Reviewed & Fact-checkedAn effective price increase letter can be the difference between barely making ends meet each month and having more than enough. The idea of sending your client a price increase letter can leave you with an uncomfortable feeling.
It leaves you wondering — will they accept it? Did I ask for too much? Am I going to lose a client?
When sending your price increase letter, you need to feel confident in your ask and what you’re worth.
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Below, you’ll find our best advice on creating a successful price increase letter, how to determine your rates, and more. Plus, you can utilize our free sample price increase letter below so you’ll never feel uneasy again.
What is a price increase letter?
At one point or another, any freelancer or business owner will have to write a price increase letter. A price increase letter is pretty self explanatory: it is used to inform a client that on a set date your rates/prices are going to increase x amount.
This is particularly true of freelancers who started out finding jobs on freelance job sites like Upwork in order to get started and have now want to begin building a business and reputation outside of these freelance marketplaces.
A well written price increase letter will not only inform the clients of the impending rate change, but assure them why this increase is required, and that continuing your working relationship is mutually beneficial.
When is it time to raise your rates?
There are countless reasons why price increases are necessary.
Is your income not up to par with your skillset?
Do you want to change your pricing structure?
Do you feel you offer more value than what you’re getting paid?
Are you absorbing more overhead costs required to continue to deliver value for your clients?
These are all reasons for a price change, but before you move forward with writing your price increase letter take a look at some of the most common we have listed below.
- When sending a price increase letter, be transparent and upfront about your reasoning.
- Give clients advance notice and allow for open communication and negotiation.
- Emphasize the value and quality of your work to help justify the increase—not personal reasons.
7 Reasons to send a price increase letter and increase your rates
1. Your business costs have naturally gone up
One simple reason you may want to send a price increase letter is that your own costs have simply gone up. This could include an increase in your rent, new software you invested in, or any other costs of doing business that have changed in your day-to-day.
2. It’s time to change the way you charge your clients
Maybe you want to go from charging hourly to project or value based pricing. Hourly rates can hold you back from making what you actually deserve. As you have gotten better and quicker at delivering your work, your time spent has decreased and, in turn, so does your income. These changes call for a price increase letter!
3. Your pricing is far below market rate
You have been undervaluing your work and it’s time to start making what you deserve.
4. Too much work with not enough time
Raising your rates will help you keep higher paying clients and minimize the chance of you being overworked and undervalued. This can also help to eliminate those bad clients you dread working with.
5. Your skillset has broadened
Over time you have perfected your craft, learned more skills, and brought more to the table for your client. It’s time that your prices reflect the work you’re putting out. Sending a price increase letter is completely justifiable when you have improved and can deliver more value to your clients than previously.
6. You simply want to make more money
Whether the increase of revenue is to grow your business or just your bank account, raising your rates is necessary to achieve your goals.
How to figure out your new rates
Finding out how much to charge your clients will always be a situational scenario. There is no one right answer for everyone, unfortunately.
For starters, try using our free Freelance Rate Calculator which will give you an hourly rate estimate based on what you’d like your annual income to be.
I believe that you know within yourself whether you are happy with your rates. If you feel you’re worth more, then try charging what you think you’re worth and see what happens.
A good rule of thumb, in which I’ve heard numerous times from fellow freelancers, is if nobody bats an eye at your prices, then raise your rates. And even if you get one “no”, don’t just stop — give it at least a few tests before determining your rates are too high.
Test price changes
A great way to know whether you’re charging the right amount is to test out some price changes. You could try sending a price increase letter to two different clients, testing out two different increases.
For example, if you currently charge $40 an hour, try increasing it to $50/hour for one client and $60/hour for the other. If the $60/hour client is accepting of your price increase without question, you know then that your client believes the value you provide matches the increase in your rate.
On the other hand, if your $50/hour client declines the price increase letter, then maybe they don’t quite see the value you bring to the table. In this case, if you can afford to, move on to finding clients that do see the value you bring.
Finding your perfect rate is a work in progress, but the worst thing you can do is be stuck on one rate for too long.
What if they can’t afford the price increase?
Don’t stress when sending out a price increase letter. Feel confident in your work and you deserve this price increase. However, you should be prepared that some clients may not be able to afford your new rates. At this time you have a decision to make.
Are they a client worth compromising for?
Some clients may very well not be worth compromising your new pricing for. The difficult ones that only bring you headaches can hit the road, if you choose.
Ask yourself: do you enjoy working with this client? Is the work they bring you rewarding and challenging? Do you get excited when they present you with a new project?
