EP #26 | How to Raise your Rates without the “ick”

Welcome to the Designers Oasis podcast. I'm your host, Kate Bendewald, interior designer, mama, and CEO of a thriving interior design business, built on authentic word-of-mouth referrals. It wasn't that long ago that I stepped away from my corporate architecture job to build my own dream, one that would allow me more time with the people that I love, the ability to serve my clients at the highest level and to make a great living. It wasn't always easy, and I've made my share of mistakes along the way. Fast forward to today, and I've learned a thing or two. This podcast is for you - the inspired, creative, ambitious, and let's admit it,  occasionally overwhelmed interior designer who shares this dream of transforming lives by transforming homes. Join me and my guests each week as we walk through practical ways to build an interior design business you love, and help you transform your client's lives. You can do this. 

Hello, hello. Hello, and welcome back to the Designers Oasis Podcast. I am so grateful to be hanging out with you today. We are talking about how to raise your design fees, how to raise your rates, that feeling icky. Okay, so you and I both know that everybody's raising their rates, we've all had to out of necessity, because we live in a shifting economy. And in a shifting world. And you are no different. Chances are your cost of running your business has increased. And it's likely time that you raise your rates to reflect that. It can be daunting, though sometimes for designers, or people pleasers by nature, I think. And sometimes we just put emotion into it. But my friend, it doesn't have to be difficult. And so today we're going to talk about some ways that you can do it that can just feel easy. Okay? Listen, like easy, we all like easy. 

One thing that even though I'm using the word, raise your rates here today, you might be considerate of being very careful with your language. And maybe instead of saying raising our rates, so you can say our rates are changing. So just a small little nuance that you might consider using when communicating these updates with your clients. And I think it's just important, no matter how you deliver this information, whether you deliver this information, because it's not going to be necessary that all clients get this message depending on your situation. But for the ones where you do need to have a conversation, or a phone call or an email, whatever the case may be, that you you, you do a couple of things. First, you're focusing on what you've been able to accomplish together, and how how proud you are of that focusing on your appreciation for your client and the work that you're doing together. And at the end of the day, if you feel like you're worth what you're charging, so will your clients. 

So let's get into a couple of these strategies today. You know, I'm just gonna say that this this this podcast is coming out at the end of the year towards the end of the year, and that's often a common time of year to raise your rates or to change your rates. But this may be something that you choose to do mid year, and there's absolutely nothing wrong with that. So if you're catching this and you're feeling that pinch or feeling like I really feel like it's time for me to raise my rates, but it's June, do I need to wait till the New Year? The answer is emphatically no. I think you need to give your clients some some time rate to prepare. But I don't think that you need to Don't necessarily wait till a new year to make these changes if if that's not going to work for you, you are the CEO, you get to decide, 

Okay, so first is to consider a gradual increase. Let's say you are charging $100 An hour or $120 an hour, and you want to move from $100 an hour to 120, or from 120 to 150, or whatever the case may be, the more significant the increase, it might be better to start any new clients at your new goal rate. But increasing your existing clients at a smaller percentage. So maybe it's, you know, 20, I'm forgetting my math right now. But maybe it's a scheduled increase. So on January 1, it's going to be this. And on July 1, it's going to be this if you're expecting that there's a long a project ahead of you. That way you can get to that increase faster, but make it a little bit more palpable. Again, read, read your projects, read what's necessary, if you only have one project, and they're at the very tail end of the project. You might ask yourself, Do I really need to implement this with this new client, which comes to my next point, not all clients have to be at the same rate. So you may decide that keeping your existing clients at your current rate is the best scenario and to only implement this new price in this new prices, new fee strategy with only the new clients. And if you bill in a hybrid format, which is what I love and promote and I think works well, which is you charge hourly for excuse me, you charge a flat fee for design and everything up to the design presentation plus one round of revisions, and then moving into hourly, then we're really only talking about those hourly rates. But also, maybe it's that your flat fee minimum goes up, right. And so then you would want to update your documentation, such as your services and investment guide to reflect that. So keep in mind that if you have a handful of clients, you might consider where they are in the design process and whether they even need to have this price increase announcement. And if they're towards the tail end of a project, it might be something that you just skip that conversation altogether.

. Number three is, don't be afraid of losing clients, you may find that once you announce these changes to your design fees, some clients may want to expedite closing out a project with you, instead of fearing this result, look at it as a way to make space for higher valued clients who are eager to work with you. So you know, there might be some some clients who you know are going to or are not going to love the idea are going to push back. And I would just say that that's not the end of the world. But you know, you want to keep your your reputation and your name polished. So if you can find a way to give them some options. Perhaps that might be a better way to to make it work. But I wouldn't bend over backwards to try to you know, you don't want to have like five different clients all with different fields that you can't keep up with. Try to keep it as simple as possible and, you know, close out the project and and be done with it. 

So if you do have to have a conversation with a client, let's talk about how to how to talk about it. I mentioned one, which is instead of saying I'm raising my rates, you can simply say I'm changing my rates. The thing is you don't need to over explain the breadth of your explanation. Should should match the price increase. In other words, a 5% increase needs only a brief explanation. Whereas a 20% increase may need a little bit more context and more value added services. So just avoid the tendency to over explain. And I'm pointing to myself here because I am the queen of over explaining things sometimes. So I'm talking to myself. Next, I want you to keep in mind that you can, you can share with your clients the fact that raising your rates will allow you to take on fewer clients, so that you can provide more attention and better attention to the ones that you are working with. So if you have an existing client, and you know that they're going to fall into this price increase category, simply letting them know that this is a value add for them that it's going to allow you to focus more time on them and be able to give them and their project the attention they deserve. And if you communicate that just to make sure that you're able to see that through and follow through with that. It's also important that you shine a light on your accomplishments. If you've completed any kind of additional training or education over the last year, I think it's important and perfectly okay, if you share that new knowledge with your clients, and they will see this as an added benefit of working with you.

You can also create a fee ladder. So perhaps you've hired a design assistant or a similar role to help you implement the design process. As long as they are working on the project and billable. It's worth sharing their hourly rate with the client with your client, it's presumably lower than your hourly rate, which may result in no measurable increase in your increase for your clients yet, they get the same results. So let's say your hourly rate is 175. You've hired an assistant who can help you, and maybe you're charging 100 $120 an hour for their time. That's what I mean by creating a fee ladder. And then the other thing is, give plenty of notice, and do not spring a fee increase on your clients. And certainly don't send an invoice without the the change of without a conversation first. I think 90 days is best 60 days also works and 30 days, it's okay. But it's not ideal. I would target 90 days. If you think a client is going to still be working with you after that. Okay, my friend, I hope that this has given you a little bit of encouragement to remember to charge what you're worth, be willing to take up some space, be willing to own your expertise and the value that you bring to your clients and their projects. And that in the long run, you're saving them. Time, mistakes, money, so you have value you're worth it. And if it's time to raise your weights, and it probably is, I hope that you can use this as a guiding light to get the conversation started and do it in a way that provides you and your clients with the best results possible. All right, thanks for hanging out with me today. I will see you next time on the next designers voices podcast.

Thank you so much for letting me spend part of this day with you. If you're loving this podcast, please share it with a friend who you think might also love it. Or perhaps you can take just 30 seconds to open your podcast app and leave us a five star rating. And if you have just an extra minute, go ahead and leave a review. This helps me so much and it helps other designers like you to find the podcast. It also adds fuel to my motivation to keep making great episodes just for you. However you choose to help. Please know I appreciate you so very much. Thank you, my friend. Have a wonderful rest of your day and I'll see you next time