It’s wise, on occasion, to review your IT consulting fees and make sure you are earning a healthy profit margin. However, you may find it rather intimidating to approach existing clients with a rate increase.
In these situations, it’s useful to ensure you’re ready with some solid justifications for your increase in fees. This article suggests three items to focus on:
Your running costs. Each year, you can be certain that some of the costs associated with running your business will increase. Increased travel and fuel costs, insurance fees, and higher taxation can all steadily erode your margins. It’s only fair to pass some of these increases onto your customers. Having some specific examples of where your own costs have increased can help you to justify higher rates.
Demand for your services. If your skills and expertise are in demand, you can often charge higher consulting fees. If you have new clients who are prepared to pay higher rates, it’s not unreasonable to expect existing customers to pay a little more too. Obviously, you need to approach this sensitively, but no reasonable customer will expect you to work for them for a low rate when you could service an alternative customer for significantly more.
Consistent service levels. If you are able to prove that you consistently exceed the demands of your service level agreements and provide a highly reliable service, this can act as excellent justification for a rate increase. Customers are generally happy to pay well for excellent service—so if your relationship is good, a small increase is unlikely to offend.
How often do you increase your IT consulting fees? Share your strategies in the comments box below.
And to follow through on the tips introduced in this short article, especially if you also consult on SaaS or IaaS, be sure to enroll now in our free 7-day eCourse: Go-to-Market Strategy 101 for B2B SaaS Startups and Scaleups.