Knowing the right time and reason to increase your prices or day rate is a challenge for any small business owner.

As a contractor or small business owner, knowing when and how to increase your prices or day rates can feel daunting. However, charging what you’re worth is key to maintaining a sustainable business, rewarding your expertise, and securing your long-term growth.

To help you take that step confidently, we’ve outlined a clear approach to ensure your price adjustments are well-received and reflect your true value.

Evaluate your current rate compared to market rate

The first step to increasing your prices is understanding where you stand in relation to the market. Take the time to research the rates charged by competitors in your industry. How do your rates compare to the average? Are you positioned at the low end, mid-range, or premium side of the market?

Use resources like industry surveys, competitor websites, and platforms such as LinkedIn or Indeed to gather data. This benchmarking exercise will help you determine whether you’re undercharging and give you the confidence to adjust your rates accordingly. If your services deliver more value than the market average, that’s a strong indicator that you should be charging more.

Build a strong case

When increasing your rates, you need to provide justification that your clients can appreciate. Building a strong case is key to achieving this. Start by showcasing your achievements. Have you completed a particularly challenging project, received great feedback, or earned a new qualification? Documenting your successes adds to your credibility.

Another powerful tool is testimonials. Ask satisfied clients to leave reviews on Trustpilot or other review platforms to build social proof. Positive testimonials can serve as compelling evidence that your services are worth the increased rates. Incorporating these testimonials into your proposals can further bolster your case when discussing new rates with clients.

Timing is key

When it comes to increasing your prices, timing is everything. Choose a moment that’s least likely to disrupt the client relationship and most likely to result in a positive outcome.

For contractors, a natural opportunity to adjust your rates is when your contract is up for renewal. If you’re a small business, consider implementing price increases on an annual basis. This allows you to anticipate the conversation and prepares your clients for the possibility. The key is to avoid springing the increase on clients unexpectedly, as this can create friction. If the work you provide has expanded in scope or complexity, use that as an additional rationale for your rate adjustment.

Enhance your skills

As you prepare to raise your prices, enhancing your skills will ensure that clients feel justified in paying more. Continuous learning is essential in keeping your services relevant and competitive. Look for opportunities to gain new certifications, expand your knowledge base, or broaden your service offerings.

Clients will be more open to a price increase if they see tangible improvements in your abilities. For example, if you’re a contractor, learning new software tools or expanding into a new niche can justify your higher rates. Small business owners can enhance their appeal by offering complementary services, such as adding consulting to their offerings.

By staying ahead of industry trends and continuously refining your skills, you position yourself as a high-value partner that clients are willing to invest in.

Communicate your value effectively

When it comes time to discuss your price increase, how you communicate is just as important as the numbers themselves. Prepare a pitch that highlights your value clearly and professionally. Show your clients exactly how your services have benefited them. Did you help them save time, reduce costs, or improve their business outcomes? Make sure these contributions are front and centre in your discussions.

Avoid focusing solely on the financial aspect; instead, emphasise the value you bring. Be prepared with tangible examples of your work and point to specific results you’ve achieved. This makes it easier for clients to understand the return on investment they are getting with your higher rate.

Professionalism in your communication goes a long way. Keep your tone positive, solution-oriented, and collaborative. Instead of simply announcing a price hike, frame it as an adjustment that aligns with your evolving expertise and the increasing value you deliver.

Be open to negotiation

Finally, be open to negotiation. Clients may not always accept your rate increase outright, but that doesn’t mean you need to back down completely. Be prepared to discuss the terms and, where appropriate, offer alternatives. For instance, if a client is resistant to a higher day rate, you could propose retaining the old rate but reducing the scope of work or offering a small discount for long-term contracts.

The goal is to ensure that both you and the client feel the new rate is fair. Being flexible shows that you value the relationship and are willing to work toward a solution that meets both parties’ needs.

Remember…

Increasing your prices or day rates can be a significant milestone in your career as a contractor or small business owner. By evaluating your current rate, building a strong case, choosing the right timing, enhancing your skills, communicating effectively, and being open to negotiation, you’ll be well-equipped to raise your prices with confidence.

Your rates should reflect the value you provide – don’t be afraid to charge what you’re worth!