Its important that this is done in a planned and transparent manner, to minimise any disruption to the client and allow them to plan accordingly.

6 Principles for Rates Management

1. Communicate your rises. Clients are expecting some level yearly. However, notice is really important as is a justification. Consider advising a client 3-6 months out that rates will rise. Alternatively inform them at a renewal point, that whilst the current renewal is at the same rate, any subsequent renewal will be at an increased rate

2. Perform regular rates assessments. It’s useful therefore to have a regular exercise, every six months’ rate cards should be reviewed comparing rates at a given client with the standard rat, current rate or simply rates with other clients.

3. Be granular. However, it’s also important to consider an individuals rate. As people spend more time at a client, or as they are promoted then they are of greater value to the client and have a greater cost to employ. An individual rate rise is therefore necessary to maintain healthy margins. We recommend that every 3 months at a minimum individual’s rates should be reviewed.

4. Consider NOT raising rates every time. As part of the planning process for rates, it may be prudent NOT to raise rates or to plan to raise them every other year. In certain clients any rate rise may trigger significant work in internal systems or may trigger a full commercial negotiation (in which pressure to reduce rates may be felt)

5. Have a clear communication trail. Whilst you may wish to make the initial communication of changes verbally this must be followed up in writing, with ideally an acknowledgement from the client. This reduces the likelihood of misunderstanding.

6. Expect and manage pushback. Some pushback may be expected from time to time. Some client reasons may be entirely justified and it may therefore be the right decision not to increase rates. Certainly if a client is having financial problems for example it is likely counter productive to insist on raising rates.. Whatever the reason for pushback its worth remembering that a rates increases typically mean we only keep up with wage inflation over the long term

A Rates Management Process

1. List every client that you are currently doing business with. Also include recently dormant clients or other longer term clients that you might not currently be doing business with. so that they have been considered if they become live

2. Define the anchor role. An anchor role is simply the most common role and rate across your business. This both simplifies the exercise and allows you to compare across clients easily.

3. List the current anchor rate for each client.

4. Document the date of last rate rise.

5. Document any contractual or other considerations so that you have a full context before making your decisions. This should include any information or agreements that may have superseded or clarified the contractual circumstances.

6. For each client, analyse the anchor rate making a judgement as to the status.

• Red – the rate is considerably lower that optimum,
• Amber, the rate is slightly low and should ideally be increased
• Green – the rate is at or above the optimum

7. Identity any client where rates have not changed in over 12 months. Even if the rate status is green you should consider changing this to amber as there may be a chance to increase this rate

8. Decide updated rates for each of the Red and Amber clients. The rate you decide on will be as a result of many factors, including but not limited to, current client margin, what an acceptable rate rise would be, contractual considerations from any Master Agreement and ongoing discussions or position with the client.

9. Communicate to each client identified to inform them of a rate rise. A 3 month notice period is a good length of time to provide sufficient notice.

10. Identify individual increases. Identify any individual resources where the rate charged is a lower rate than desired. When managing rates at an individual employee level, you are looking to ensure that value and experience that the client receives match the rate you are earning as well as the internal cost.

11. Communicate to each client identified to inform them that the rate of the identified individual will increase from date of next renewal or some other date in the future. Again a 3 month notice period is recommended

12. Finally document the outcome so that you have your own organised summary of rates management data and can use this as input to the next iteration