The only way is up
At the beginning of December, I wrote a blog post called The Right Rates in which I explained the dilemma I was facing over whether to increase my rates for 2015. Now, almost two months later, I think it’s time to explain the decision I eventually made and how it’s working out. I hope the result will encourage others when they have to tackle the tricky issue of rates. Who knows, it might even encourage me next time it’s my turn.
If you read the previous blog (if you didn’t the title in the previous paragraph is as a link) you may remember that I was unsure whether to put my rates up for the second year running after a long period of not raising them at all. After a great deal of consideration, including, as I described in the blog post, consulting some of my best customers to see how they might react, I decided to go ahead with the increase. There were various factors that tipped the balance. One was the fact that I was consistently busy and often so busy that I was having to turn away work I’d have liked to accept.
Another was related to another post I wrote, The Productivity Conundrum, in which I lamented the fact that, whatever I tried, I couldn’t find any way to up my productivity significantly. At the end of that one I asked for any tips readers might have, but the responses I received, although very welcome, only went to prove that there really isn’t any way I’m going to be able to improve my productivity to any great extent in the foreseeable future. The implication is that any improvement in my income is therefore either going to have to come from working longer hours or increasing my prices, and I know which one of those I prefer.
So, I sent out notices to my customers before Christmas that I was raising my rates from 1 January. The response was more or less the same as I remember from previous increases I’ve made. Some clients acknowledged the new rate without comment, some didn’t say anything at all, and a few (fewer than I expected, to be honest) told me they were going to be less likely to use my services at the new rates.
One thing I did agree to do was to take on a couple of large projects for January at my 2014 rates. This was mainly because of what had happened the previous year, when I found myself with very little work at the beginning of the year. I really didn’t want a repeat of that and I felt a lot safer with these two jobs already lined up. I’d made it very clear to the clients involved that I was giving them a special price because the deal was being agreed while it was still 2014. Working in this way, I didn’t feel I’d compromised my rate increase at all.
I also went into the increase with the attitude that I would be flexible, offering discounts or returning to my 2014 rate if necessary to make sure I wasn’t left without work. But I honestly needn’t have worried. The amount of work that has come in this January has astonished me. I could even have done without the big “safety net” projects I’d taken on. I’ve even had work from several customers who’d told me that my latest rate increase more or less put me out of their league. I’ve also had work from clients who’ve placed orders quoting, and therefore specifically accepting, my new rate. It is still possible, of course, that one or two who haven’t placed specific orders of this kind might complain when I simply bill them at my new rate, but in general I can say that my customers have accepted my new prices amazingly well.
That still leaves me with one problem, however. The reduction in demand I was expecting isn’t really happening and I’m left doing what I was doing last year: taking on as much work as I possibly can without compromising my quality of life (and sometimes pushing the boundaries quite a long way in that respect) and simply turning away the rest. This suggests to me that, far from being dangerous or reckless, my rate increase in fact didn’t go far enough. And, if things carry on the same way, I’ll certainly be looking at raising prices again next year.
So if you’re someone who was going through the same process as I was a the end of last year, and perhaps made a different decision to mine, my advice is to revisit the subject as soon as you feel you can. Increasing rates is always a nerve-wracking exercise, but, as I think I’ve proved, it can, and probably should, be done.