How to raise the rates you charge clients

Oh my, I could not resist posting this one!

What appears below is only the beginning of this article, but the portion I’ve put up

In this blog-post is, I think, sufficient to get the message across.

The article was authored by a CPA and is intended for CPA’s.  But, think of this article in terms of your business – raising prices to your clients; does it make sense for you to do what this author says?  If you tried it, would it be successful?  (If you use a CPA firm, don't be surprised if your rates go up this year; your CPA may have read this article!)

“How to raise the rates you charge clients” You should be billing what you’re worth — and raising prices isn’t as hard as you might think. June 10, 2013 By David W. Cottle, CPA

Editor’s note: This column is an excerpt from the book Bill What You’re Worth, by David W. Cottle, CPA.

Suppose after performing the analyses in chapter 2, “How Much Do You Really Earn?,” you decide your prices are too low. (Note that although this book uses the phrase “raise price,” when you discuss prices with clients, you never “raise” prices, you always “adjust” prices.) So, how do you raise them? You raise prices by raising prices.

Example: You charged Tina Taxpayer $565 last year, and you think she should pay $700 this year. Just do the work, and invoice her $700. That’s only about a 24 percent increase. Most people have no problem with increases of less than 25 percent to 30 percent.

Example: You charged Clark Client $475 last year, but, after reading this book and looking back at the value of what you did, you think you should have charged $750.

If Clark’s past record holds, this year will be even more complicated, perhaps to a fair price of $800 or more.

After Clark brings in his information this year, but before you start work on it, you say, “Clark, I went back and looked at what we charged you last year, and I realize that we should have charged you $750 for the work we did. Also, we have made some adjustments to our prices since last year. This year, it looks like the price for your return will be about $800, assuming it is no more complicated than last year. If it is more complicated, the price may be higher. Because this is significantly higher than we have charged you in the past, I wanted you to know about this price adjustment before we started work.”

If Clark has a problem with a $750 or $800 price, it is better for you to find out before doing the work. This gives him the opportunity to take his business elsewhere and gives you the opportunity to stop working for less than you are worth. It’s as simple as that.

Do you have to ask permission from most of your clients? No. Do you have to notify your clients? No. Just do it. Just go into your time-keeping system and raise your chargeout rates to whatever you feel is fair—even if you don’t discuss the concepts in this book with your billers.