The Big Question: Should You Raise Your Rates?
We have written a lot in the Symmetry Collective Knowledge Hub about getting yourself in the right mindset to get things done.
Although this is important, we think it is also essential to talk about the hard topics of running a business. Because it doesn’t matter how motivated you are, or how awesome your social media marketing strategy is – eventually you will be faced with making tough financial decisions.
And one of the most common of these is deciding whether to raise your rates.
Wellness practitioners face this decision often.
It can come from financial necessity, or because you are finding a new level of success and want to get what you deserve!
Or maybe you heard what someone else in your area is charging, and you want to meet the market and avoid selling your services at a discount.
Whatever the reason, this is not a decision that should be made without deliberating.
Let’s dive into answering the million-dollar question of whether you should raise your rates.
Know Your Financial Status
This step is so important.
When you make any decision that directly affects the financial drivers of your business, you need to have full awareness of your financial standing going in.
This can be difficult for wellness practitioners who are managing their business finances for the first time, because:
- You may not be making enough money to hire an accountant, tax specialist, or financial professional.
- Your personal and business finances may be blurred.
- Your finances may be chaotic. Both expenses and earnings can feel sporadic as you experience running a business for the first time.
Regardless of these challenges, you need to know where you stand before you make decisions.
Hopefully, you have been building your business in a lean, budget-conscious way so that runaway expenses don’t drain your cash quickly.
If you truly don’t know the state of your finances, consider reaching out to your local small business center. There are often financial professionals available for free (or reduced rates) who can look over your numbers, and give an idea of where you stand.
Whether you seek help or not, make sure you have recorded key financial metrics for your business.
The next big question you are seeking to answer is whether you can afford the risk of fewer clients, which could sink your business (even if you are charging a higher rate).
Understand Your Market
We have recently written about the importance of finding a niche for your wellness practitioner business.
This gives you greater opportunities to specialize and charge a higher rate in the long run. But regardless of your niche, you need to understand your place in the local market.
Here are some aspects of the market that many business owners feel they have a handle on, but are actually quite difficult to quantify:
- The number of people in their area who will pay for their services.
- Whether these people are sensitive to price increases.
- How major market forces like inflation are affecting how their clients spend money.
Here are some other aspects of the market that business owners can quantify with some independent market research:
- How much competitors are charging.
- Whether competitors are raising their rates lately.
- What kind of promotions competitors are running.
These are the best ways to get an idea of what is happening in the market.
Call around and jot down competitor rates, and sign up for their email newsletters (using a fake name is a good idea) to see what kinds of promos they are running to drum up business.
If other businesses are raising their rates, then this is a sign you could raise your rates. But remember, this is an opportunity to pitch yourself as a cheaper alternative if what your business really needs is more volume.
What Will Your Clients Think?
This is the toughest part of deciding about a rate increase: how your ever-loyal clients will react.
First, you should be confident in the quality of work you are providing, with positive feedback from your clients as proof. Getting referrals from your best clients is a great sign of this, especially if they are quick to sing your praises after you make your first impression.
If you are ready to commit to a rate increase, start thinking of how you communicate this to your clients. The way you go about this will have a major impact on how it is perceived. Remember to practice transparency to maintain trust.
Here are a few tactics you can use to ease your clients into the idea of your increased rates:
- In a message to your clients, explain why you are raising your rates. Emphasize new services or training that you are incorporating into your practice.
- Offer loyalty programs or promotions for existing clients, so they receive an added benefit for sticking with you while you grow your business.
- Consider “grandfathering” existing clients at lower rates (this can be done for a limited period of time).
Growing Your Business By Offering a Premium Service
There’s one more thing worth mentioning that we wanted to leave until the very end of the article.
If you do your job right, some clients will perceive your higher rate as indication of a premium (or even luxury) service.
This isn’t something that you want to let get to your head! But it is an important part of the brand messaging strategy that you will use while you grow your business. As you consider your marketing strategy (especially on social media), make sure you are putting out a message that is consistent with the price you are setting.
At a certain point, this may mean it is time for a new logo, outsourcing your organic social media to an agency, or working with local influencers.
Are you still unsure whether it is the right time to raise the rates for your wellness practitioner services?
Working with a community of like-minded entrepreneurs could be a great way to answer your big business questions. If you are looking for a coworking community in the Denver metro area, check out our Symmetry Collective locations today!