Empowering Web Creativity

Is It Time to Raise Your Rates? (Part III)

Handshake on the deal

In my work with small technology and web companies, I see certain problems over and over again.  One of these is how to get paid fairly for work produced.  In this series we’ve been looking at five common reasons why tech and web professionals don’t get paid what they’re worth.  To review, the 5 reasons are:

  1. Benign Neglect – "Everything is going smoothly.  We have other issues to worry about."
  2. Fear of Loss – "I’ll lose clients."
  3. Misguided Strategy – "We want to be the affordable option."
  4. Uninformed – "I’m not sure what others charge, but I know we’re competitive."
  5. Trouble Communicating Value – "I’m not really a sales person."

Last time we looked at how to escape the trap created by fear and a misguided marketing strategy.  Today, we’ll wrap up with Reasons #4 and #5.

Reason #4: Uninformed

"I don’t know what others are charging, but I’m sure we’re competitive."

At first blush, it might seem obvious that you should know what others are charging.  In my experience, however, those most likely to be undercharging are not tracking what their colleagues charge for similar services.  Even more surprising is their resistance to doing any research.  This need not be a time-consuming project; just call people you know who use such services and ask what their provider charges.  Have friends or colleagues make a call or two if you’re not comfortable doing it yourself.  You’ll quickly collect a range of data that gives you a more accurate picture of what the market deems appropriate for your services.  Many times, this alone will give you the confidence needed to adjust your rate.  This experience is also valuable preparation for communicating value – which brings us to Reason #5.

Reason #5: Trouble Communicating Value

"I’m not really a salesperson."

There are two prongs to this discussion: existing clients and new ones.  First, let’s look at existing clients.

Preserving Existing Client Relationships While Raising Rates

If your research uncovered gaps in your rate structure then it may be time to have the rate discussion with your clients.  Here are some ideas to work with:

  • Unless you are at the top of your range, you can very likely increase by up to 10% with little or no fallout.  Clients that are happy and have not had a recent increase will likely accept such a change with little fuss.
  • If your research points to a heftier increase to catch up with your market – say, 20-30% – then you may want to increase value provided at the same time you announce your new rates.  Some things you can do that provide additional value to clients:
    • Provide a regular newsletter with information that is useful to them.  For web designers, that could be information on branding, skillful use of email, or other marketing strategies that help them maximize their investment in their website.
    • Conduct a webinar or seminar as part of your overall service, going deeper into some topic of critical interest.  For IT and tech professionals, this might be an in-depth treatment of cloud computing with solid info to help clients learn how to apply the technology to their own businesses.
  • One colleague in my field makes it a practice to "test" an increased rate on new clients first, to determine whether there is strong resistance.  If it goes well with new clients, he rolls out the new rate to existing clients at a later time.
  • As a variation on the previous idea, you can notify all existing clients of the increase, but offer the option of being grandfathered at the old rate for a period of time in exchange for providing referrals to new clients.

Winning New Clients Without Selling Your Soul

Most of us have heard of the stereotypical salesman who "could sell ice to Eskimos."  But a sincere and ethical sales approach still wins in the long run.  Communicating value is as simple as identifying your prospective client’s needs and explaining with sincerity what you can do to solve their problem.  How do you do this?  Here are some simple steps to follow when making a presentation to win business:

  1. Acknowledge that you might not be right for their needs.  This takes pressure off both you and your prospect, since you’re not there to "push" anything.
  2. Ask questions to understand their needs, being both sincere and genuinely interested.
  3. After they’ve explained their concerns and wants, watch for the momentum to shift naturally.  At this moment, you should summarize what you’ve heard to be sure you understand accurately.
  4. If you don’t think you and the prospect are a good fit for each other, then politly explain why they might want to go a different direction and what you see as their options.  On the other hand, if it still seems that it might be a good fit, then ask permission to present your services.  It could be something along the lines of, "I think I understand your situation better now.  Do you mind if I tell you a little about what I do?"  This is both respectful to them and keeps the door open for you to bow out gracefully if there is no real interest.
  5. Make your presentation.  What should you say?  Tell your story about why you do what you do, what you believe, and what you’re passionate about.  Tell stories that illustrate key points and benefits, especially those that teach through "what went wrong" and "what whent right."  Also, use testimonial letters from happy clients you’ve worked with – let your best clients speak for you.
  6. Ask for a decision, using questions such as, "I think we could help you with [service or product]; do you think you could be comfortable working with us?" or, "What time table are you operating on?" or, "When would you like to move forward on this?"  If you’ve done a good job of establishing rapport and listened carefully to what they’ve been saying, you should have a fairly good idea of where they are and whether to pursue the opportunity further.
  7. Negotiate, working out the details when they seem ready to move forward.  If your prospective client has indicated interest in working with you, then it’s time to talk about how you do business – i.e. rates, estimate of charges for their project, timeline, etc.  Finally, if you must make a pricing concession, ask for something in return – referrals, a letter of recommendation, credit on their new website, etc.  These things all provide value to you but cost the client nothing out-of-pocket.


Thanks for joining me in looking at the difficult (but key) issue of raising your rates as a web professional.  I hope that you’ve been inspired to overcome whatever obstacles that are holding you back from charging what you’re really worth.

Do you have a story or experience to share?  We’d like to hear about it.  Please use the comment form below to share your thoughts!

Greg Rohler specializes in providing accounting and controller services to small technology, IT and web firms. He also acts as controller for DWUser.com.

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