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Raising rates with existing client didn't go down well

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One of my first clients joined me 18 months ago and I gave him a ridiculously low rate of $10 ph, which I was happy with at the time because the work was a bit of data entry here and there, filtering some emails, things that I could do while I was listening to the TV, just to earn a bit of extra pocket money (you know how it is! I was new!)

 

Anyway, my business grew, as did my responsibilities for this particular client, in a huge way - I became the first point of contact for his customers, took responsibility for all customer support, working with Infusionsoft, WordPress, my 24 hour response time became almost instant response time, etc, etc.

 

I approached the subject of a raise with him last March, and it took him a few weeks before he'd reluctantly agree to go up - by $2 per hour!!!!

 

These days, my Infusionsoft skills, 'inside out and back to front' knowledge of his business means that he calls me his 'right hand person' and frequently says that I'm an integral part of his business. I'm averaging 15-18 hours per week for him at $12 ph.

 

I've also taken on clients in the past 12 months that are on rates of more than double what he's paying - and they are more than happy with what they are paying.

 

In December just gone, I decided to get a business plan in place to roll out in the new year, which meant trying to get my clients on a consistent rate level, and stop spreading myself too thin across too many clients. I thought if I could limit myself to 3 or 4 clients and bring this particular guy up to $20 ph (effective from February to give him some notice), I could focus on each of my clients more effectively, rather than doing too much for too little money and spreading myself too thin.

 

However, he was not pleased that I had spoken of a raise again before 12 months since the last increase (I'm 50/50 on that one, I understand it to a point, but then - it wasn't much of a raise and who wrote the rule that increases are only allowed every 12 months?)

 

He's refused to even talk about it again until April!

 

The thing is, I really love working with this client, I enjoy the role, I've learned a LOT over the past 18 months - but right now I am SO demotivated! He has a major launch coming up in March and I'm wondering whether he's thought process is he's going to keep me on until after then and then let me go and hire someone cheaper. What might bite him is that he'll struggle to find someone that not only knows Infusionsoft and all the other nuts and bolts of his business, etc, but that genuinely cares for his business like I do.

 

What do you think I should do? Even though he pays me the least per hour, he gives me the most hours and is therefore my best paying client per month. Saying that, I could survive without the money I earn from him. Do I cut my losses and spend the 15-18 hours per week looking for a couple more clients who will appreciate the value I bring? Or should I stick it out and see what he says in April? Even if he does keep me on, he might say "I'm only willing to pay $14 ph", which as you know is still at least 50% less than what he should be paying?!!

 

Thanks for any advice and sorry about the long post!!!

 

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I doubt that client would ever find someone that knows all of what you know for that rate. I don't even know how you can afford to work that low, unless maybe you live in a country where $12/hr has more value. What country do you live in?

 

I wouldn't be worried about what the client thinks about the raise, frankly I think you should be charging at least $35 an hour for Infusionsoft and product launches. Even that seems very low to me. They are getting a steal!

 

I would cut ties and spend that 15-18 hours a month working on marketing you. You could be putting all that time into networking and find a replacement client in no time. I recently found a few clients through social media and I think you could do the same.

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I live in the UK, so $12 is around £8, which is not much more than minimum wage.

 

I'm so glad to have it confirmed that I'm definitely way under charging.

 

I've always found it quite difficult to market myself and find brand new clients - I've always got my clients through referrals. I suppose part of that is down to not having enough time to market myself, but like you say if I cut this client out, I'll have 15 hours per week to dedicate to finding just one more client.

 

Writing that all down actually felt really good! The more I thought about it afterwards, I'm often working until 10pm my time on his urgent work - it's had a bad impact on my personal life in the past (which I know comes with running your own business sometimes, so I'm fine with that, but not for minimum wage!)

 

I'd be interested to hear if there is anyone else who's been in a similar situation and what did you do about it?

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I would say you are way under what you should be charging, I know people with IS experience including myself and they dont work for anything less than double what he is paying you. So I would cut losses with him personally. I was in your shoes once and you learn that you are better off letting the lower paying ones go and finding a better situation plus it sounds like he is trying to call the shots like an employer/employee type roll and thats not what we are.

