How to Explain Price Increases to Clients
Labor, material and product costs have risen, and so have your rates. How should you explain this to customers?
The rising cost of labor, materials, products and more have had a strong impact on professionals in the construction and design industries. To be able to work economically and secure the viability of your business, you have to pass on some of these costs to your customers. Here’s how.
Offer Opportunities to Reduce Services and Costs
Of course, you also need to earn a living (not just cover your costs). Talk to your clients and list the individual service components and the associated costs in detail.
This is how building company K-Mäleon has always proceeded and has found that both clients and pros can benefit from this approach. If the client does find an aspect of the service too expensive, they can look for an alternative (and more affordable) service provider or cancel individual services.
This can be a way to stay within the price range despite rising costs, as well as reassure your customers you are doing everything in your power to stick to the budget.
Tip: With Houzz Pro, prices and margins can be communicated in an easy-to-understand and transparent way for you and your clients from the beginning to the end of a project. Watch video tutorials to find out more about Houzz Pro software and tools.
Learn more about Houzz Pro all-in-one business software
Of course, you also need to earn a living (not just cover your costs). Talk to your clients and list the individual service components and the associated costs in detail.
This is how building company K-Mäleon has always proceeded and has found that both clients and pros can benefit from this approach. If the client does find an aspect of the service too expensive, they can look for an alternative (and more affordable) service provider or cancel individual services.
This can be a way to stay within the price range despite rising costs, as well as reassure your customers you are doing everything in your power to stick to the budget.
Tip: With Houzz Pro, prices and margins can be communicated in an easy-to-understand and transparent way for you and your clients from the beginning to the end of a project. Watch video tutorials to find out more about Houzz Pro software and tools.
Learn more about Houzz Pro all-in-one business software
Defend Your Claim to Quality
Make it clear that you place great emphasis on quality and that quality has its price. After all, you want to work with clients who appreciate good work and are willing to pay for it. This willingness on the part of your client may (or may not) become apparent early on.
Luisa Haase-Kiewning of Lu Interior Berlin, for example, started charging an extra fee several years ago. She charges for her time spent on the initial meeting as well as for travel time. This is justified as she arrives prepared and with good ideas after completing a certain amount of preparatory work prior to meeting with her clients.
And remember, if your client is not willing to pay for quality, it could be a warning sign that working together may not be smooth — or possible.
Lara Theel, managing director of Stand Out Design, recommends a similar approach. Explain to your clients, from the smallest to the largest items, how rising prices have affected the elements and materials in their project. Point out how companies that don’t pass along some of the current price increases are cutting back in other places.
Theel and her team focus on “longevity, quality and sustainability” and customers appreciate that.
Tip: Positive reviews on your Houzz profile and a visible Best of Houzz award help build trust and distinguish your excellent work from competitors.
Make it clear that you place great emphasis on quality and that quality has its price. After all, you want to work with clients who appreciate good work and are willing to pay for it. This willingness on the part of your client may (or may not) become apparent early on.
Luisa Haase-Kiewning of Lu Interior Berlin, for example, started charging an extra fee several years ago. She charges for her time spent on the initial meeting as well as for travel time. This is justified as she arrives prepared and with good ideas after completing a certain amount of preparatory work prior to meeting with her clients.
And remember, if your client is not willing to pay for quality, it could be a warning sign that working together may not be smooth — or possible.
Lara Theel, managing director of Stand Out Design, recommends a similar approach. Explain to your clients, from the smallest to the largest items, how rising prices have affected the elements and materials in their project. Point out how companies that don’t pass along some of the current price increases are cutting back in other places.
Theel and her team focus on “longevity, quality and sustainability” and customers appreciate that.
Tip: Positive reviews on your Houzz profile and a visible Best of Houzz award help build trust and distinguish your excellent work from competitors.
Explain That You Question Price Increases in Individual Cases
Birgit Hansen of Hansen Innenarchitektur is primarily booked for planning services. However, if something needs to be ordered, she always tries to negotiate on costs with her suppliers, “because there are always companies that try to take advantage of the situation,” Hansen says.
With her long-term suppliers, however, Hansen already has a relationship of trust. In these cases, she can assume that price increases are unavoidable and are a response to the market situation. This can then be justified to customers with a clear conscience.
Your turn: How do you communicate price increases to your clients? Tell us in the Comments.
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Birgit Hansen of Hansen Innenarchitektur is primarily booked for planning services. However, if something needs to be ordered, she always tries to negotiate on costs with her suppliers, “because there are always companies that try to take advantage of the situation,” Hansen says.
With her long-term suppliers, however, Hansen already has a relationship of trust. In these cases, she can assume that price increases are unavoidable and are a response to the market situation. This can then be justified to customers with a clear conscience.
Your turn: How do you communicate price increases to your clients? Tell us in the Comments.
More for Pros on Houzz
Read more stories for pros
Browse millions of photos for inspiration
Talk with your peers in the Pro-to-Pro discussions
Join the Houzz Trade Program
Remember, price hikes may initially be met with resistance (and you may be reluctant to increase your own rates), but they are often unavoidable if you want to offer consistent quality. Clients who appreciate your work will certainly understand that and you can support them with information to justify your new rates.
Celine Ratey of Celine Ratey Interior & Design knows from experience that it is difficult to convey to clients how prices are arrived at, because often people cannot fully imagine or comprehend the various steps involved in a service (especially those you and your team perform behind the scenes).
However, if you break down exactly how your prices are structured, clients usually understand. “And the fact that material prices are rising is because they [reflect] the market,” Ratey says. It’s important to inform your client about this to provide them with the greater global context.