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The Rate Increase Conversation Every Solopreneur Dreads · The Life-First Solopreneur

• 0:00
  Carly Ries: Picture this. I'm standing in front of my bathroom mirror practicing what I'm going to say for three weeks straight. And why? Because I want to ask for a rate increase, and I'm absolutely terrified. Does this sound familiar?
• 0:10
  Well, today we're getting into why raising your rates feels so scary, and how to finally get out of your own way. So if you've ever wanted to ask for more but talk yourself out of it, keep listening. This one is for you. You're listening to the Life First Solopreneur, the podcast for those in pursuit of a life first business. I'm Carly Ries, and my cohost Joe Rando and I spend every episode with Solopreneurs who are proving there's a better way to run a one person business and experts who are helping make it happen.
• 0:39
  We like to say life first, then business. So let's get right to it. Joe, I don't know if LinkedIn's algorithm has changed, but I keep getting fed things like, here's how to raise your rates. Here's how to do this. And so I thought I'd share a funny story that ties into how to mentally prepare with raising your rates.
• 1:01
  And I, for people that don't know, I contract with LifeStarr. I have been, gosh, now for six years, which is crazy. And so sporadically over that time, you and I have had a rates conversation. And we work very well together. I'd consider us buddies too in addition to working together.
• 1:24
  And I mentally prepared for these conversations for, like, three weeks in advance every time. Practice in front of mirror like people tell you to do. Hopped on these calls with you, shaking. So scared for these conversations. And it's you. Like, I feel like I can talk to you about anything.
• 1:46
  I do talk to you about anything and everything, not even work related. Like, you help give me parenting advice. And yet, I walked into those calls trembling. I had this whole script and I was like, this is what I'm gonna say.
• 2:01
  And I think the couple of times I've done this, it started with, oh, Joe, I hate this conversation. And I immediately just before he said anything, was like, oh, I'm so nervous. Which hopefully the authenticity helped. But I was so scared. So so scared. my poor husband had to deal with me the days leading up to it. And the times I've asked you about the rate increase. You said, okay. Sounds good. For weeks of panic. Weeks!
• 2:34
  And it got me thinking, people need to, if they think they're worth the value that they think they are, they should not be as panicky as I have been. I had no doubts that I thought I was worth that rate increase. But for one of whatever reasons, I was still in my head about it and I realized anybody that I ever asked increased rates for, they're not the problem. People need to get out of their own way.
• 3:01
  They are the problem. And so I started thinking, where are some helpful ways we can help people come across these conversations? I've been talking this whole time. I haven't even told you this story about how petrified I've been. But before I go on for some recommendations, do you want to chime in with anything?
• 3:17
  Joe Rando: Well, I'm gonna go look in the mirror and see if I'm scarier than I thought.
• 3:22
  Carly Ries: That's the thing. You aren't, like, Stacy is the mama bear of the team. You are the papa bear of the team. but, yeah, it's scary when with people that don't have the practice or the reps, it's a scary thing to do no matter who you're talking to. Would you agree with that?
• 3:38
  Joe Rando: Yeah. I mean, it can be very frightening to, potentially put a relationship, a business relationship at risk. And asking for more money is something where somebody could say no. And then it might not necessarily, hurt the relationship or anything, but it might be, oh, now they're not happy with what I'm paying them and you know, there's a risk.
• 4:00
  I mean, I don't want to underplay the fact that this kind of conversation does have some level of risk. It's just not nearly as big as I think people tend to make it when they contemplate doing it. So obviously, your three weeks of panicking beforehand was, really unfortunate and unnecessary. But, anyway, so good. So when you finish explaining this to everybody, you can use it next time, but not too soon.
• 4:32
  Carly Ries: Not too soon. No. we have some time. Don't you worry. Well and so I think, again, the real blocker is I think the fear of loss. like, what you were saying.
• 4:42
  I don't think it's even necessarily the price, but just that fear of not getting it and kind of changing the relationship, I think is a big one for people because especially if it is a good working relationship, you don't want to put that in jeopardy. But then I think it's scared you're gonna lose the client. Coming off, thinking like, impostor syndrome, feeling like you aren't actually worth that. Even though deep down you think you are, there's that fear of, oh, I don't know if I am. And then also, I think some people feel greedy.
• 5:15
  People that I've talked to, they feel like they're asking for something they shouldn't deserve or something. And I think people need to reframe. They need to separate their worth from their price. well, let me back up. I think you'll need to do your homework, and they need to see what other people are charging and make sure it's competitive. if you go in there and you're like, oh, I charge 75 an hour. Now I'm gonna start charging 250 an hour. Like, why? And justify that and do that research and see what other people are charging. If the going rate is $250 an hour, let's say, but you're coming from 75, don't jump to $250. work your way towards that. That is a big leap. I mean, companies that you contract with, they need to budget for this stuff too. So don't be discouraged if you go in there and are trying to make this big leap, and then they don't take it because sometimes that's unreasonable.
• 6:15
  Joe Rando: Yeah. And I think another thing to think about is that, again, going back to the Life-First business concept, some people are, loss alternatives, they want to do certain kinds of work for certain kinds of people or companies. They want a certain kind of relationship. And let's say if somebody loves working with non profits. Well, the work they're doing for that non profit might be worth three times at a for profit company, than a nonprofit can pay for the same thing.
