Today’s Quote: Your most important sale is to sell yourself to yourself. – Maxwell Maltz
Welcome to another episode of the podcast that teaches you how to be a ridiculously good virtual assistant.
Today we are going to talk about raising your rates the right way.
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Connect with Tracey D’Aviero, VA Coach and Trainer
Episode Notes:
Today I want to talk about raising your rates.
It’s a common conversation in VA circles, I think we are always wondering if our rates are ‘right’.
I know that a lot of VAs I work with think their rates are fine where they are, and I think they are too low.
When I work with you, I will almost always suggest raising your rates, but I’ll never force you to!
At the end of the day, it’s your choice – but every decision in your business is easier when you are charging appropriately.
Remember you are running a business, and it’s important to build a foundation that you can build on.
One of the most common times I will suggest raising your rates is when you are trying to bring subcontractors in to work with you.
Your rates need to support paying someone else to do the work for the clients – not all of the work of course – you also have to allow for your admin time to manage the client and the sub.
But of course there are all kinds of reasons that you might want to raise your rates – here are a few:
- your demand is too high (ie you are booked out)
- you know other VAs who offer similar services are charging higher rates
- the cost of business is increasing
- inflation is ridiculous
- you are working too many hours and not earning what you need to earn
- if you aren’t making a profit, or if your expenses are not being covered
- if you haven’t raised your rates in a year
- if your clients are saying yes at every sales conversation
- you want to bring in subcontractors
Whatever your reason, there is a right way to raise your rates and that’s what I want to talk about.
First off, you don’t owe anyone an explanation as to why you are raising your rates.
It’s amazing to me that as I was doing research for this episode, I found two kinds of articles – one was for business owners, and the other was for virtual assistants. I have to say that I was disappointed to see most of the VA articles talk abot negotiating with clients, or asking them their opinion, or writing them a really detailed email as to why you would raise their rate.
It is discouraging, because it’s no one’s decision what your rates are – except yours.
I will say it again – you don’t owe anyone an explanation as to why you are raising your rates.
I even saw someone say that men won’t bat an eye when they change rates, but women are the ones that really have to explain it to feel better about it. Gah!
Keeping your prices current is part of business. It’s a business decision – and it’s yours!
So many VAs start their business charging too little anyway – so it’s going to be a decision you need to make at some point, and if you do it sooner rather than later your business will thank you!
Money is a confidence thing. A lot of us were taught never to talk about money. Maybe that’s where the hesitation comes from.
But I think it’s what I always tell you – that being in corporate, we are simply used to someone else being in charge of everything including how much we get paid – and that in the support role that we filled as admin assistants, we didn’t get taught how to value what we do and set a price for it.
It’s something you need to learn. I teach you to do the math using my rate calculator – so you can understand why you charge what you charge.
And now I’m going to teach you how to raise yours too.
First, if you haven’t done the math, go and download my rate calculator right now. I’ll leave the link in the show notes fot this episode!
It’s really important to know how much you need to charge so you don’t have to raise your rates every time you turn around.
Once you know how much you should be charging, then you have to figure out which client has to be increased and by how much.
When I was working with VA clients, I started charging $25 per hour (yes that was 24 years ago so you should not be charging $25 an hour now!). I was happy with that rate, but I could not grow my business at all charging such a low rate. And billing 30 hours a week which is very full time, I was only earning $875/week, which is about $600 after taxes, before expenses. To be running a business full time and only bringing in $2000 a month is not very much.
Then as I added clients I raised my rates for the new folks but I left my old ones at the old rates – simply because I didn’t know how to approach the conversation. Like you, I thought it was ‘fine’ to leave them at my older rate. And then a year passed and I still didn’t raise them. So dumb.
By the time my rate was $40 per hour, I still had a bunch of my old clients at $25, and the more I worked for them, the less money I made from my higher paying clients.
I’m all for being nice and building a relationship with my clients, but business is business. It’s not personal.
And guess what – over the years that I worked with those clients and did not raise their rates … they were busy raising their own rates for their clients!
So they were doing better business than I was, and here I was still sitting at too low a rate – and YES, I was a WAY better VA a few years in with them than I was when I started.
I absolutely made these mistakes, that’s why I always want to make sure that you don’t.
Let’s get back to when you last raised rates.
That’s one of the first things I’ll tell you not to do, is raise them too often!
If you just started working with someone, unfortunately it’s on you to quote the correct rates. I like to say that you shouldn’t raise them more than once every year, but if your business or skills or service offerings are changing, you can raise them six months in.
