I recently increased prices on my private coaching services to my existing clients, and thankfully, they all chose to stay. But the process of increasing prices, especially to current clients is really challenging and it brings up all kinds of emotions.
In today’s episode, I chat about why you would increase your prices, when is the right time to do it and the process of raising your prices for existing clients.
In this Episode:
01.15: Why you should increase your prices for existing clients
07.37: Working out the right time and mindset to increase prices for existing clients
10.11: The process of increasing prices for existing clients
I recently increased prices on my private coaching services to my existing clients. And thankfully, they all chose to stay. But the process of increasing prices, especially to current clients, is really challenging and it brings up all kinds of emotions, even talking about it. So today I want to talk to you about why you would increase your prices for existing clients? When is the right time to do it? And importantly, the process of increasing prices to your existing client base.
Hello, and welcome to the Clare Wood podcast, where myself and incredible guests share about money mindset, financial successes, and how to manage your money in a fun and practical way to create wealth and abundance in both your business and your life. I’m your host, Clare Wood. I’m a business coach and a money mentor. I strongly believe that money has the power to positively change the world. I can’t wait to help you transform your mindset around money, create a love of numbers and build the business of your dreams so you can live a life of financial freedom giving and global impact.
Why you should increase your prices for existing clients
So why would you increase process to your current clients? There could be a number of reasons. Number one, due to inflation. The cost of living increases every year. This is how inflation works. All of our costs increase every single year. And if you are increasing your prices by at least CPI or in line with inflation at least once a year, you’re effectively going backwards because all of your expenses are increasing year on year.
The second reason might be, if you are bringing on your new clients at higher prices in your existing clients, you might start to resent some clients that are paying lower prices than the new clients who are coming through. So this might be another good reason that you want to increase your prices to your existing clients so that you don’t end up resenting working with them.
For me, in addition to the above two reasons, I increased my prices to my clients regularly as I want to model the behaviors I teach around price increases, and I want to navigate through the mindset challenges that come along with it. I feel I wouldn’t be practicing what I preach if I said one thing to my clients and didn’t implement them myself. And it’s always really interesting going through process around changing price points and observing the money blocks or the challenges that come up, even for me as a money mindset expert. But I’m a big believer in walking the walk. And I want to model to my clients that I am going through the same processes that I encourage them to go through as well.
So there’s a number of reasons why you might want to increase your prices to your existing clients. The next question is, well, when should you increase your prices? I think you need to increase your prices at least once a year for the reason I discussed earlier. Even if you were quite happy with where your price points are, I recommend that you do a small increase at least once a year so that your clients get used to it. Perhaps at the start of every new year, you increase, or you pick an anniversary date, and every year your clients will come to know that that is when you increase your prices, even if it’s by a small amount every single year.
Let me explain this in the context of the rental market. I’ve owned several investment properties over the years, and I make it a practice to increase the rent at every single lease renewal, even if it’s only by a tiny amount. Sometimes it’s literally only by $5 a week. So what’s the reason that I do this? I have seen examples of where someone will have inverted commas, great tenant, and they want to keep them, so they don’t increase their rent. And then they repeat this year after year, after year, after year. And then, one day, the owners will realize that the rent is so far behind the market rates that they need to do a massive rental hike. And instead of the tenant being grateful that they’ve had all of these years of no increases, usually what happens is the tenants pretty pissed off. Quite often, they’ll end up moving, or if nothing else, they’ve got their nose really out of joint, that there is this massive increase. It makes sense to acclimatize your clients, to the fact that prices are going to go up, even if it’s by small amounts, and even if it is at irregular intervals.
There are other times I recommend to increase your process as well. Firstly, if you’re priced below the market, my goodness, this is a time to put your prices up, especially if you are experienced in your field and offering a similar product or service to the other people whose prices you were comparing yourself with. Another time I recommend to increase prices. If you were priced in line with the market or even above the market, and you were wanting to position yourself as a premium product offering and charge premium prices for your products and services, this is another great time to keep increasing those prices.
