Some independent professionals are hesitant about increasing their fees.
A common reason that I have heard is they feel sorry for their clients or patients.
It seems to me they are actually afraid they will lose clients or patients by raising their fees.
We have constantly been hearing about inflation in the news. We know the Federal Reserve has been raising interest rates to combat inflation.
Have you considered that when we don’t increase our fees to at least compensate for inflation, we are electing to accept a pay cut?
I know an accountant who hasn’t increased their fees since 2018. According to the Bureau of Labor Statistics and the Association of Bay Area Governments, the cost of living index for the San Francisco Bay Area for August, 2023 was 341.2 (base years 1982 – 1984 = 100), and the cost of living index for August, 2018 was 287.7. If the hourly billing rate for August, 2023 was $300 per hour, that would be the equivalent of $253 per hour in August, 2018 dollars. (The average cost of living increased about 18.6%.) In other words, that accountant has elected to take a $47 per hour pay cut.
Meanwhile, their clients and patients think little or nothing about paying more for their groceries, going out for dinner, or taking a vacation. If they are so fee sensitive that they would make a change because of a modest fee increase, it’s an indication they don’t value their relationship with the service provider and the service provider’s services. These are problems requiring some serious attention.
If that accountant was working for someone else’s accounting firm and had a $47 per hour pay cut over a five-year period, they probably would have been very upset, quit their job and gone to work somewhere else.
Many independent service providers reassess their fee schedules during January. Maybe it’s time to give yourself a raise.
Would you like a sounding board about your professional fee policy? Please contact me at firstname.lastname@example.org to schedule an initial consultation.