How to Pitch a Contract Price Increase

What happens if you HAVE to increase your prices to your existing clients? What do you say? How do you do it?

Too many cleaners make any increase about themselves. They pitch a price increase without making it about the client. When the client doesn't see a reciprocal increase in perceived value compared to the increase in price, then they'll get frustrated or even bail. 

The cleaner will say something like...Dear SoandSo, I hope this email finds you well [*cringes*]. Effective June 15, 2024, our price increases to $XXX per [Visit, Month, etc.]. Thanks for your understanding and cooperation. Sincerely, You

It's definitely a recipe for disaster. 

Let's start with the WHYs. Why increase your rates at all? Could be a number of reasons...

• Average wages increased and/or your state or local government increased the minimum wage thereby causing wages to generally go up.
• Inflation rates increased, and that $15 gallon bottle of concentrated glass cleaner is now $18, or your Proteam backpack vac was $380 pre-COVID and now it's $500. 
• Your state or locality just passed a new law mandating new paid benefits like Paid Time Off or a local Family Leave tax. 
• While still profitable, you haven't increased rates in years. 
• Your overhead is increasing, like your business insurance, accounting software, marketing costs, utilities, and more. 
• You have some new growth goals for your company and you can't accomplish that without a higher rate for capital investment.
• You just haven't given yourself a raise in years. 
• You underbid the project.

After taking your WHYs into consideration, what are the reasons why a client could understand why a price would increase:

• They'd like to see your employees get paid well.
• They're open to investing into your business through an increase to get better supplies or equipment.
• They feel the inflation pinch too and they understand all too well.
• Maybe the client has been demanding on the SOW and they know there's a cost for that.
• They'd like to see added benefit like new payment systems, better communication processes, or tech improvements outside of supplies.
• They're afraid to lose you as a cleaner. 

If you can marry their WHYs with yours, then you can do a better job showing an increase in value and therefore make any increase palatable. For example, maybe you need to increase it due to inflation and they  understand that inflation and are open to an increase. Or maybe they've been complaining about your state of a vacuum and you're wanting to increase rates to improve your equipment. Combine their needs with yours and you have a winner. 

Better example:

Dear SoAndSo,

I'm writing today to announce a future rate increase. As you know we're always trying to keep rates low for everyone for as long as possible. Beginning in August, we're proposing a rate increase to your location by X%.

We didn't make this choice lightly. We truly do like to keep rates low. In fact, it's been 3 years since our last increase and I challenge you to name one bill that didn't increase within the last three years. 

We're increasing the rate to help offset future raises and help our employees stay ahead of inflation. As you know our state increased the minimum wage by $X with a second proposed increase in XXXXX. While we'd never pay minimum wage, we do want to keep ahead of the curve so we can limit turnover. Our proposed employee raise will equally match your percentage increase.

I'm proud to say that our turnover is very low and paying our employees well is a core value for us. We wanted to give as much head's up as possible. In the coming week we'll send out a new agreement reflecting this rate. If you have any questions, don't hesitate to reach out at xxx-xxx-xxxx.

Sincerely, You.

Simple and easy. Below are some things you should take into consideration:

1. If you have a contract, continue to honor it through the end unless you're facing a detrimental loss. Honor your word. 
2. Give as much head's up as possible. I had some clients that needed up to a 9-month runway for any pricing changes because they're budget-centric.
3. I didn't include this in the letter, but if you had any wins, include that in a paragraph. Include something like, "We took over the cleaning in [Month] and we were able to do an about-face on the cleaning and deliver a service that was complaint-free." You can also include topics around "keeping their facility safer from germs" or "We recently completed our 3rd summer with flawless execution on your mirror-like floors". Always solicit praise and mirror that back at them when needed.
4. Be transparent about the cost. Don't be vague. Know what the increase will be when you send them the email or letter. 
5. The above mentioned, keep official correspondence in letter or email format. Don't tell them over the phone. Please don't text it.
6. Don't send canned letters or emails. Personalize each one. 
7. If they push back on the price, consider alternatives like adjusting the SOW or adjusting the days to be cleaned.
   
   
   
   Next on Deck: Random Musings After 1000 Sales Walkthroughs (6/26/24)