One of the hardest thing to do is to make the decision to raise your price for house cleaning clients. If you don’t, you could risk losing money and in the long run – your business. If you do raise your price, you run the risk of losing a client.
Table of Contents
In this article, I’ll explain:
How to Make the Decision to Raise Rates
Why Rate Increases are Difficult for Clients
Rate Increases and Your Pricing Strategy
Implement Your Rate Increase with Confidence
Price Change and Cancellations
Making the Decision
Prices may have increased so that you are generating a loss of income over the prior quarter or the prior year. This needs to be addressed for you to stay in profit. On the other hand, you may have specific clients who require an increase.
Price of Doing Business
Several factors may have changed, such as:
- Price of gas
- Minimum wage
- The price to compete on employee wages
- Inventory
- Other overhead
Some of the issues that affect the cost of doing business are out of your control, such as gas. Others you can control by changing your inventory or supplier to negotiate for a better price. If you’re having trouble hiring the best employees, then you should take a look at what you are paying in relation to your competition. The outcome may point to the need to increase what you pay your employees.
Any of these are reasons to increase your hourly rate and provides good justification for the rate increase.
Individual Clients
If you have clients that are costing you money, you may have under-bid the work when you took the job. You might also have clients who have made changes to their home configuration, such as new furniture, a new pet, or more people in the home.
These individual client rates should be adjusted as quickly as possible. If not, you won’t be able to justify the change at a later date after the client is used to you doing the work at the original price. Your clients won’t like the increase, but will be able to understand when you can justify your request.
A Rate Increase is Difficult for Clients
Increasing your cleaning rate for residential clients is more difficult than a business-to-business situation. B2B clients have to deal with rate increases on a regular basis, where homeowners only deal with them infrequently. For this reason, you want to get your quotes as valid as possible to avoid an increase.
Unless you can fully justify the rate increase, many home cleaning clients will look to replace your service with somebody cheaper. If you have provided quality on a regular basis, your clients may be hesitant to lose you. Same for clients who have used cleaning services for years and know how hard it is to find good workers.
One way to ensure you get paid what you’re worth is to use an Estimating Calculator when you provide an estimate or quote. This will standardize your quotes while providing you with a price for weekly, bi-weekly, monthly, and first-time cleans. Enter your company default values once and then enter load values when you are quoting a job. These load values are used by the calculator to increase/decrease the price based on the condition of the home.
Implement Regular Rate Increases
If you haven’t raised your business cleaning rate in a long time, you’re going to encounter more resistance to your request. One way to avoid this is to implement an annual rate increase across the board. The amount of the annual increase should take into consideration annual inflation rate. If you can’t justify your increase, then it’s best to wait for the next year.
I’ve included a rate increase template in the Business-in-a-Box to start a house cleaning business – one for a one-off increase and one for an annual increase.
With a pricing strategy in place, you can include it on your service agreement so your clients know what to expect. Setting client expectations is half the battle and sets you up for success when it’s time to raise your rates.
Implement Your Rate Increase with Confidence
If you are 100% confident in the service you provide, then you have absolutely nothing to fear in raising your rates. On the other hand, if you have impacted your clients in any way, such as last-minute reschedules, upholding your service guarantee due to quality, you have more justification to do when announcing your increase.
The benefit of raising your rates according to a strategic plan means that you have clear reasons and justifications for doing so.
To justify your rate increase:
- Refer to your pricing plan
- Highlight improvements to your business and how these have affected your clients. This may include products, equipment, and scheduling software.
- Point out specific rate increases, such as gas, insurance, etc.
The best time to notify your clients of a rate increase is as soon as possible. Don’t wait until the date of their next appointment to implement the change. Clients need time to absorb the information and decide if their budget can afford the change. Give them at least a month before the change goes into affect.
Price Change and Cancellations
If a client cancels due to your new pricing structure, it usually has something to do with the perception of value. This ties in with those clients who have been impacted in the past and also those who don’t see the value of your service.
If you are highly confident with the service you provide, then maybe you won’t regret the lost clients. These clients are usually the least desirable who:
- Never really appreciated you
- Always found something to complain about
- Cost you money in employee turnover or customer service
Every year that you are in business, you offer more experience to your clients. Your experience is worth what you need to charge to continue to provide the level of service your clients expect.
Price increases are a standard need for all businesses. You can’t avoid dealing with them. Instead, use them strategically to increase your business potential.
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