Not Raising Your Fees = Lowering Your Prices

I was reading a recent blog post about the folly of lowering prices that many small business owners fall into as they try to attract business. I want to also put forward the idea that not raising your fees on a yearly, or at minimum, biyearly basis is the same as lowering your prices.

In the VA industry I have seen this trend repeatedly. A Virtual Assistant sets up her business and after reviewing the market decide on a fee that reflects her skills, talents and experience. Quite often the VA is bold “coming out the gate” by saying. This is what I am worth." But if two or three years later, that VA is still charging the same rate then in effect this can be the equivalent of lowering her fees to get business.

Now I am not saying that a VA should arbitrarily be increasing her fees, but I assume the VA has developed more skills, picked up new experiences and invested in her talent and education. If she has not then maybe raising her fees is not appropriate. But it makes sense that when a VA started her business and calculated how much her skills were worth, that overtime her skills develop and naturally are more valuable.

Okay, so maybe you don’t agree with my viewpoint here. Then I ask you to look at it competitively. A VA can coast along for a few years, keeping her fees the same and keeping in line with what many other VAs within her community are charging. Suddenly one day she will notice that everyone around her is charging a lot more then she does and she realises that she has to raise her fees considerably just to be seen as being equal. To me this is creates a more complex situation to contend with because this VA’s clients are not used to pay rises and can be comfortable with the “status quo” and resistant to any change.

Some of us (me included) consider ourselves to be moxieful by sticking to our rates and not allowing prospective clients to bully us into lowering them. But in my view the real moxie move is educating our clients that fee rises will happen and then doing what we say we will by actually raising our fees. This idea made me “pull up my britches”, and take my fees through a review process… and yes they needed a raise.

So do you need to raise your fees? Recalculate your fees now and see if you are charging what you should. Hey and if you are part of the AssistU community, Stacy does a great class on this very subject.

Comments

[Laura Jo]

Great post, Petra. You are right on the money. If you don't do it often and in small increments, you find yourself way behind and needing to increase significantly in order to be competitive. A large increase can be a major turn off for clients whereas, incrementally, it's pretty much expected.

I haven't been in this position but I have seen others. One in particular was one of my clients. Fear of losing clients always held her back. She wouldn't have lost clients because she was the best. But she never would believe that.

[Vickie Turley]

Nice article - and I do agree!

I find that one of the reasons some VA's don't raise their rates as they feel it makes them out of line with "local standards."

Unfortunately, when we think like this, they are still using the "employee" mentality. We are not employees. We should not charge employee rates, nor should we set our rates at the employee standards.

Vickie Turley