Normalise putting up rates

It’s hard not to feel nervous about putting up rates. Even if you are confident in your agency’s value, and you don’t mind talking figures, there’s still friction about asking for more.

You can find yourself waiting until the client isreallyhappy before bringing it up. You can second-guess what they’ll accept and reduce what you ask for.

You can’t afford that. Your rates have to keep going up because your costs are going up and you need to invest to grow.

That’s a fact of business. Raising your rates should be a fact of business too.

Put a clause in your standard terms that says your rate goes up by a certain percentage each year. When you are onboarding a client, point that clause out to them and ask if it needs to be factored into any purchase orders.

For the majority of your clients, this will be expected and they’ll appreciate knowing in advance how you handle raises. They aren’t anticipating that they’ll never go up. They increase their prices over time too.

Some clients might push back on the idea of having this in the agreement, but most won’t. By having the conversation, you are now making more revenue.

Don’t discount your rate

There is no point in raising rates and then giving that raise away on the next project.

Avoid discounting your rate. The rate you set with a client is a benchmark. The fact it was discounted will be forgotten, and all future negotiations will be based on the lower number you initially agreed.

Remove the concept of a discount from your thinking. You’ll never be able to take them off the discountandraise the rate because that’s often too big a jump. So the result is that they are discounted forever. That’s not a discount, that’s just a low rate.

This doesn’t mean you are never going to use financial incentives to win work or make a client happy. Those incentives just aren’t going to relate to an ongoing rate if you can possibly avoid it.

Quote your new rate then discount

If the customer can comfortably afford you and just wants to feel like they are getting a deal, then quote a price that is 10% higher than your normal one and then offer a discount.

Your rates are steadily going up over time so there’s nothing unethical here. This technique also doubles as a great way to test the market’s reaction to a higher number.

Offer alternative incentives

What extra value can you add? For the ambitious client, bring someone from the leadership team into the initial phase of the project. Give them more direct access to strategic expertise. Or perhaps there’s a set of workshops you could run for them (that you might have run as part of your client development anyway).

Give away work for free rather than discounting

Sometimes the only thing that will work is if the price of the project comes down. And as long as it’s still valuable to you, there’s nothing wrong with that.

Reduce the price without reducing the rate by giving away a portion of the project. It’s a good idea to give away work that isn’t your core deliverable so as not to devalue this in their eyes. For example, give away your onboarding and kick-off time, not your research and design.

This works because rather than doing a 100-hour project at a 10% discount, you do the first 10 hours for free. After that’s finished, you go back to full rate. The revenue for the project is the same.

The difference is that when further work or future rate raises are discussed, you are benchmarked where you want to be.

Be careful around bulk orders

Be particularly wary of people that spend a lot with you.

It’s tempting to give them ‘a good rate’. But try and give them something else to show you love them. The trap here is having a large client on a low rate. A large portion of your work will be less profitable. The whole ‘buy in bulk’ thing doesn’t make sense for your business model.

It adds up

Let’s not pretend that you aren’t going to have clients on different rates, that’s agency life.

But apply a bit of the above and you’ll see meaningful improvements to your revenue.

And the reason you deserve this increased revenue is because you deserve it.