writing — that he plans to raise rates by 5 to 10 percent. “Have a conversation as part of a regular visit,” he said. “Make it casual. Tell them why you’re doing it. Say something like ‘I hope we can work out an agreement.’ ”

It’s that last sentence that will get you in trouble. I agree with the writer about talking to current clients in person. However, I disagree with leaving them room to negotiate with you. When you say, “I hope we can work out an agreement” you are in effect saying, “This new price is not really firm and you can talk me down. Go ahead. Try.” If you feel compelled to tell clients why you are raising your fees, simply say, “due to rising costs.”

Yes, this is stressful. But the truth is that not everyone should be able to afford you. Even if you lose some clients who will not pay the new higher fee, you will create room at the top for higher paying clients. If you never lose any clients when you raise your fees, I suspect you are not charging enough. You will make more money with fewer clients if you charge at the top of the range. (I’ll save my thoughts on the emotional aspects of this for a different post. I’m just finishing the ebook on the emotional dynamics of charging people money.)

When you decide to raise your fees, make the new fees effective for all NEW clients. Then, let your current clients know that you will be raising your fees. Tell them you appreciate their business, and because they are current clients, you are going to give them two months notice. Let them know that you’ve already raised your fee for new clients. “Therefore, the new fees will not go into effect for you until…” I know this is hard, but you simply must make enough money to maintain a healthy business and avoid financial deprivation!