I have had a lot of clients lately who have come to me looking for ways to increase the rates they are able to charge clients without losing them. So many are providing a Rolls Royce solution but only charging Lada prices. They realise that they are doing a lot of good work and yet not getting paid enough for it.
If you are in this situation then a good first step is to check the market to see what your competitiors are offering. You may find that if your client could go someone else but they would be unlikely to get the same level of service. Alternatively, you may find that you are about the same but that does not mean that you cannot still increase rates provided you have something additional to offer. Ideally something that does not cost you a lot of money but is valuable to your client and worth paying extra for.
The technique I use with clients makes it much easier to negotiate changes is rates. I call the technique ‘Terracing’ and it involves creating multiple service levels.
For example, I was working with an adviser who was attracting lots of clients based on low rates but frustrated that he was not making enough money from it. His service level was much higher than it needed to be, yet he was uncomfortable with charging more or taking away some of the services.
One service that he was providing was travelling to see clients rather than them having to come to see him. During the traveling time he was stuck in the car and not earning. He did not charge for traveling time. We worked out some service packages and gave them each a name, list of contents and price. There was a service package that had the current pricing but excluded some things like traveling which went into a higher level package with a higher price.
The outcome is that most of the clients were quite happy to accept the lower service level which meant that although the sales income for those clients did not increase, the service became more profitable and freed up a lot of time. Some clients did decide that having the extra service saved them time and money and were happy to pay the extra. Giving them the choice made the negotiations so much easier.
If you are currently charging a reasonable rate for what you do then you could still look at the Terracing technique in order to create more revenue by upselling certain clients onto packages that provide extra value added services. Creating lower tiers can make lead generation easier by using price and then upselling to the high value added packages if required.
Terracing is a great approach that has worked very well with clients. What is your experience with this approach? Have you used a different technique to increase rates?