How to Raise Rates Without Losing Clients

Regardless of your computer repair business model, at some point you need to raise your rates. Your vendors will increase their rates. If you want to keep earning the same money, you need to charge your clients a higher price. It’s scary, but necessary. With these tips you’ll make the change with minimal disruption.

Legitimate Fears in Raising Your Rates

If your business is successful and you’re making money, the last thing you as a computer repair business owner wants to do rock the boat. If you raise your rates, and someone in town offers a lower rate, your clients will jump ship. Sure you’ll make more money in the short run, but you’ll have fewer clients and end up making less money.

While loss of clients is a real fear, it shouldn’t stop you from raising your rates. Even if you don’t change your rates, you always risk a competitor offering the same product for a lower price. If your clients aren’t loyal to you, then they aren’t your clients. If they are price conscious, residential clients will switch the minute they see an online deal for someone else. Computer repair businesses that cater to other businesses face the same loyalty problem. If another company saves your clients money buying computer service, why not go with the lower price?

The key is to provide excellent service and create value for the client. If they trust you and want to continue to do business with you, a small price change won’t bother them. If you make a huge jump in price, the client may have sticker shock. Increase your prices at regular intervals–more on that later.

How to Determine Your New Rate

Both new and existing computer repair businesses face this question. You should base your price on market conditions, expenses and positioning. The rate in a small town differs from a major metropolitan area. If you have an office or shop, that increases your costs. You may decide to be a low-cost leader or a premium service with a premium price.

At least once a year, you should survey your competition in the area and determine pricing. Find out who your competition is by researching on Google, yellow pages, chamber of commerce listings, review sites like Yelp and basic word of mouth. Create a spreadsheet with the names and numbers of these businesses. Put in that spreadsheet a list of common services you offer. For example, in my spreadsheet I have

• Malware removal
• Transfer data to a new computer
• Replace a failing hard drive

I wouldn’t recommend calling these businesses yourself. While there isn’t anything wrong with calling the competition, it’s awkward. I have a friend call or I use a virtual assistant service.

Once you have this information, you then know the price range in the area. I set my business to be in the 80% price range. My price should be higher than most other companies so I don’t get price conscious clients. I also don’t want to be the most expensive service in the area. Listen to your clients about your rates. If they say you aren’t charging enough, then you aren’t charging enough. If they’re offering generous tips, that’s another sign you’re charging too little.

How to Announce Your Rate Increase

Most clients understand prices go up, so there is no need to justify your increase to clients. I see this mistake all the time in other businesses. I lose respect for the business. The common excuses include

• We haven’t raised our rates since …(my internal response-”So why raise them now”)
• Our expenses have gone up … (my internal response – “That’s your problem, not mine”)
• We want to pay our employees more … (my internal response – “Again, that’s your problem”)

Instead of explaining a change, just state what your current rate is. For new clients, quote them the new rate. Put the new price on your marketing materials and outgoing voice message. Don’t say it’s a new rate, but you’re welcome to date the rate card. For example, “Our rates as of June 1st are as follows.” If someone mentions a piece of marketing material with your old rate, honor the old price. Tell them what the new rate is going forward.

For existing clients, you must give them plenty of advance notice. Three months is a good time frame of time to let someone know. In the short term, this can be a boost in business. I prefer a personalized letter instead of an email. An email might end up in junk and you want to use this as a sales opportunity.

You’ll want to raise your rates on a regular schedule so existing clients expect the change. Every business raises their rates. You want to avoid the “big” price jumps at irregular intervals. Business clients, in particular, have a tough time budgeting for large rate increases. The start of the year is a typical time to raise rates, but you might want to do it during a slow period to help increase sales.

How to Soften The Blow and Increase Sales

After you state the current price for your services, try to offer the client something positive in the email.

• Grandfather rate
  Always “grandfather” or allow existing clients a grace period at the old price. This offer can cause an immediate uptick in business, so send the announcement during your slow period. If you can track the purchases, allow them to buy service in advance. You’re offering them a discount because all new clients get the new pricing.
• Remote support
  If you don’t already offer remote support, now is the time to suggest it. Most computer support businesses offer remote support at a different rate than onsite or shop support. They might charge less per hour or job, or have lower minimums per hour (15-minute increments instead of an hour). Check our vendor’s list if you are on a lookout of Remote Support services
• Value-Added Services or Packages
  Consumers love a deal, so offer them in your rate-announcement letter. The deal doesn’t have to be a direct discount. You’re already giving the existing clients a discount off your new, existing rate. This letter is a chance to offer a computer tune-up at a lower price or test their backups. Check the forums for ideas of services to offer your clients. Explain to them the services you offer that they might not have known about. If you wish, give them a limited-time discount to try out that service.
• Referral Bonus
  If you have existing clients who like your service, leverage this letter as a way to get more business. Many computer repair business owners will offer a referral bonus to existing clients. Sometimes it’s a gift, a discount on future service, or direct payment. If you decide not to do this, allow new clients to try out your service at the rate you’re offering existing clients. That’s an incentive to try out your services before your rates go up.
• Thank them for the business
  It sounds obvious, but I see few businesses sincerely offer thanks. This paragraph ends the communication on a positive note. Let clients know in a short paragraph about your business successes and how they’ve been a part of it. A great example I recently saw was “We’ve been in business ten years and we couldn’t have done it without you. Thanks for trusting us with your technology needs and we look forward to assisting you in the future.”

Raising your rates doesn’t have to be scary or difficult. It is a natural part of any business. If you do it right, you’ll not only increase your profit per sale, but increase your sales overall.

Written by Dave Greenbaum