How to inform client of rate increase?

It's been 3+ years of service. No problems, great relationship. However, I need to increase the rate at which I bill as well as to tell them that I am no longer going to provide service for specific elements. So the goal is to increase my rates while reducing the work. What would be a good way to do this? The company is a world wide corporation which has gone through huge cut backs and a recent merger. I've held off increasing the rates for fear that they will drop me. I give them a killer rate, they won't be able to find anyone to meet my rate AND provide the service like I have.

So how do I inform them of this in a professional manner that doesn't give the wrong idea.

Assuming you aren't under a contract specifically outlining a certain price for a certain period of time, simply adjust your invoice accordingly and send a professional letter notifying them of your new services and procedures. You might also send this letter to your contact at the company.

As for the billing, if this is as large a company as you say they'll probably cut the check without a second glance. If they have a problem they can contact you to discuss the changes. Don't make a big deal out of it unless they do - your time is too valuable.

Increasing the price marginally (anything < 15-20%) shouldn't be a major hassle unless they are already having thoughts and considering a switch. If they are really thinking about switching, keeping your present rates won't help much anyway.

The trickier part is where you need to tell them about dropping certain elements from support.

Humans as a species just don't like to lose stuff, even if they aren't using it :P

If you really need to withdraw support for some things, consider throwing in some minor enhancements that you can jazz up to look good, that tends to soften the blow. The person you are dealing with might need to report to a superior and stuff like that makes it easier for them to present your case.

We provide our clients with an annual statement of the current rate and what types of projects we're able to handle. Most years we just change the date, but that way they know when to expect changes.

Whether or not they'll drop you is another question and it really depends on how competitive the local market is and how much they're willing to risk change.

When ever we need to increase rates I try to follow these three things:

Customer Review I like to bundle rate increases with a "total customer review". A total customer review is where we meet to really reassess and evaluate the relationship. We have lots of service usage charts and ROI (as we can determine) We listen. We learn. We identify new initiatives, features, options. We get them reengaged and excited about moving forward.

Make it about them This is about their experience, their needs, their requirements. You are learning and changing and adapting to be their best partner possible.

Add goodies I am a huge believe that the following phrases are important:

• "to continue to provide the high quality of service"
• "to allow us to deliver these new features . . . "

I think that there are always small features (like embedding Live customer support) that will be experienced by the B2B customer as adding value and taking the potential edge off a rate increase.