Another reason that you might want to increase your prices is that you know you are undercharging for the quality of service that you’re offering. And the last reason is that your business is fully booked. Your services are in a high demand. When I see someone announce on social media that they are fully booked for months in advance, it always makes me think there must be an issue with their pricing. So it’s something to bear in mind that if you’re in demand, it’s time to put those prices up.
Obviously, you need to comply with your legal obligations under contract law. I am not a lawyer. So I suggest you get specific legal advice around your particular situation. There will be times when you can and can’t increase your prices, and there’ll be requirements around how that needs to be done and communicated to your clients. So make sure that you do seek appropriate legal counsel in this space.
Another thing that I want to share at this point in time remember you don’t have to increase your prices. I know I do talk about it a lot as a really effective strategy for increasing your sales without having to work any longer hours, but there are plenty of other ways that you can scale your business. So please don’t feel pressured to increase your prices if it doesn’t feel right for you. But like I mentioned earlier, I really do recommend that you do it at least once a year, even if it is only by a small amount.
Working out the right time and mindset to increase prices for existing clients
So you’ve decided that you want to put those prices up. Let’s set the scene and get your mindset sorted because this is going to be a really challenging time for you. I know I bang on about it a lot, but this is why this mindset work is so important. Increasing prices, particularly to existing clients, can be really uncomfortable. So spend some time reminding yourself of why you made the decision to do this and reaffirming the reason that you are worth this price increase. Reflect on any extra value that you are contributing to your clients that perhaps you weren’t when you first started working together.
An example of this, I am currently creating a product which is called the abundance vault. In there, I have breath work, meditation, journaling prompts. It’s all of these really cool tools to really help my clients uplevel and get the results they desire faster. And this is something that my private coaching clients and my mastermind clients get free access to. So this is a value add offering. I am literally upleveling the value that I’m providing to them. And this is an example of how I am helping to support them on a deeper level, really reflect on anything additional, any extra services that you’re providing to your clients. And if you aren’t, perhaps you can spend some time thinking about how you could add some more value back into your clients.
Another thing to reflect on is the training that you have been investing in. I personally have invested over a hundred thousand dollars into my own personal development and training. This additional training, the energetic work that I’m doing, the education that I’m investing in will directly impact on the clients that I work with. And therefore, I am adding extra value to them.
So spend some time thinking about how much additional professional development you have been doing. How are you continuing to uplevel your education, your knowledge, and the service that you are able to provide to your clients? When you spend some time really reflecting on exactly how much you helped to transform the lives of your clients, it can really help you to step into the power when you’re going in to have these difficult conversations about price.
The process of increasing prices for existing clients
So what price should you charge when you increase your prices? Ultimately it has to feel good for you. If you are selling something and you think there is absolutely no way someone will pay that price, that energy will come across, and your confidence will be reflected to your clients. So it’s really important that you are feeling confident in the price that you do choose. Again, these may or may not feel good for you, but at the point in time of recording, I often offer ongoing coaching clients a lower rate than my market rate because that feels good to me. Although this may not be something that I always do, but at this point in time, I’m not necessarily increasing it right up to market rates. That just feels good to me.
The flip side of this is I would also say that a limiting belief or a trap that business owners can enter into when offering ongoing clients is to offer them a significantly lower rate than their market rate, like less than half of what new clients would pay. I just really check-in that you’re not short-selling yourself and that you not going to be in a position where you end up resenting these clients if they are significantly below what you know you can sell your services at in the open market.
So get clear about the price that you want to charge, and then do the work on the mindset and your confidence. It is super important that you spend that time reflecting on the value, and make sure that when you enter this conversation, that you’re really confident that this is the right price for them. Something that is really important to note with price increases. Once you have decided on a price, you need to be confident and firm in this amount. You need to be so confident to the extent that you’d be happy to walk away from one of your dream clients over it. This sounds really harsh. And if you’re one of my clients and listening, I really want you to know that I did not want to lose you through this process. But when you are going through the process of a price increase, you have to be open to the fact that you may lose clients that you love to work with. To me, it is really important that if you do go to a client with a price increase that you don’t then back away from it or offer discount if they push back. There’s a couple of reasons for this.
