How to increase your fees
Increasing your fees is actually extremely easy. Once you are charging something (anything) for the work that you do, it’s only a matter of time until you gain confidence and start to understand your value added. Then you can start to increase your fees accordingly. Therefore, don’t worry too much in the short term about not charging as much as you would like, or as much as you think you might be worth; this will come. Instead, focus your energies on providing a great (and ever improving) service to your clients. The better you can do this, the easier it is to demonstrate your value to new and existing clients who may challenge your fee levels.
Remember, clients have every right to challenge your fee levels and will often back off immediately if they can see that you know your own value and are prepared to talk with them openly about the issue. This need not be a heavy or aggressive discussion, but one in which you are clear and confident in articulating your value.
Reducing client numbers but increasing income via fees
By increasing fees and charging what you are worth, even if a percentage of clients do leave (and in my experience this doesn’t happen), you will still be in front. Increasing your fees allows you to have less people generating more money so you can afford to spend the time required to service them well. This is a win for you as a business, as well as for the clients that are prepared to pay for good quality advice.
A very good accountant I knew when I was working as an adviser in Australia asked me the question:
What would happen if you doubled your fees? Would 50% of your clients leave you?
It was a hypothetical question and he wasn’t literally suggesting I do it, but he made a good point. On reflection I thought it highly unlikely that 50% of my clients would jump ship if I doubled my fees.
This raises two issues:
Even if 50% of clients did leave you and your revenue stayed the same, you would be better off with fewer clients to serve and lower costs as a result. A major win.
If less than 50% of clients left, you would improve revenue and profitability significantly by having fewer clients to serve than you do currently. Also a win.
The accountant’s point was that if either of these outcomes seem likely, there is room for a higher fee level in your business. So why not give it a try? You don’t necessarily need to increase by 50%, but an increase of any description will improve your bottom line.
Some final questions to consider
If for any reason you still find that your pricing is uncertain, work through these questions in a quiet moment:
- Why am I fearful of charging what I need to charge to become adequately profitable?
- Is it because the packaging and communication of my value to clients is not yet good enough?
- Is it because my back office is inefficient, making me a high cost producer of advice?
- Is it because I am not convinced clients will pay the fees I want?
If confidence in your business is an issue, don’t panic; every business owner can have these moments as they try to improve or change their business.
Take small steps in increasing your fees.
If you can’t make the jump to where you would like to be instantly then increase your fee levels as much as you can for now. Then try that with your next few new clients and gain some confidence as people say yes. They will say yes, and if the occasional person says no, evaluate how big a loss this is to your business. Sometimes the clients that say no are the ones you really don’t want anyway.
As you gain confidence, keep moving your fee levels upwards. Using this approach it will only take you a matter of months to get to where you need to be. One step at a time will still get you to your destination.
By Brett Davidson