Rate increase letter

I try to make it clear in rate change letters why the rates are changing.

Such as: "We are raising our rates now, after keeping them at the same level for the past 24 months, because we can no longer absorb the higher costs our vendors are charging for the ----- we sell you."

"I believe you would agree that we need to keep talented and experienced people on our staff to work with you on a day-to-day basis. In the current very competitive market for ---- (type of staff) We have raised our staff compensation rates several times in the past 18 months, and we believe your company has benefitted by the expert service you have received. We now need to raise our rates to continue to pay our staff at the market rates.

If you think of your customers as your business partners, giving them reasons for a rate increase is very important. If you don't need to worry about your customer's reaction, raise the rates and don't tell them why. Of course, this is very bad business practice.

There are no "standard" letters for rate changes. How you approach this depends on a number of factors: Do you have standardized rates? How good is your relationship with your clients? How long has the client enjoyed the same rates? just to name a few.

I typically only raise my rates once a year. About 30 to 60 days prior I send out a letter to all of my clients (even inactive clients) to let them know my rates will go up to the specified amount on a certain date. The exception to this is when I low-ball a short-term opening contract with a new client. Then the rate change for the renewal is negotiated up front so there are no surprises.

I generally don't give much reason other than a rather bland "regret to have to raise rates to cover rising expenses", "its been xx months since last rate increase".

Good luck with what is almost always an unpleasant task.