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I would move on. If the client bickered about a $2/hr increase it will be years to get them to pay you what you are worth. You'd be better off (and less stressed) spending that time focused on marketing your services to new prospects. Just tell this client that as of XXX date (Jan. 31) you will be releasing him as a client as you have new clients coming on board who are willing to pay you XXX/hr. If he wants to pay that price then you will stay with him otherwise you have to say adios ;)

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It's funny how it seems those who want things either for free or very cheap are often a little harder to deal with. I guess your client doesn't really fit your market so as Julie said, might have to cut your losses. He won't find a better deal elsewhere for even the new price you were suggesting. His loss.

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I had a situation where my client was paying a good deal more than what you charged at your lowest. She started with me 3 years ago at that rate. (I have been in business for some time.) I raised my rates again based on a number of factors with her and to align her rate with my newest clients who were paying with packages as opposed to hourly. I say this to you because she left me. She resented the rate increase even though I hadn't raised it in 3 years. She was my only hourly client and I did a lot of work for her that I hadn't contracted to do as time went on.

I hated to see her go. She went with another VA whom I had recommended for her to do some graphics work.

Well one month went by and I got an email from her that she wanted to work with me again. Apparently the other VA didn't understand her well enough and the work wasn't as she expected.

If you stick by your rates, people often have more respect for your professionalism. If they won't pay your rates, then they are not your ideal client.

You have great advice here. I say that you should give your client 15-30 days before you raise your rates according to your value. Note that you will also need to raise the deposit you have secured from them as well and request a month's in advance to cover yourself.

Best,

Janine

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Janine, I had the exact thing happen to me but was like 3 months later they came back. They definitely appreciated me more and understood the value of my service price after working with another VA.

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You also need to look at your highest grossing clients, and it sounds as if your newer clients are surpassing him. I have a coaching client who only paid $550 total last year. The year before, we did much more business together. As much as I love this client and love working with her, bending over backwards (because she was grandfathered into my coaching fee from years ago) isn't worth it. If my revenues from her were higher, then I might reconsider. But at this point, if she wants to renew, she'll have to sign up for one of my coaching packages. I doubt she will, AND based on my financial review, it won't be that much of a loss.

 

This is a long-winded example to show how looking at your highest grossing revenue streams sometimes puts decisions into perspective.

 

And it sounds like you've already decided to move on. Good for you!

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If I looked at it from a monthly basis rather than hourly, he actually pays me about five times more a month than any of my other clients (because I do so many hours for him) - but I'm working 10 times as hard for him as I am for any other client!

 

So this is what I need to be thinking... I don't have the time or energy to focus on my other clients any more at the moment, because I'm doing so many hours for him. I'd much rather be focussing more on a select few clients and giving them even better results than what I am right now - but I simply can't because he takes up all my time. I'm trying to pour from an empty cup.

 

I know business is a hard thing to go into. I'm happy to pour all of my time and energy into it because I love it, but I'm earning not much more than minimum wage from him!

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Sounds to me that your client is a little confused. He seems to think you work for him. Bottom line, you work for yourself. Your rates are your rates. Period. Don't feel sorry for him or concerned about how he'll feel. He knows darn well he can't hire good help for less.

 

When you set your rates, you need to think about paying for your rent, bills, medical / dental, retirement, investments, vacation. You aren't doing yourself a favor by cutting yourself short and you aren't doing the industry any favors either.

 

I work off of retainer. My clients pay a flat rate for me by the month. I let them sign with me for 90 days at a time and we renew at the end of that period. That allows either of us to cut free from each other if we decide we don't want to do business with each other anymore. When you work on retainer, you rationalize that you expect to do 15 hours a week (for example) or a client at $20/hr. That's $300/wk, $1200/mo. That way, you get paid whether they go on vacation or not. As do you. I was on a 7 day cruise in the Bahamas over New Years. I worked a little each day and I mean no more than a half-hour but I was still paid for a set amount of hours for the month. And trust me, I spend more than two hours a day working for my client. But when he's gone for two weeks, I'm still paid whether bits and pieces trickle through for him or not.

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