Rate increase.
Is it time for your company to have a rate increase?
We're going to talk a little bit about that today.
Hi there, I'm Angela Brown, and this is Ask A House Cleaner.
This is a show where you get to ask a house cleaning question
and I get to help you find an answer.
Now today's show is brought to us by HouseCleaning360.com
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new space with the color schemes that you have,
or you'd like to start a new color scheme altogether,
HouseCleaning360.com is the place for you.
All right, on to today's question, which is about having a rate increase for your house
cleaning business.
Holly: Hi, Angela.
My name is Holly.
I have a cleaning business.
I just work solo, and I have been doing so for about 10 years.
My question today is about rate increases.
Is it okay to raise my rates with my existing clients?
If so, how much of an increase is fair?
I've been going back and forth.
I've never raised my rates.
My expenses, say with fuel, increased even a year ago when I moved further away to a
town further out from most of all my customers that were
at one point a couple blocks away from me.
I just wanted to know if that was something that is professional and okay to do to increase
my prices with my existing customers.
I would love to know your feedback and get an answer to this question because I'm so torn.
Thank you so much.
Angela Brown: All right now, 10 years is way too long to go without having a rate increase.
Because it is really important that you get the money that your company deserves.
Now when we start out in the house cleaning business we encourage people to start at a
lower rate for a variety of very valid reasons.
But when you very first start your house cleaning business or you start your business with a
particular client, even if you've been in business for a while, it's very important
from day one to set up the fact that within one year you will have a price increase.
By having the rate increase within one year, that preps the customer to know that within
one year, if I like this particular house cleaner, I'm going to end up spending a little
bit more money.
Now at the end of the year you can always choose to keep the customer at the same price
if you so choose.
But they are already prepped and they are expecting a rate increase, so then when you
give them a rate increase there's no surprise.
The other benefit of doing that is if the customer, for example, becomes very high maintenance
on you and you're charging them a lower rate, if you know and they know you're going to
be charging a higher rate, then there's also a little bit of flexibility in there as to
how much you're going to raise your rates.
Now you asked what is a fair amount to raise your rates.
If you'd have had a series of rate increases over the years, that would be something different,
but since you haven't had any rate increases in the last 10 years
I would start you out with 20%.
20% is flat across the board a very good rate increase for your business because
it's very affordable and it's not going to shock anybody.
But that's going to bring you closer to where you need to be in the community of people
whose houses you clean.
Now the price of gas did go up.
So did the price of cleaning supplies.
So did the price of everything.
Everything increased over the last 10 years.
In order for you to raise your prices on your customers you ask is it fair.
Yeah, it's more than fair.
No one is complaining.
When you go to the grocery store and they raise the price on a gallon of milk you don't
go to the shopkeeper and say, "You raised your price on a gallon of milk.
What's up with that?
I'm just not going to buy milk anymore."
You don't do that.
You just say, "Wow, I guess I got to pay a little bit more money."
Then you ante up the money and you pay the price.
When the gas prices go up you don't go in and talk to the gas station owner and get
all upset that they raised their prices.
You just scratch your head and say, "Well, I guess I got to pay more money for gas."
Everything has gone up over the last 10 years and it's going to go up again.
How often do you raise your prices?
My suggestion is that you train your customers that on an annual basis you're going to have
a price increase.
Like I said, you can always decide at the last minute that I'm not going to have a price
increase this year.
Your price gets to stay the same.
But if you prep your clients for a price increase every year, at the end of your renewable contract,
and we're assuming you have renewable contracts that end every year, if the price is too high
the customer can decide not to go with you at that point.
But at the end of every renewable contract there are so many things that are at play,
whether you like the customer, whether you get along with them, whether the workload
is what you originally signed up for.
The price: are you getting paid a fair price for what you're offering?
If you have a renewable contract at the end of every year, that's a perfect time to initiate
a rate increase.
Is it fair?
Yes, absolutely.
What do you say to the customer when you raise the price?
Well you just come right out and you say, "Hey, I'm having a price increase starting
January 1," or whatever the annual renewal date of your contract is.
If it's May 31st, then it would be May 31st.
If you have clients that you picked up all throughout the year and their contracts end
at the end of every year, then you have a rate increase that continually happens all
throughout the year.
It's not like you're scrimping by on money until the end of the year and then boom,
come January you're going to raise your rates.
It's not all the way across the board.
It's a rate increase here and a rate increase here that's going to help keep the cashflow
healthy for your business.
Is it fair?
Yes, absolutely.
How do you do it so that your customers don't get angry?
You just let them know.
For your customers you're going to say, "Man, I haven't had a price increase in 10 years.
I wish I could go for another 10.
Unfortunately, I can't.
Come January 1st I'm going to be raising my rates 20%.
I know that that's not going to even flicker on your radar but I just wanted to let you
know so that are no surprises."
If you just take an assumptive clothes like, "Hey, it's no big deal," then it's going to
be no big deal for the customer.
But, if you make it a really big deal and, "I hope this isn't too much of a challenge
on your budget.
Are you still going to keep my business?" and all these things, if you're uncomfortable
about it, it's going to make your clients uncomfortable as well.
What wasn't an issue to them is now going to become an issue.
If it's uncomfortable to you to ask for more money, go and stand in front of the bathroom
mirror and practice your new prices in front of the mirror over and over and over again
until they just roll off the top of your tongue until you can announce them with pleasure
like, "Oh yes, your $200 will now be 200 and whatever it's going to be."
But raise your prices already.
That's my two cents for today.
Until we meet again,
leave the world a cleaner place than when you found it.
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