Pricing isn’t an exact science. Gratefully it doesn't have to be. What it does need to be is competitively set without devaluing the time and effort required to fulfill the client's requests.
When you are just starting to offer a new service like SEO, then it’s easy to fall into the trap of underpricing your services. Why does this happen? You may feel like your inexperience devalues the service, as one example, and not have the confidence to correctly price the real value you are providing.
Alternatively, perhaps you have been offering SEO services for years, but have legacy clients underpaying for your services, too.
Fortunately, it’s possible to raise your rates while adding value. When do you know it’s time to raise your rates? Let’s start by looking at the signs.
Signs that It’s Time to Raise your Rates
There can be a variety of signs that it’s time to raise your rates including:
- You haven’t raised your rates in a year or more
- You turn nearly all of your opportunities into new customers
- You are too busy and are overwhelmed by work
- You know your competition is charging more
- Your project profitability for your SEO services isn’t in line with other services you offer
You don’t need all of these signs to signal that it’s time to raise your rates — even one or two being true is indicative that a rate change is warranted.
The easiest place to start marketing your new rates would be with new customers. This way there are no explanations necessary for an increase, the new price is what they’ve been introduced to. Once you’ve successfully marketed the new pricing to potential clients, then circle back to your existing customer base.
Raising Your Rates for New Customers
After marketing your new price on your website to potential clients, you can focus on raising your rates for existing clients. Review each of your SEO services offerings — SEO Assessment, SEO Set-Up, and Monthly SEO. How many hours are you investing into these projects? Are your current rates accounting for the “real-world” time investment?
Here’s how we recommend you manage this. Create a spreadsheet that allows you to average your time for each offer. Then, compare your hours invested to the rate you are currently charging for these services. Does the income match the output of resources? Always ensure you are getting paid for your time.
That being said, as your experience grows, the time you need to dedicate to tasks may decrease. An SEO Assessment may have taken you eight hours the first time, but only took you six the next time.
Does that mean you should decrease your prices? No! In this case, you are evolving your pricing to be based on the value you provide not the hours invested. You may even decide to raise your rates on projects you can deliver in less time than estimated.
This should be the same approach you have towards the deliverables for your existing clientele. Raising the rates on them isn’t a reflection of more work, but rather the value you’ve been providing.
Raising Your Rates for Existing Customers
For most freelancers and agencies, this is the hard part. Raising your rates for existing clients can feel risky and/or awkward. How do I ask for more money? What if they leave? What if they no longer see the same value in the deliverable at the new pricing?
We can overcome these obstacles by providing choices, communicating clearly, and honoring our long-time customers with added value.
Let’s explore each of these dynamics further.
Providing Choices
When selling SEO services, we like to offer our prospective clients choices. And we like to think that they appreciate that. We currently have a Good, Better, and Best monthly SEO plan. Customers can select the level of service and price that is best for their organization. Over time, they may even move between these plans as their business evolves. This allows us to put the power of raising the rate in our client’s hands.
We also enjoy giving our customers choices so they don’t feel they are forced into a corner where they must choose between more costs or cancel the service.
When beginning to raise your rates, consider these two options:
- Option one is the current plan at the new, higher rate. This is what you’d like them to select.
- Option two is a lower plan at the current rate. This is the “less for more” option that will retain your revenue but decrease your time investment.
Communicating Clearly
Ultimately, your success in raising your rates will come down to communication. It’s via communication that your customers understand the value of your service, why you are raising your rates, and the options available to them to continue their monthly service.
One dynamic to this is to give them time to make a decision and plan for the increase. Some clients operate on fixed annual budgets. If you email mid-year with a price increase that goes into effect next month, you are instantly putting them in a tricky situation.
They already have a marketing budget for this year. They may not be able to change it. The timing here is everything. Instead, present the change when they are planning for their upcoming year's budget and the answer will likely be an easy yes.
Other clients may be able to implement a mid-year change but need time to get approvals within the organization. For these reasons, we recommend letting a client have 2-3 months between the initial communication of the change and when it goes into effect.
Email is a great way to first introduce a rate change. It gives your customer time to think about it and you can then later talk about the change during a monthly call.
We are here to help, so here’s an email template that you can use to inform your clients about your rate changes. This is just a template and should be customized to each client vs being sent out in a mass email fashion.
Subject: Rate Change for [Agency Name’s] Service
Hi [Name],
We've been working with [Client’s Business Name] for [X] years and value our partnership. We haven't raised our rates in this time and you might have wondered how we are staying in business.
For many of our newer clients, our pricing is [$X] for your current level of service. This includes:
- Reporting: Monthly performance reports.
- Content Marketing: Monthly blog post.
- SEO Maintenance: Ongoing action items for continual evolution.
- Google Maps & Local Search: Listing management and distribution.
I understand this might feel like a big jump.
We have another rate at [$Y] which includes:
- Reporting: Monthly performance reports.
- SEO Maintenance: Ongoing action items for continual evolution.
- Google Maps & Local Search: Listing management and distribution.
Of course, I'd like to see [Business Name] at [$X] as the current campaign is very effective and a large part of that is the steady content marketing component, but you are a valued client, and we understand if you'd prefer the lower option at this time.
Let me know which plan you'd like to continue with and know that we are right here to walk you through this. These changes would go into effect on [Date].
I'm also happy to discuss this and any specific questions or concerns you may have via video conference anytime.
Thank you for your business.
Best,
[Your Name]
Honoring Long-Time Customers
The final dynamic is the need to honor your longest-time customers. It’s often the hardest to raise your rates for these clients because you appreciate them the most. These customers are also the ones typically with the most outdated pricing.
To honor your long-time customers, you can offer a discount, offer a longer grace period before the price changes, and/or create a custom plan that gives them added value.
Whatever you choose as the value adds for these customers, be sure to communicate it as “As a long-time customer …” so they realize they are getting the special treatment they deserve.
What Happens Next
After you present your rate increase to your existing customers, one of four things will happen:
- They say yes. That was easy.
- They say no. This is unlikely but possible. Let the client know that you have appreciated working with them and start the offboarding process.
- They need some time. That’s ok. This is why we offer a few months to decide. Put these customers on a follow-up list for when the change is a few weeks to a month away.
- You get no response. This will require additional follow-up. A phone call would be a great next step.
Raising Your Rates
Raising your rates isn’t just about making more money or adjusting for inflation. It’s about getting paid for the value you provide.
The first step is the easy one. Review your customer list to determine which customers require a new rate in the coming months.
The second step is presenting your price increase to the customer. This may feel more intimidating but it’s necessary. Remember the value you are providing, communicate that value clearly, present the choices, and reward your best customers.
We’re Here to Help
We built Pathfinder SEO for agencies like yours who are looking to start and scale their SEO services offering. We’ll accelerate you through the process and help you avoid costly mistakes.
A subscription to the Pathfinder SEO platform includes access to all the resources you need to create your SEO services offering and effectively deliver the service. That includes templates, process documentation, and built-in SEO tools.
New Pathfinder SEO subscribers receive two free onboarding sessions with our SEO coaches.
Sign up for a subscription today.
