I run a service company and currently have about 4 reliable customers and various other smaller clientele. Last year i decided to increase my rate to one of my customers for a couple reasons, mostly due to inflationary pressure but also to harmonize with what my other customers were already paying. So last December I sent a notice of change and soon after my main contact person at that company broached the subject of my service and what it was costing. We had a good conversation and I was sure that that discussion was a result of my letter of notice. So I went forward with the change and that customer continued to call for service and our relationship inproved. They ended up being my largest revenue generator for last year. Just recently I had a message from my main contact acting completely blindsided about my rate change from last year. He now he never knew about the change and claims we’re not worth that much and he is immediately looking to replace us.
My reaction was to take ownership of the mistake I made by assuming he was aware of the rate change because of the conversation we had. I was not explicit about it to him as I thought the emailed notice was made known to him ( I failed to actually email him directly)
At this point he has indicated that he is looking for a new service company and I have not responded officially except to say
Ok, that’s too bad
So what do I do? I believe my charge rate at this point is on the high end, but fair. I have several other clients who have been paying thos rate for a longer period. I continue to recieve nee requests for work from nee clients which I unfortunately mostly reject because we are at capacity.
Do I let this client search around and hopefully return back? Or do I set a meeting and try to justify ourselves to him? Do I move on with hopefully a new large customer in the future.
Anyone else go through something similar? What did you do?
Thanks
I’m a service provider. I’m on the higher end in my area but not the highest. I charge what I charge. If I were to charge less, and I have, resentment starts to set in. The amount I charge is the point where I think my job is worth it.
If people want to find someone cheaper, they are welcome to. They usually come back to me because I offer them a good service.
You have people you are turning down that are willing to pay the rate. If he wants to drop you, you will pick it back up.
I have a variable rate for different projects, but give myself a raise every year. I know what the going rates are so no big if they pass. At least with me they only deal with me.
Rule #1 of pricing: Never justify your rate. Let your service/product justify it. The moment you start justifying your rate, you’re negotiating your rate and it’s no longer the rate.
Sounds like you’re free to start accepting some of that other work you had to turn down.
💯. End thread.
You manage your business. They manage their feelings. You do your job and they do theirs.
I went through exactly the same thing. I had a client for 4 years who we serviced monthly. Overtime, we would do some small extras here and there (aka free work) while onsite to add additional value and exceed our client’s expectation. Initially, our service was 3 hours. By year 3, it stretched closer to 3.5 hours. With aging came longer service time and the extras. Additionally, the job always went into evening hours because we couldn’t start until 4 pm.
I approached the owner about a small increase, literally $25/month which was a 9% increase that became necessary to cover some of my employees wage ($25/hr) for an additional hour.
My client said; “Thanks for letting me know, but I’m going to have to change service providers.” I told him I appreciated his business, it was an unavoidable fee increase and if anything changes in the future, I’ll be here for you.
He did call us about a year later for 2 servicings. Presumably his new guy had an issue. His fee was 35% higher for these jobs. He also had an emergency service call and nearly gagged at the emergency service fee, but we were on site within one hour.
Since 2021, I havent done any work for him.