This transcript was generated from the episode audio and may contain minor errors.
I've noticed over the past year, I've been getting more and more questions that are not so much about logistics or technical things like which platform is best and such, but much more about overcoming self-doubt, which we're going to look at tomorrow, and other like emotional issues related to running your side hustle, being burned out. We recently had a skeptical spouse, you know, somebody whose partner didn't really support them. And I think this is so important to look at because running your side hustle or small business is not all about just how do you set up your website and so on. And today we're going to talk about raising prices, which is one of those things that is both strategic, but it is also emotional in the sense that people are afraid to do it. They worry they're going to lose their clients or clients are going to be upset with them.
They just kind of see it as a conflict as opposed to an opportunity. And we can't just flip that entirely, but maybe there are some things we can do to help somebody feel more comfortable in raising their prices, which would then allow them to of course make more money and be more sustainable. So today we've got a caller, a bookkeeper who hasn't raised prices in I think three or four years, and they understand that they need to do it, but they are terrified in their words. This is John. So let's see what we can do to help John and hopefully other folks out there too.
You need to price what you're worth, but I know it's not easy. So I'm going to try to give you some specific tips, stay tuned. Hello, it's John calling in. I run a small bookkeeping practice. I've charged the same monthly retainer since 2022 because I'm terrified of a price increase will send clients running inflation's up.
My workload has grown and new prospects still say yes immediately, which probably means I'm under priced. How do I analyze current value to side on a new rate and communicate the change without triggering a mass exodus? I think this is the thing where after you do it, you're going to wish you had done it sooner and you're going to say, well, it wasn't as hard as I thought it was going to be. So don't worry about the first thing. Don't worry about wishing you had done it sooner, but do get to that point of relief.
So to do that, I think you want to think about the value that you provide for your clients. What are the outcomes you provide, presumably on-time tax filings, maybe some clarity, maybe avoiding penalties, and make sure the client knows about this value that you provide. For example, if the client avoids a $500 late fee each year, well, that's worth what, $500? And then next, pick a data-based new rate. Make sure you check the market, make sure you're aware of what other people are charging.
And try to lift the bottom line a good bit. If you're charging $250 an hour or for a particular service, try to go up to $300 at least, 15 to 20%. I think that feels incremental to clients, but it adds real income to you, especially when you've got multiple clients and you're looking at the whole portfolio. It's good to start with new clients, like start quoting the higher price for anybody new coming along. It is okay sometimes to grandfather a rate for existing clients, but eventually you want to bring them up to speed as well.
And when you do that, communicate with at least 30 days notice. Sometimes a bookkeeper could even do it for a quarter's notice if you're billing at quarterly rates and just give plenty of notice, but also communicate with a clear win. So you can send a note to your client that's like, "Hey, for the past three years, I've kept your monthly fee at this rate," while adding some other stuff. So to keep that level of service, the rate's going to adjust so-and-so on this date. Here's what stays the same, your unlimited support emails, your on-time reconciliation, avoiding those penalties, et cetera.
The response guarantee, if you have a guarantee, maybe you don't have a guarantee, but just like general responsiveness. If you have any questions about this, let's chat. I really appreciate your partnership. I am pretty sure if you send this email, almost no one is going to object. The only reason someone might object is if they are ready to move on and want to have a different service in the first place.
Otherwise, most likely they're going to be like, "Yep, that's how it works," right? Maybe they'll encourage them to raise their rates for something. And in fact, if you have consultation calls as a bookkeeper with clients, you might want to be encouraging them to do that anyway, which is another kind of value add. So I know it's normal to be worried, but I think you're going to be totally fine in this situation. Let us know how it goes, of course, and I'm wishing you well.
As always, friends, listeners, community, I want you to do something for yourself that advances your interests and also helps others at the same time. That's what we are all about here at Side Hustle School with more than 3,200 consecutive daily episodes. I'm going to sign off for today. Take care of yourself during the holidays. My name is Chris Guillebeau.
This is Side Hustle School. From the Onward Project.