• 6:45
  But if part of their goal is working for nonprofits, well, they're gonna have to think of their pricing in the context of their target customer. And by the same token, somebody like you could probably get more money contracting for some big company, but you will have a very different experience. You'll have probably a lot more pressure, a lot less of a, kind of feeling like you're a crucial part of the team, you know, making changes. And so it's just there are a lot of considerations there, but that's why when you say do your homework, you're absolutely right. You gotta really do your homework.
• 7:24
  You can't just go oh, that person's getting $250 an hour. I'm getting 75. Well, what is that person doing for whom, and what does their life look like? And then you have to think about it from that perspective. But, maybe the 75 should be 85.
• 7:39
  And if you do some apples to apples, you can kinda get an idea of what you're worth. I mean let's be honest, solopreneurs almost always underprice themselves.
• 7:48
  Carly Ries: You don't even know what I'm about to say, but that was such a good segue because I think people see, their rates almost like an, oh gosh. What am I trying to say? They use rates as boundaries, And I think a low rate isn't generosity. It's a quiet resentment that you'll eventually charge someone for. maybe I'm talking in circles right now.
• 8:15
  But I think your price protects capacity to do. Yeah, your price protects your capacity to do good work, though.
• 8:22
  Joe Rando: You're absolutely right. I mean, if you charge too little, you can wind up being very busy because a lot of people want something, for a discount. And you wind up having to work and be very busy in order to pay the bills. So that idea of raising rates to something that is appropriate is the kind of thing where you can then work a number of hours that makes sense for you for the life that you want and do good work for people. Because if you're working sixty five, seventy, eighty hours a week, you're probably not giving everybody your best quality work.
• 9:00
  Carly Ries: You have to calculate that cost of staying cheap, whether it's lost time, kept capacity, I would say, resentment even. Because, yeah, you find that balance. Again, the life first business, make a living, obviously, but do the good work. And that's the thing. Do the good work.
• 9:18
  I feel like so many people think that they deserve a higher rate, but they have nothing to show for it. Like, why do they deserve a higher rate? Have they done anything that makes them go above and beyond? I think people also will go into the conversation a lot more confidently. And I do think it's do good work.
• 9:36
  But you're going more confidently knowing that you have, the numbers to back it up. Maybe just have, something on the side to be like, look, I accomplished x y z. I moved the needle, dot dot dot. Have something that you can reference when you go in for these conversations because not only will it give you a conversation point, but you'll go in much more confidently too.
• 9:58
  I don't know. I just keep seeing all these people posting about rates, or increasing their rates on LinkedIn. And I was like, for people that have never done that with clients, it's a really scary thing. And more than anything, I wanted to make sure that they didn't feel alone. But I also wanna make sure that people are being reasonable and that they're coming prepared and that they get out of their own way.
• 10:21
  I think I was being reasonable, I think I was prepared, but I didn't get out of my own way. I was so scared. So I think those three combined can lead for a successful rate increase.
• 10:32
  Joe Rando: And one other thought on this is that one of the things you can do mentally, it's actually more than mentally, but it helps you mentally, is raise your rates with new customers and do that for a little while. Right now, you're charging your existing customers, $65 an hour, or 3,000 per project, and you're charging, the new customers 3,500 per project. And you do that for a while, and then you say to the old customers, well, gee, you know, my rates are this now. I've been kinda giving you the old rate for a year or six months or whatever, but I'd really like to raise the rates now because it's just, my costs have gone up and this and that and whatever else. And that can give you that confidence that if new people are paying the higher rate, why wouldn't the old people be willing to pay it?
• 11:23
  But it's, that psychology of, gee, I've always gotten it for this price, but, you know, for a long time, inflation was so low that, literally I started a business in 2004, and we didn't raise prices. I think 2020 when we sold it, we still hadn't really raised prices. And because inflation was so low, it was just hard to justify. But, in the last few years with inflation being more back to normal or high for a while, now back to normal, it's like, gee whiz, prices are going up. I need to raise my rates because prices are going up, and people get that.
• 12:04
  And we need to so that's another thing to think about, the fact that, when you set these prices three, four years ago, a dollar bought x, and now, you need a $1.10 to buy the same thing four years later. It's not that hard to justify a rate increase.
• 12:22
  Carly Ries: Yeah. But just For people that are doing Life-First businesses, one way that you can get a Life-First business is by increasing your rates so you don't have to work as many hours. I just wanted to give some food for thought for people that are trying to pull that off. listeners, thank you for tuning in today. And if you're considering that or if you know somebody considering asking for that rate increase? Share this episode with them. Hopefully, helps inspire them. And again, makes them realize they're not alone in being nervous, but just making sure they're also prepared.
• 12:51
  Subscribe to our show on your favorite podcast platform, including YouTube, and give us a five star review. Not only does it give us a big ego boost, but it also helps us spread the word to other solopreneurs who are trying to create a life first business. And we'll see you next time on the Life-First Solopreneur. You may be going solo in business, but that doesn't mean you're alone. In fact, millions of people are in your shoes, running a one person business and figuring it out as they go.
• 13:21
  So why not connect with them and learn from each other's successes and failures? At LifeStarr, we're creating a one person business community where you can go to meet and get advice from other solopreneurs. Be sure to join in on the conversations at community.lifestarr.com.