Firstly, integrity. If you say you were going to do something, you need to do it. That’s your word that you’re putting on the line. And secondly, it’s setting a bit of a dangerous precedent. If a client knows that you aren’t serious when you come to share your new prices with them, they will know that this is always the case moving forward. This is why I personally wouldn’t increase my prices to existing clients that I love working with if I wasn’t in a position to walk away from a client if they didn’t wish to proceed. So make sure that this is definitely what you want to do before you have that conversation.
So what is the process for actually communicating the price increase your clients? I really think the key here is to keep it simple. Remind the client that your contract is expiring soon if that’s the case. Remind them of the progress that you have made together and perhaps give them a refresher of any wins that they have had from working with you, then inform the client of the price increase and ask them if they wish to proceed.
The best way to do this is verbally. Email is also an option to allow them to absorb the information, particularly if it’s a larger price increase. One tip I have here is don’t go into the process of justifying the increase. Often business owners will say, “My costs have increased.” And if that is true, it’s fine to share that. But I personally wouldn’t want to set a precedent that a price increase has to be attached to a cost increase in my own business. And I personally don’t think that any rambling excuses make a price increase any more palatable. It’s simply a matter of, “This is my new price. Are you happy to proceed at my new price point?”
What happens afterwards? So the client will either say yes, and you say, “Fantastic. I’m excited to keep working with you,” and send her a new contract and an invoice as soon as possible after the conversation. Or a client will say no. And at this point, we need to lovingly send them on the way.
As I stated earlier, it’s really important to remember that this is a risk with any price increase. I’ve been on both ends of a price increase as a client. Sometimes it’s totally fine, and I’m happy to keep working with someone at a higher price point. And other times, I’ll say, “Unfortunately, this is not a fit for me moving forward.” And we can part ways on really good terms. I won’t have any bad feelings towards that business owner. Sometimes there may be a situation where a dream client wants to keep working with you but shares that they really can’t afford that price increase at this point in time.
If it feels good to you, you could offer them an alternative service. I.e., one where they have less contact time with you for the same price point, or you could offer them a payment plan. But of course, make sure that you allow for interest expense if you are delaying the timeframe in which you’ll be receiving your payments. I’d like to state at this point in time, there is absolutely no need to offer a payment plan if it doesn’t feel good for you. This is just an option. If you really do want to keep working with someone and want to find a way to make it work. I really believe that even if it feels uncomfortable because someone says, no, I really don’t believe that you should offer a discount or say, “Don’t worry about it,” for the reasons I mentioned earlier. So there you have it, my framework for increasing prices to your existing clients without feeling guilty.
Inside Mind to Money Mastermind, we talk about confidence, particularly in the space of pricing a lot. My Mastermind is a six-figure plus community. I.e., everyone in there is earning at least a hundred thousand dollars per annum. And many of them are earning many, many multiples more. This community is an amazing space where you are surrounded by encouraging business owners who support you through these mindset challenges, whether it’s price increases, hiring a team, or any of the other struggles that you face in business. The first call for the Mastermind is happening on Monday, the 5th of July, 2021. If you’ve been hearing me talk about it on the podcast, which I have been a lot, and you want in, now is the time to jump on a call with me because, like I said, it is kicking off very soon. If you’d like to find out more about the Mastermind or jump on a discovery call with me to see if it is a good fit for you, you can do so via a link in the show notes for today’s episode.
So to sum up today, there might be a whole range of reasons why you choose to increase prices to your existing clients. First of all, what you want to do is get really clear on the reason why you want to increase your prices. Then you want to determine a timeframe of when you were going to go ahead with the price increase. Then you want to do that mindset work. Remind yourself of why this increase is appropriate and why the time is right now. Then the next step is to go ahead and have the conversation with your client and then move forward depending on how the client chooses to proceed. Price increases to existing clients, don’t have to be challenging when you have a really clear strategy about how to do it and have an unshakeable money mindset.
Thanks so much for listening. If you love this episode, please share it with your audience. And don’t forget to tag me on Instagram @clare_wood_coach. And also, make sure you hit subscribe so you never miss an episode. Have an abundant week. And I look forward to talking to you again next week.