Do you sometimes get frustrated by the rates legacy clients pay you? Wondering if it’s even possible to upgrade them to your agency’s new prices?
Back then, when you started, those first clients seemed like a godsend, didn’t they? They’ve helped you kick things off, and perhaps even made launching an agency possible.
But today, they probably still pay the same low rate while you charge everyone else a couple times more.
And it seems like there’s just no way to align them with your agency’s current pricing, right? Wrong.
And in this post, I’ll show you exactly how totransition a legacy client to your new pricing, retain their account, and even upgrade their account. Intrigued? Let’s do it then.
Why You Have Such a Problem with Increasing Legacy Clients’ Pricing
You know: I bet that every time you consider hiking up some long-time clients’ rates, one of the two things happen.
You feel either guilty or afraid.
You feel the guilt of trying to charge more the very people who have made launching and growing your agency possible. Or you fear that even mentioning the price hike will cause a conflict resulting in them dropping your agency (which actually brings us back to guilt). You want to avoid any conflicts with the people who have made it all possible.
In other words, it’s your emotional connection with the client that prevents you from transitioning them to your new prices.
“At times, you can feel like you have a debt to pay those who helped you get started, but the truth of the matter is you're a growing agency and you need to graduate from the mentality of "debt."”
But as a result, you continue putting more hours into their projects while getting significantly less money for it. And then, keep on feeling frustrated about the whole situation. Luckily, with a couple of steps, you can increase their rates without causing any conflicts.
Here’s the process I suggest you take:
#1. Assess Their Profitability as a Client
Start off by deciding whether it even makes sense to retain the client. For example, your agency may have outgrown their account. You now focus on providing a different set of services, and they’re your only customer with those deliverables. Or the client’s company is simply too small for your new prices.
On the other hand, having them on your roster might offer other benefits to your agency, reputation, promotion, or prospects. So, before doing anything else, take an honest look at the business relationship and decide whether the client is worth keeping.
#2. Detail Any New Processes and Tasks You’ve Been Doing for the Client
Approach the price hike as negotiations. To win the client over, you’ll need strong arguments. Why are you increasing the rates? What’s the underlying reason for your services now to cost more than before?
In most cases, the answer lies in the processes, tasks, and deliverables.
Your agency has grown and along with it, the quality of your work. You’ve probably become more knowledgeable and effective too. Not to mention expanding your offering with new services, all to the client’s benefit. Listing all those changes might provide sufficient arguments for a client to accept the price increase.
#3. Raise Prices Gradually
If you’ve been working with a legacy client for a long time, then they’re probably at a very low rate. Bringing them up to your new rates might prove a too big jump.
To lessen the blow, suggest raising prices gradually. This could help reduce the shock a larger increase could cause.
However, the downside of this method is that you will have to repeat the price hike process a couple of times. Be open with a client about it, and outline the price upgrade schedule to them.
If they’re comfortable with doing it in a single jump, do it. Otherwise, bring them up in smaller but regular steps.
#4. Don’t Apologize
Doing so would undermine the value of your services. In spite of any feelings of guilt, don’t apologize to legacy clients for increasing their rates. Instead, focus on explaining the results, processes, services, and tasks you provide along with their effect on a client’s business.
What to Do If a Legacy Client Rejects the Price Hike
Not every client will be happy with the price increase. They simply might not have the budget to cover your rates. Or don’t need your additional services. Yet for various reasons, you and they feel that continuing working together would be beneficial to you both. Luckily, there are ways out of this situation too.
#1. Renegotiate the Scope of Work
Restructure the work you provide for the client to match their budget at your new rates. This could mean reducing the amount of time you would be spending on their projects or dropping tasks from the scope of work.
#2. Start Considering Them a “Training Account”
Training junior staff poses certain challenges, doesn’t it? For one, you don’t want an inexperienced person to tinker with a big account, and potentially causing losses for the client. At the same time, there’s no better way for them to learn than by working on a real account, solving real client problems.
A solution – come to an arrangement with the legacy client to start using their account as a training platform for junior employees.
Of course, you’d need to have your client’s full consent. But it could provide you with an easy way to train new staff without worrying about consequences of potential mistakes they could make on the client’s account.
Legacy clients feel almost impossible to transition to higher prices. After all, many of them have been with you from the start, and have even made launching your agency possible. At the same time, your agency has grown and charging legacy rates only reduces its profitability. Hopefully, the steps I provided will help you upgrade some of the long-time clients to your agency's current pricing.