Daily Directive: 070424

Project Focus: ARM

Yesterday, we printed a list of our clients, and highlighted those we believed would quit over a rate increase.

Many founders might look at that list and say “These are some of my most problematic clients.” That’s another topic, but your worst customers usually have more than one red flag (they’ll complain about your pricing AND show up late / or they’ll break your policies AND complain about your parking / etc.) In these cases, a price increase is actually just an easy way to remove your worst clients from your book and make room for better clients.

Your job now is to communicate your price increase with 3 groups of people: your staff, your worst clients, and your existing clients. Your future clients don’t need to know that the price has changed; they’ll simply hear the new rate when you present it to them.

1 – book a meeting with your staff a few days before you raise rates for your existing clients. Explain that rates need to go up to create more opportunities to them. Resist the urge to cry poverty or showcase your martyrdom. Focus on how a rate increase will benefit THEM.

2 – book quick calls with your highest-risk clients (if you want to keep them.) Present your 2024 rates and work through the conversation–but resist the urge to back down or negotiate some special snowflake deal for them.

3 – write an email and blog post and private group post to all of your clients. Schedule it for Friday. Don’t over-explain, don’t apologize, and don’t promise anything in the future. Keep it as simple as possible. The key is to write it; schedule it; and then monitor the response for 48 hours.

There’s a lot to this, and most entrepreneurs will feel nervous about raising rates. But raising rates is a test of value. If your clients value your service, they will pay more. If they start cancelling their membership or appointments because of the rates, that’s a signal to change your service OR to change your clientele.

A mentor’s help in raising rates is infinitely valuable. They can help you roleplay the conversations with your staff and your highest-risk clients; give you templates for the email; and provide support through the change (because you’re going to need it.) In fact, a small rate increase could pay for mentorship for a whole year, in many cases. And since rates never go down again, you’ll benefit from this change forever.

Rate increases are one of the most powerful changes you can make to your business. The difference isn’t just in revenue; it falls straight to the bottom line, because expenses don’t increase with the rate change. It’s also one of the most scary, because it IS a test. But if you provide a valuable service, your best clients won’t have any problem paying a bit more.

This project started on April 3, 2024. Start with that step.

What do ARM, LEG, EHR, ROI, HEAD and NOB mean? Click here

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