I recently had a somewhat difficult conversation with a vendor about the hourly fee she charged me. The challenge? Convincing her to raise her rates.

She had contracted with me for about 18 months at the same hourly fee. I was pleased with her work. I also knew she was so busy she had stopped taking new clients.

My concern was to be sure I was paying her a market rate. That meant hiking her fee by 20%, which she was fearful of doing because she didn’t want to lose my business. I pointed out that if she quit, I would have to hire someone at a wage 20% higher anyway. She pondered for a bit, then said she got my point and would think about it. After several more minutes of convincing her I really wanted to pay her more, we agreed to a 20% increase.

Why did I decide to cost myself the extra money? Was that a smart financial decision? In the short term, maybe not. In the long term, I see it as a wise choice.

Here is why: First, I was really happy with her work, and I wanted her to be really happy working on my behalf. I wanted to treat her fairly. I’ve had times when I didn’t quote a job at a high enough fee. While I usually enjoyed working with the client, there was always a niggling thought that I was not respecting myself because the fee was too low.

That type of niggling thought often turns into resentment that may not even be conscious. Resentment in a work setting will usually come out in one’s behavior. It can result in apathy, a lack of cooperativeness, low responsiveness, poor performance, and a lack of engagement. It’s a win/win for both employer and employee if the wages paid for a service treat everyone fairly.

If you are a fee-for-service provider, how do you go about raising your fees?

  1. Determine the market value of your services. Find out what you would need to pay someone else for the same service. I asked my vendor what she was charging new clients. It was $30 an hour; I was paying her $25.
  2. Consider your experience. The market rate may be higher for a vendor with more experience than you or lower for a vendor with less experience.
  3. Be aware of any fear-based self-talk. I experience trepidation any time I raise my fees to clients. Even when I know the increase is within the range that others charge, I usually experience internal resistance and fear. Will they think I am greedy? Will they drop my services? Isn’t a lower fee better than the risk of losing the income altogether? If they do stay, will raising my fee anger them and change our relationship? These thoughts are normal when a part of you is afraid of being rejected or anxious about your financial security. It’s important not to resist or criticize yourself for having them.
  4. Increase fees for new clients first. This can help manage the difficult emotions of fear, anxiety, and insecurity, especially as you see new clients accept the higher rate. You can give existing clients notice of a rate increase in the future, giving them time to adjust.

Keeping your fees at market rate is respecting yourself. It helps you enjoy your work, assures that you show up fully for your clients, and will ultimately keep them happier. The same is true for employers. Paying your contractors and employees a fair market wage will result in them being happier, which will result in happier clients and a more profitable business.



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