When was the last time you raised your fees? If your business still quotes T&M most of the time, now is the time to make the change. If you set fixed price fees based on estimated time, you might consider moving to “value pricing” this year. Don’t wait; it’s the New Year, meaning people are open to change.
If you’re looking for justification on fee increases, look at the value you bring to your clients. If your value is low, it’s time to upgrade. However, most companies I talk to insist their value is high and their clients are highly satisfied. If this is the case, you have justification to raise your fees. But don’t penalize your existing customer contracts. Guarantee pricing to your best clients while you move new business opportunities to new prices. Consider adding new offerings to your existing programs that deliver more value with a higher price. Figure it will take several months, if not a year to see bottom line impact, so get started now. Those who wait until their income statements are in a crisis will be sorry.
Some considerations. It’s time to charge more if:
o You are losing money on existing contracts
o Installations are coming in with lower margins than expected
o Fixed prices are turning into losses
o You are the low price leader in a high-tech market
o Larger companies won’t consider you because of amateur pricing levels
o Your business is project oriented
o Your value exceeds your price
© 2010, David Stelzl