If your answer is no to most of the above, then it’s probably not worth continuing the relationship.
Other clients who you still wish to continue working with may be worth compromising your new rates for. Together, come up with a middle rate that they can afford and you are still making what you deserve.
Be sure you’re still happy with the compromise, because when you compromise your rates for work that doesn’t excite you, you’ll begin to not care about the projects and therefore will be providing lackluster results. It’s better not only for you, but also for your client to move on if they can’t pay you what you’re worth.
How to tell clients about your price increase
As in any relationship, communication is key to its success. Your working relationships with your clients is no different.
To be successful you need to have clear communication at all times, especially when dealing with the financial side — because nobody likes surprises.
Sending your price increase via email is totally acceptable. Make sure you address it to the ‘higher up’ that has the final word, and you could also cc the Accountant so they are looped in on the change in business expenses on their end.
How to write your price increase letter
When writing your price increase letter, you want it to be received well. If you have any doubts in your ability to communicate well, writers from this company can help you to prepare the necessary cover letter or complete other writing tasks.
If you are confident in your abilities, try to create a letter by yourself using our advice below. Here’s a few tips on making sure your client takes the increase with ease:
Direct and simple
When writing your price increase letter, don’t make it confusing.
Be straight, honest, and to the point. Make it clear what you’re telling them, and write confidently. If you are uncertain about your price increase, it’ll most likely show in your writing.
Remember, you more than likely have built a good client relationship over a period of time, so approach this letter with a friendly tone that doesn’t come off forceful.
Justify increase
If you’ve done steady work and built up a nice portfolio, you’ve probably justified an increase in your rates just by pure experience.
However, the client may not see it that way. They could think you are doing the same exact work, but at a higher cost now.
Explain briefly that the experience you’ve gained makes you an even stronger asset to their company now, and you’re capable of handling anything they send your way.
You could also go into detail about the positive results they’ve seen from working with you — there’s no denying it when you’ve helped them grow.
Add value
A great way to gain the approval from your client on a price increase is to provide an added value to them.
In your price increase letter, always start out by showing your appreciation to your client for their support in your business. Explain to them what the new rate increase is, when it goes in effect, and then give them a little bit of an incentive that won’t make them hesitate on it.
For example, if your rates are going up January 1st, give them the first 2 months at your current rate for being a loyal client. They’ll most likely appreciate this gesture on your end.
Give client plenty of notice
When sending out a price increase letter make sure you give your clients plenty of notice before the price change goes into effect. Springing a price change on them would not go over well and could receive a negative response.
A reasonable notice is 30 days prior to your rate increase, however I wouldn’t recommend anything sooner than that. In fact, the longer the better, because if for some reason your client can’t afford you anymore, they may need time to find someone new to work with.
A price increase letter sample for you to use
Ok, we’ve told you all about a price increase letter — what it is, reasons to send it, when to send it, how to set your rates, and more — but now it’s time to see it. Below, we have a free sample letter for you — just replace the copy in bold brackets with your own:
If you’d rather access your own copy of this template as a Google Doc, enter your email below and we’ll send you a link.
Hi [client],
We are so pleased to be working with you to [grow your online presence]. The [increase in following] you’ve been receiving as a result of our efforts couldn’t make us any happier! Your continued support and confidence in [insert your business name] really means so much to us.
We take great pride in the level of expertise we offer, and in order to continue to deliver positive results we will be increasing our rates from [x amount] to [x amount] effective [January 1st]. In an effort to thank you for being such a valued client to us, we want to extend our current rates to you through [Feb 28th].
If you have any questions about the increase, please don’t hesitate to reach out to us via phone at [insert number] or email at [insert email address]. Additionally, if you’d like to sit down to discuss in-person, we’ll be glad to schedule a meeting with you.
Again, we thank you for your business and look forward to a long, prosperous relationship.
Sincerely,
[Your name]
As you’ll see, I never apologized or showed any weakness to the tone in my letter. Instead, I focus on my appreciation for them as a client, and the work we’ve been doing together.
If you stick to positivity and looking forward, then you’ll have more success with your price increase letter.
After sending your price increase letter
Once you’ve clicked send, be available to talk to your clients. It’s important they feel comfortable and informed. Allow whatever communication avenue that they choose whether it be email, phone, or an in person meeting.
Also, follow up with them. Be sure they fully understand what’s to come with the new changes. If you don’t hear within 7 days, I recommend following up first with an email, and then a phone call next.
Just don’t get too impatient if you haven’t heard back, because then you could force them to decide wrongly.
No matter what, remember to always remain professional and confident!
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