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What is the best way to communicate to clients that you are raising your rates?


Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

For most businesses, not able to tell based on the question, the best way to address a rate increase is straight on. Send a communication to your clients that states, "as of ____________ rates will rise by ____________." Do not apologize, do not try to provide a reason - simply state the information with an effective date.

Providing a reason opens you up to your clients deciding if they agree with your reasons. You relay your sensitivity by providing them with an effective date. Caution - depending on your business, a lead time may provide the customer with the chance to shop for a new supplier/servicer...but so does a surprise rate increase.

Topic Expert
Keith Perry
Title: Director of Global Accounting
Company: Agrinos, Inc.
(Director of Global Accounting, Agrinos, Inc.) |

If you're selling direct with annual renewals (without a sales force) at the time of renewal is the preferred time to tell. Per Regis, the incentive to shop is even stronger if you pre-announce. However, if they *see* a higher rate on the current rate card and see their lower rate, they infer that they're getting a good deal, so not having told them that *their* rates may rise is beneficial to you. Also, you never know if you're going to change your mind.

Large, one-off clients with a dedicated salesforce with annual renewals; you want the announcement to go to the sales team...they'll typically want to apply their judgement in informing their customers.

If you're selling monthly subscriptions (like a more pure SAAS), then a reasonable lead (45 days or something) would be appropriate.

Goals are:
-Don't provide an artificial incentive to shop.
-Build trust by pre-warning appropriate parties.
-Allow customers reasonable time to plan.

Topic Expert
Randy Miller
Title: Partner
Company: CFO Edge
(Partner, CFO Edge) |

Great question - it is an issue I struggle with too. I would be interested in hearing how others with service businesses (consulting, accounting, etc.) deal with the issue.
Do you include it in your contract? Do you use an annual standard increase?

Violet Althage
Title: General Manager
Company: Nanco Electric, Inc.
(General Manager, Nanco Electric, Inc.) |

Nanco Electric, Inc. is an electrical service company. This is what I have found for our business as well as multiple other businesses in the same industry. You are better off to NOT make an announcement, but simply identify your date of increase internally then begin your billing with the adjusted rate. Many of our customers are first timers or have infrequent need of an electrician, billing rates are not something they are familiar with. Commercial customers that utilize our services frequently literally never inquire when they see an increase. Most of our jobs are performed on a "time and material" basis. For the sake of respect and good business, we will announce on a proposal that our rates will be increasing as of XXXX date. This is in hopes of them accepting the proposal more timely and benefiting from the savings. As your other resondents above have stated, I believe the specific business or industry you are involved with would play a major role as to how you handle price changes. Just keep in mind any comments you make regarding pricing (unless it's a reduction) is a red flag to your customers. Not always the best choice. Hope this helps a bit.


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