How to Increase Your Rates

There are two primary ways to think about rate increases: with new clients and with existing clients.

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Raising Rates for New Clients

The simplest way to increase your income is to raise rates for new clients going forward.

This approach avoids awkward conversations and allows your pricing to naturally evolve as your experience, reputation, and demand grow. As you get better at articulating your value and delivering outcomes, quoting higher rates becomes much easier and more defensible.

Many fractionals will step their rate up over time by:

• Increasing rates after a strong engagement or metric achieved
• Adjusting pricing as demand exceeds capacity
• Raising rates annually as a default practice

New clients anchor to the price you quote them. They do not know what past clients paid, which makes this the cleanest and lowest friction way to increase your rates.

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Raising Rates for Existing Clients

Increasing rates for existing clients is more delicate but often necessary over long engagements.

The most important principle is giving the client advance notice. Three months is a good baseline, and more is better when possible. It is critical that rate increases never feel sudden or arbitrary.

The best rate increase conversations are paired with context. Perhaps you’re raising rates at the beginning of the new year, or when the company completes a large funding round that your work helped achieve. Or maybe you’re renegotiating your contract because the scope and responsibilities have materially changed.

Framing the increase around change helps clients understand the pricing is evolving with real reason behind it.

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Specific Tactics and Language

1. Grandfathered in - “I wanted to let you know that I’ve started onboarding new clients into my practice at a rate of $X. Don’t worry, you’re grandfathered in for now, but starting X months from now I’m going to be moving all existing clients to this new rate too.”
2. Upcoming milestone - “Starting in the new year, I’ll be increasing my rates to X. I wanted to give you ample notice so we can prepare in the event that we need to adjust our engagement together.”
3. Use a temporary discount at the start - “OK I’m happy to discount you to $8K / month to get the relationship going, but once you’ve raised your next round I’ll need to charge you my rate card of $10K / month”.
4. Offer a choice - “Although my rates are increasing, there are a couple ways I think we can tweak the scope in order for me to be able to keep the rate the same.”
5. Supply/demand - “A little bit of insight into my fractional practice, demand for my services continues to increase, and I’m starting to turn clients away. To adjust, I’m going to be increasing my rates for new clients starting now and for existing clients starting X.”

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Tips to Keep in Mind

• Communicate early. Do not surprise your client with a sudden rate increase. Target at least 3 months notice. Even if your contract is technically expiring and re-negotiation is fair game, your client should not be made to believe they will be able to renew at the same rate.
• Be transparent about discounts. Giving a discount is a common thing to do, let your client know its a discount, and how much your normal rate is, because this gives you leverage to remove the discount in the future.
• Have a reason for the rate increase. It might be a company milestone, or a scope expansion, or even just supply-and-demand.
• Use renewal conversations. Formally negotiating a renewal, or after a natural ending/starting point, are both great times to have a rate increase conversation when needed, vs. e.g. right in the middle of a huge project.
• Be prepared for clients to say no. They might! And if so, are you comfortable walking away from the relationship?
• You’re not asking permission. This is different from full-time employment where you “ask” for a raise. Instead, you’re telling them what their new rates are, and they can either agree, negotiate, or decline.
• Own the transition plan. If the client does decline to continue working with you, you should work with them on an appropriate transition plan so that they aren’t left hanging. P.S. if you need a new fractional leader to replace yourself, Fractional Jobs can help.

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In Summary

In fractional work, you have more control over your compensation. You set your own rates, and can therefore determine when those rates increase (or get discounted). Raising rates for new clients only is the easiest path. Raising rates for existing clients requires advanced notice, justification, and relationship management.

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