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Are You Ready to Charge Your Clients More?

Jun 6, 2018

What stops you from raising the price of your web development services?

For most web agencies, raising prices seems like a tantalizing goal that is just out of reach. Many agency owners are worried about losing their existing clientele to more affordable competitors.

This is a legitimate concern, but the fact is that if you raise your rates the right way, your customers will be even happier with you. It sounds hard to believe, but it’s true – and it’s been demonstrated time and time again in the world of entrepreneurship.

The key is to pay attention to seven key indicators of your performance and to justify the price you charge by looking at the value you produce for your clients. The seven performance indicators listed below all point to the value of your services from the client’s perspective – not yours!

Seven Indicators You Can Raise the Price of Web Development Services

Today’s marketplace is all about value. To charge rates that satisfy your personal and professional ambitions, you need to understand the value of the work you do.

Value is easy to define in this case, but you have to do some research to put a precise figure on it. Your work’s value is equal to the increase in revenue you generate for your client.

For example, if you charge $3000 to develop a web application that earns your client $30,000, you are earning 10% of the total value of your work. Under these circumstances, you could have charged double or even triple and your client will still be making a significant profit.

This underscores an important truth of professional services like web development: As long as you generate value for your client, you can charge whatever you want.

But to identify that value and distinguish it from competitors’ offerings, you need to understand it from seven additional points of view. These are outlined below:

One: You Have Niche Expertise

Your experience in the web development industry is an all-important factor for determining how much you can charge for your services. In order to raise the price of web development services, you need to be able to offer niche expertise that speaks to a particular customer need.

Agencies with experience solving a specific type of problem can – and should – charge more than generalists who may not be used to the particulars of that problem.

Look to successful photographers for inspiration. Photographers know they have to specialize in a certain field in order to survive, yet most web developers haven’t yet focused themselves on that critical niche.

Two: Your Workforce Includes Dedicated Administrators

A business of any kind is a complex system. In order to ensure your projects get completed in an efficient manner, you need to invest in management processes – which usually means onboarding management talent.

As an individual, you may be an expert developer, but few clients will measure the success of your agency purely on that score. They are looking at the overall competence of the entire organization – from project management to billing, invoicing, and even marketing.

Before raising your prices, you will need to determine how the change will reflect on the size and complexity of your business.

Three: The Processes You Use are Mature

Accruing experience means more than just completing projects – you also need to refine your processes. If you have been fine-tuning your processes with every project you take on, then after a certain amount of time you will be able to offer your clients better, faster, smoother service as a result – and you should charge more for it.

For an example of how important process maturity is, consider the fact that you can actually implement a process for increasing your rates on a regular basis. Even something as simple as increasing your hourly rate by 5% after every 10 completed projects give you a sensible, predictable method for achieving this goal.

Four: You’re Building a Network

This aspect ties into having demonstrable expertise in an industry niche. If you have been around long enough to develop mature processes and have specialized to a sufficient degree, you will begin developing a reputation.

Your reputation is key to achieving almost any business goal, including raising the price of your web development services. You can boost it by attending networking events, writing blogs, being featured on podcasts, and partnering with other agencies.

Building a reputation and an industry network is hugely constructive when considering your rates because you can determine two important things:

  • Whether you are really enough of an authority in your niche to merit extra pay for it.
  • What your competitors charge for similar services.

Five: You Have a Steady Inflow of Work

If you plan on raising your rates and then looking for work, you run the risk of disappointment. A much better plan is to start raising your prices only when your current inflow of work begins to reach a critical level – when you can afford to lose a few clients.

Not all of your clients are going to like paying more for what they see is the same service – but it’s up to you to explain how the value your service offers is improving. Some clients will simply be unable to afford premium service, and you will have to find new ones.

However, as long as the previous four factors are on-point, increasing your price will make your services more desirable on a psychological level.

Six: Clients Keep Coming Back

This one is related to having a steady inflow of work. You need to look at your current rates as a function of the number of clients who come back to you time and time again.

Those clients are the ones who are obtaining value from the work you do. You will want to pay close attention to the specifics of the projects you perform on their behalf and find out just how much they could be paying while still obtaining value.

This will inform important decisions like how much or how often you should raise your price. It will also give you insight into the niche you will target through specialization.

Seven: Price Changes Reflect Your Long-Term Goals

Lastly, it’s important to conceptualize where raising the price of web development services will take you and how that serves your long-term goals. Where do you see your agency going? Most growth strategies fall into two categories:

  • Big & Lean. A big, lean business is one that focuses on growing its work capacity while keeping its rates competitive. Almost all big-brand retail stores and supermarkets use this strategy. They operate on low margins with huge sales volumes. This long-term growth strategy is usually incompatible with raising prices – instead, growth comes from external investment.
  • Small & Fat. The opposite of the low margin, the high-volume growth strategy is operating at higher margins with lower work volume. This is the strategy that boutique and luxury brands use to differentiate themselves from premium market segments. Your increasing experience with a specific niche gives you the ability to cater to specific needs with great precision.

For most web agencies, raising prices is part of a growth strategy that peaks to the needs of niche consumers. Unlike groceries and fast fashion, web applications are inherently customized products designed to meet highly specific requirements – positioning your brand to offer premium services helps you align yourself to the needs of premium customers.

Do you need to leverage a scalable workforce to achieve industry-best expertise for niche clients? Talk to us about our white label web development services to learn more.

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After building my web agency JD Softtech in both Boston and Ahmedabad, India, I wanted to find a way to help other agencies.

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