You've Been Thinking About Raising Your Rates...It's Time

As an accounting firm owner, you've probably been hit with rising costs which have cut into your profits over the past few years. The price of everything from office supplies to professional liability insurance steadily increases while client fees remain stagnant.  

Raising your rates is one solution that would offset the cost of running your firm. But there’s often a gap between first thinking about a fee increase and actually implementing one. That’s especially true with legacy clients.  

Well, it's finally time to take the plunge. But raising rates is tricky with long-term clients who are grandfathered in with your older pricing.  

Smoothly making this transition requires some planning and foresight. 

Check out this video about the 6 mistakes to avoid:

You’ll want to avoid these 6 common mistakes when telling your legacy clients about your new rates: 

Mistake #1: Avoid Getting Defensive 

You've run the numbers, and a rate correction is necessary (and probably long overdue).  

When you share about the increase, expect some clients to push back or complain. You probably already know who’s going to challenge the value of your services.  

Solution: Raising rates is a business decision, not a commentary on your abilities. Remain neutral as you acknowledge any client concerns. For example, you could say, "I understand your concerns about the rate increase. Doing this lets us maintain the quality service you deserve." 

Mistake #2: Don’t Apologize   

It’s natural to apologize when speaking with someone who’s upset about a fee increase. But, saying sorry is the same as admitting guilt for doing something wrong. 

There’s no wrongdoing here. Raising prices is a necessary step that strengthens cash flow and improves profit margins.  

Solution: The "broken record" technique is like a stuck record that keeps repeating the same message. It's a calm but firm way to deal with someone who's arguing and not listening.  
 
Pick a neutral response you’re comfortable saying. Without getting mad or apologetic, simply repeat that same statement every time your client tries to convince you to lower your fees. “I understand this fee increase might be unexpected. Raising our fees was not an easy decision. However, this allows us to continue with the quality service you deserve.”  

Mistake #3: Not Taking the High Road 

You find yourself dealing with an angry client. Realize that person isn’t mad at you. They are frustrated with the price change.   

Your response may be the deciding factor between whether they remain with you or whether they move on.  

Getting flustered, arguing to justify your fees, or losing your temper only heats things up. It’s not effective. 

Solution: Remain calm and professional – no matter what. Take a deep breath and keep your cool. This can help an angry customer become less upset.  

Discuss the options, and if they decide to move on, then respect that choice.   

Mistake #4: Justifying Your Costs  

When explaining a rate increase, don't lean too heavily on rising operational costs as the rationale. While overhead like rent, payroll, insurance, and tech steadily rise, it doesn’t matter to them.  

They're experiencing a similar reality, too. Your clients are thinking about their business costs and how this impacts their bottom line.  

Solution: Shift the conversation to the client benefits.   

Highlight the time you save them, the proactive insights your firm provides, and how your services directly contribute to their financial success. For example, "Our clients work with us because they know we’re committed to offering a personalized service and fast turnaround times." 

Mistake #5: Not Anticipating Attrition 

A 10-20% client loss after a rate increase is typical. With some client-centered firms who follow a proven system like the Raise Your Rates Formula, one hundred percent of your clients accept your new fees.   

But here's the silver lining: the clients who leave are often the most price-sensitive clients who don’t value the full scope of your firm’s services.   

Solution: A fee increase cleans up your client list. Your firm continues to engage the higher-quality clients, and the headache clients move on.  

Do the math. Even if 20% of your clients leave, you ought to continue earning the same revenue (if not more), and you reduce your workload.   

Mistake #6: Overlooking the Opportunity 

Don’t get fearful when a client threatens to leave. Instead, be mindful of the old adage, “when one door closes, a new one opens.” 

So, consider this a recalibration.  You’re making some changes within your firm.  

Solution: By shedding a few clients, it’s now possible to: 

• Offer current clients a higher level of service 
• Accept a new project  
• Engage new, higher-caliber clients 
• Focus on business development 
• Improve your work/life balance 

As a client-centered firm, you've already proven the value you provide to your clients.  

Smooth the Path to Higher Rates 

The right mindset, clear communication, and a focus on client value are the keys to successfully raising your clients’ rates. As a result, you’ll minimize churn, attract better clients, and ultimately build a thriving accounting firm. 

Raising your rates is a powerful move for your firm's well-being. Once you've done it, you'll wonder why you waited so long.  

About the author:  

Loren Fogelman, founder of Business Success Solution, has been steadily recognized by HubSpot in its annual list of the world’s top 22 business coaches. 

As a keynote speaker, Loren delivers talks and workshops across the United States at major accounting conferences such as Scaling New Heights.  

Loren is an expert in pricing strategy and sales. She coaches accounting firm owners to shift away from the “dollars-per-hour” business model to a value-based model that reduces workload by as much as 50% while doubling revenues.