How to Write a Rate Increase Letter to Get Your Desired Rates (Samples)

As a freelancer, business owner, or service provider, increasing your rate is an eventuality you cannot escape from. Sometimes, a rate increase may be all the difference between thriving or barely staying afloat with your finances. 

Writing a rate increase letter is one of the hardest things you may have to write as a service provider. When it comes to increasing rates, it’s a lot easier to do this with a new client than it is to do with an existing client. 

This article will explain everything that goes into writing a rate increase letter. We’ll also crown it with some letter samples to help you write a rate increase letter.

What is a Rate Increase Letter?

 A rate increase letter, also known as a price increase letter, is a letter written by a freelancer or a service provider to clients to inform them of an increase in your prices/ rates. If you’ve had clients for a while and you’d like to inform them of a change in prices for whatever reason, this is the letter that is sent to them. 

As a freelancer, if you start your freelancing career on freelancing websites, after transitioning from these websites, it’s only normal to increase your rates after a while. 

There are a number of reasons to increase your rates. To write an effective rate increase letter, it is important to include these reasons. These reasons answer the “why” question your clients may have. It also explains to them why they should continue doing business with you. 

Before writing a price increase letter, here are some of the most common reasons service providers have increased their rates. 

Common Reasons to Increase Your Prices and Send a Price Increase Letter

Before going further with this section of the article, you must know that the reasons for increasing rates vary among service providers. Individuals are different, and so are their reasons. This means that while your reasons may not exactly be stated here, it doesn’t make them invalid. 

Without further ado, here are some of the most common reasons freelancers and business people have increased their rates. 

  1. You’ve Increased Your Skillset

It is common knowledge that your skills improve the longer you use them. And the natural progression from improved skills is improved results. So, if you’ve acquired new skills or have become better at your job and are now producing better and faster results, it is completely okay to increase your prices. 

  1. Reduce the Number of Clients You Have

This may sound a bit odd but stay with us. If you have more work than you have time for, raising your rates will help you cut down and keep only the high-paying clients. If you have clients that you dread working with, this is a great strategy to eliminate them. What makes it better, when you’re out acquiring new clients, you’re doing so with your new rates. 

  1. Operating Cost Have Gone Up

One of the most common reasons to send a price increase letter is if your operating costs have increased. If the price of the software you use has gone up, or your general cost of living, the next action plan would be to increase your rates. 

  1. Want to Change the Way You Charge

If you previously charged hourly and would like to structure your rates to work per gig, then sending a rate increase letter is the way to go. The better you get at a task, the quicker you become. And if you feel your current pricing model is not serving you because of this, it is completely okay to change your rates. 

  1. You’ve Been Undervaluing Your Work

If you check the market price for what other people in your niche are making and realize that your price is below market level, then you should send your clients a rate increase letter and start making what you deserve. 

Rounding up this section, there’s no go-to reason to increase your rates. It is completely acceptable if you want to increase your rates solely because you believe you deserve more or want to earn higher. While this may be harder to sell your client, it is also a valid reason to increase your rates. 

 how To Write a Price Increase Letter

When writing a price increase letter, you cannot overlook some important aspects. In this section of this article, we’ll look closely at everything that goes into writing a rate increase letter. 

  1. Get to the Point

The purpose of a rate increase letter is to increase your rate – this is what your letter should be about. After the regular pleasantries, your letter should tell your clients how much your prices are going up and why. If you waste time with unnecessary information first, your clients will see right through it, which may hurt your chances of getting a favorable response. 

  1.  Fight the Urge to be Apologetic

When writing a rate increase letter, especially for the first time, you may feel the need to be apologetic. Do not. You have every right to ask for a raise every now and then. Keep your letter straight to the point, factual, and do not sound apologetic. 

  1. Be Open to Further Discussions

While your new rates may be fixed, and you have no intention of settling, you should give your clients the chance to contact you for inquiries. Your rate letter should not give the perception of “take it or leave it” even if it is, you should give your clients a chance to ask questions and understand why your rates have changed.  

  1. Remind Your Clients of the Services You Render

Some clients will look outside for cheaper options when you increase your rates. That’s okay. But before that happens and they benchmark your rates with a cheaper competitor, remind them of the services you render and the results you’ve achieved for them. 

Doing this can be as simple as listing out the services you render for them. All of these are done to ensure that your client understands why you’re increasing your rates better. 

Rate Increase Letter Template and Samples

In this section of this article, we’ll include some templates and samples to give you an understanding of how to write your own rate increase letter. 

Rate Increase Template One

Subject: Price Update Information 

Dear (Client’s name),

I’m writing to inform you that our prices will increase by (percentage increase) with effect from (start date). For you, this means an increase from (the previous amount) to (the current amount). This price update takes effect from (the date the increase starts).

(State the reason for the increase)

To continue to provide you with great service, we have to increase our prices to (restate reason for increase). We are confident that our prices are competitive in this market.

Please do not hesitate to reach out to us if you have any questions or inquiries. 

Yours Sincerely, 
(Your name and position.) 

Rate Increase Template To Client 

Dear (name of client),

After much consideration, we at (name of company) have decided to increase our rates by (percentage increase). This means your new rate starts from (include date of increase).

This decision was not taken lightly as it was the only way to continue to provide you with great service given the (state reason for price increase). We believe that increasing our rates is the only course of action we can take to continue providing you with great service. 

Thank you for your continued patronage and trust. Please do not hesitate to contact us for further clarifications or inquiries. 

Sincerely, 
(Your name and Position)

Rate Increase Sample One

Dear Jason Todd,

I’m writing to inform you that our prices will increase by 20% with effect from July. For you, this means an increase from $500 monthly to $600. For you, this price update will come into effect from the August invoice.

The reason for this price update is the rising cost of living in my city. This greatly impacts my work, and I believe the only action plan is increasing my rates. 

To continue to provide you with the great service you've been getting, this is the decision we must take as a company. We are confident that our prices are competitive in this market.

Please do not hesitate to reach out to us if you have any questions or inquiries. 

Yours Sincerely, 
Benjamin Affleck
Head of Client Relations

Rate Increase Sample Two

Dear Ryan Wilson,

After much consideration, we at Woculus Inc. have decided to increase our rates by 10%. This means our new fee starting from June will be $990, from the previous fee of $900.

This decision was not taken lightly, as it was the only way to continue to provide you with great service given the increasing cost of the price of the tools we use. We believe that increasing our rates is the only course of action we can take to continue providing you with great service. 

Thank you for your continued patronage and trust. Please do not hesitate to contact us for further clarifications or inquiries. 

Sincerely, 
Reynolds Wade
Head of Operations Woculus

Conclusion

When it’s all said and done, the decision to increase your rates can only be made by you. A point to remember is that not all your clients or customers will accept these new rates with open arms. The decision to either let them go or continue working with them with the old rates is left to you. 

If you do decide to stay with a client after they decline your rate increase, try again after a couple of months. This way, their chances of declining are slim as they’ve been prepped for the increase.

Jim Blessed
Jim Blessedhttp://Shakespen.com
Jim Blessed is a certified content specialist. He's a versatile and accomplished writer with diverse knowledge in creating unique content for different niches. When he's not clicking away at his keyboard or learning new things, he's listening to or reading other peoples' thoughts.

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