You don’t want to upset or confuse your clients. That’s why the math is sooooo important from the start.
So, you have your new rate. You know when you last raised your rate for each client.
Now you need to decide when you will raise the rates for each client.
No, this doesn’t have to happen all at the same time.
You can either raise them with the next retainer (I usually give a client 30 days notice), or you can give them 60 days if you prefer. But once you decide, set a date.
If the raise is substantial, you may consider stepping them up. I did this with a client that I was charging $25/hour for – when I told her I was raising my rates to $40 she panicked, but we decided she would pay $30 the following month, $35 the month after that, and then $37.50 the following month. I was okay to keep her rate slightly lower because she was a long term client, but I had to bridge the gap. And what we also did was really look at what I was doing for her over those three month. Instead of going through the motions, we decided what was most important and we kept that. We got rid of a few other things, and her monthly invoice only went up incrementally even though my rate went up. That worked for both of us. And it was still my decision and my rates so I don’t want that to be considered them having an opinion. It’s about working with their budget to make sure that you are doing what they need, at your rate.
If you raise your rates regularly, this will not be an issue for you, but in the event that you do have that type of thing happen I wanted to share a successful way that I handled it.
There were clients that were fine with the increase.
There were clients who were not. And we had to move them along to other VAs. Which is totally fine too. Don’t forget that you can get a new client at your new rate that you can work fewer hours for, while still making the same money.
We don’t want to lose clients, but if we haven’t managed them properly then it’s sometimes better just to let them go.
The other thing you can do when it’s time to raise your rates, is to convert them to packages.
I did this with a couple of my clients too. These clients used to bill approximately the same amount of money every month – about $750. So when it came time to increase that, I told them I would be going to a package rate for the same services they had previously gotten, but their monthly rate would increase to $900 – and I would add in a weekly production call or a new report for them that we weren’t doing before. Something that didn’t take a whole lot more time, but that would help use to be more organized, or keep an eye on our results a little better. The reason I found that this worked was that we are stepping up our level of professionalism for them – our expertise. The clients I moved to packages made things easy for me to ‘give myself a raise’ afterwards, because it was no longer a dollar per hour that I was talking about – it was a $50 or $100 increase monthly which is less visible to the client. And of course, it’s really smart to find ways to work more efficiently or find ways to automate things you do, so that you can get the work done faster and still earn the same amount.
Finally we have to inform the clients – and again I usually suggest to keep this as simple as possible.
You don’t have to explain to anyone why you are raising your rates. You simply let them know that you are, and when the change will take place. If you are proposing a package or have one of the special increase scenarios I described above, you have to make time to speak with your client. It’s too much info to just put in an email.
But a straight increase just requires an email. Usually I would send this along with the next invoice. When the invoice gets sent out, tell them that the next month (or the one after that) they will see the increase on their bill. It’s usually sufficient – the only one who gets nervous about it is the VA.
If you are raising it a lot, then be more aware of your clients – you don’t want to upset them or confuse them. You probably should be careful to only raise them a maximum of 20%. Like I said earlier, if you need to go higher than that, propose taking some tasks out of the to do list and keep the client’s monthly invoice down.
The most important thing is for you to be clear WHY you are raising your rates. If you aren’t able to confidently have a discussion with your client, then you will run the risk of getting pushback. This is what we try to avoid.
So ask yourself – why do you need to raise your rates? And answer that question. Believe that you need it. Understand why it’s important for you to stay in business – or stay profitable in business anyway – and then you will have no problem passing the message on to your clients.
And be prepared to lose some clients – it’s honestly okay. I had 12 clients, I raised the rates for 6 of them. I kept 4 of those 6. One stepped up over 3 months, three went to packages, and 2 we moved on within 60 days. I made room immediately for 2 new great clients at my new rate. Six months later I was only working with a total of 7 clients instead of 12, and I was earning more money. And you will too.
Above all, remember that it’s business, it’s not personal. And if you have outgrown your clients, that’s totally okay.
Need Some Help?
Raising your rates is something we can work on together in The Virtual Circle, my mastermind group for Virtual Assistants. Check it out at www.YourVAMentor.com/TVC (the virtual circle) – I bet it’s exactly what you need to get revenue coming in and running a better business.
If you need some help with setting or raising your rates, reach out to me at tracey@yourvamentor.com
I’ve helped hundreds of VAs through their challenges and got them on their way to growing their business through my private and group coaching. I’d love to do the same for you.
That’s all I’ve got for you this week, thanks for tuning in to learn to become a ridiculously good Virtual Assistant.