How to Increase the Price of Your Consulting Services
Who do you ask for a raise when you’re an independent consultant?
That’s easy. You. As the boss of your business, you get to choose both your price and payment model. But it’s not a one-and-done exercise. As you gain new skills and expertise, your value will increase, and, since getting paid for your full value is at the heart of any successful consulting business, you should increase your price to match your value. You may also adjust your price if you realize that you have been underpricing yourself.
If the thought of raising your price makes you anxious, I understand. But that’s no reason not to do it! I assure you it’s a normal part of having a consulting business. So take a deep breath and let’s talk about how to do it.
Normalize Fee Increases with Yourself
It can be difficult to give yourself permission to consider increasing your fees. Raising your fees can be an easy trigger for imposter syndrome and other confidence issues! Many consultants avoid having to address those feelings by not even considering raising their fees, even as their value increases. You may not be able to stop those feelings altogether, but you can get past avoiding taking action by normalizing price reviews and increases as a standard practice in your business. Pre-schedule those reviews ahead of time. Pre-schedule time to talk to people in your market about pricing at least annually or when something changes.
Establish Fee Increase Triggers
Decide what triggering events or changes will result in raising your consulting prices. It may simply be that you raise your prices each year. Or you can name other specific triggers that directly relate to increases in the value you bring your clients, such as when you:
Acquire new skills or knowledge
Earn a certificate, degree, license, or credential
Add new expertise to your offering
Another triggering event to reexamine your price is if a client tells you that you are underpriced. Most often, it will happen like this: you submit a proposal and when the client hears your price, they react with, “Wow, that is lower than I expected. You’re hired!” If this happens to you, you should honor the price. Do the work, deliver excellent value, and take it as a learning experience. But don’t be afraid to ask the client a follow-up question such as, “I’m glad this works for you. Can I ask what amount you were expecting to hear?” Their expectation will reveal how much you were undervaluing your services and help guide you toward better pricing with the next client.
Set Expectations Early and in the Contract
Clients don’t like to be surprised, especially when it comes to costs. An unexpected fee increase, even if completely warranted, risks souring a relationship. That’s why it’s best to let clients know from the beginning that you increase your prices from time to time. Include that language in your standard contracts. If you plan to increase your fee annually, which many consultants do, put that in your contract. Tell them how much notice you’ll give before an increase.
How Matters as Much as How Much
Although how and when you have price conversations with your existing clients will vary, some tactics are critical.
Be mindful of budget cycles. If the client has already set their budget for the year, a price increase may be difficult for them to absorb or it may irritate them that you didn’t tell them sooner. So know when your clients establish their budgets and time your increases and conversations accordingly.
Always initiate a conversation face to face or, if that’s not possible, by phone. Don’t broach a price increase over email unless they are accustomed to regular price increases. It’s too impersonal and doesn’t show enough respect for the relationship. It also doesn’t allow you to answer questions they have or questions their leadership or financial folks may have.
Prepare for the conversation with some talking points. Be ready to refer to your contract clause about fee increases, explain the trigger of this increase, and reassert your value and appreciation for working with them.
After the initial conversation, put your fee increase in writing. Never rely on a handshake or verbal agreement.
If they are surprised by the increase or they have budget limitations, consider offering a grace period before you initiate a price increase. That will give them time to adjust their budgets and transition to your new price.
If you anticipate client resistance, consider doing a price increase with a pricing model switch. Never hide your fee increase. Be transparent about increased costs and articulate how those costs are associated with value. Just consider that it may be easier for a client to focus on value by, say, moving from hourly to value-based pricing rather than raising your hourly rate.
Price Increases Are Not Fatal
If you’re still feeling nervous about raising your fee, consider this: I have never, ever lost a client due to a price increase. And my prices have increased every year. If you handle it respectfully, show your client that the relationship is your top priority, and ensure they get every ounce of value of working with you, you can get paid for all your value, especially as your value increases and even if you underpriced yourself before.
Want More Help Matching Your Price to Your Value?
Pricing is one of the main things I help the consultants I coach with. I helped a new consultant successfully triple the price in their first engagement—and enabled them to offer maximum value in the client!
If you need help making decisions—or feeling confident—about your pricing or need other help starting or growing your consulting business, let’s talk and see if coaching is right for you. Click here to learn more.