Should I increase my prices?

By Stuart 2 months agoNo Comments

In several agency meetings recently, the tricky issue of price increases has been discussed at length.

One agency owner told me that they hadn’t increased their prices in 5 years (He seemed quite proud of that!).

Increasing prices to existing clients can be a scary thing to do. However, if you don’t, this is what’s at stake…..

Let’s say that you go for a modest increase of 2% per annum. If your agency turned over £500,000 in 2013, then it would be turning over £552,000 in 2018.

In fact, a 2% annual increase in each of those 5 years, would have put an extra £154,000 into your bank account over those 5 years. Big Numbers!!

During that 5 year period, you’ll have increased salaries and your other running costs of the agency will also have increased. So, in real terms, your profitability will now be lower than it was 5 years ago.

But how do you do this? Surely it’s not as simple as just emailing all your clients telling them to pay more?…..No, it’s not

Your 7 point action plan to increase fees with existing clients

We’ve agreed it’s not as straightforward as “just doing it”. Here are your 7 steps for making it happen:

1. Tackle each client individually and systematically. You may find that prices need to increase by more for some clients than others (for example, a long-standing client who has never had a price increase may need a bigger one than the client you signed last year). I would start with a small client or the least profitable and build your confidence from there

2. Review the timesheets. Where is time being spent on this client and where is it being wasted. Is work been done at the right level, by the right people? Are there any internal efficiencies we can implement to reduce the time spent on this client?

3. Review the original contract. We all know scope creep is one of an agencies biggest enemies. Over a long period of time, how has the relationship changed versus what was laid out in the original contract? As well as price increases do we need to revisit the work done for the client and reprice any extra work?

4. Look at the importance of this client to the agency in terms of size, niche and relationship. Ask the client questions about how they view your relationship and internally review the value that you’ve delivered to the client over the period you’ve worked together.

5. Choose your timing carefully. There’s never a perfect or even great time to discuss a fee increase. However, doing it straight after the client has had an issue with your agency, ain’t the brightest of ideas! Perhaps after you’ve delivered a valuable piece of work and the client has given positive feedback is about the best timing you’ll get.

6. Practice, practice, practice. When you arrive at the meeting, you need to be brimming with confidence in your service and your new, increased price. Stuttering through the conversation and not being confident puts you in a weaker negotiating position. Try and anticipate what objections you’ll get and rehearse your answers. Whatever you do, don’t wing it!

7. Be prepared to revise your services and relationship with the client (Be prepared to say no!). If they don’t accept the increase, what’s your next position? What services could you reduce, could you use more juniors on the account. Could you accept a lower fee in return for an introduction to an ideal potential new client?….negotiate, negotiate, negotiate

Not all clients will agree, and not all negotiations will be easy. However, by preparing properly and having a clear presentation of your value, you should be on your way to negotiating a price increase across the board

Photo by Kyle Glenn on Unsplash

Should I increase my prices? Accountancy Extra

 

 

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  Creative AgenciesProfit Improvement
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