88 | When to Raise your Rates

Annie
Well, hey there Leah.

Leah
Hey Annie, how are you?

Leah
I'm good. How are you doing? Pretty good, just getting ready for spring and spring break and just trying to look forward to better weather, although down here we get like one week of like, oh, this is nice, and then it's hot and gross. But I still really look forward to this time of year and it also feels like, you know, spring and new things and I don't know. It just feels like we're coming out of that winter haze, trying to take the positives here.

Annie
Yeah, we're excited because we booked our trip to Galveston for spring break, so we'll be. We'll be down your way. I cannot wait.

Leah
Someday we're going to need to podcast in Texas. You know, remember, a long, long time ago we did a podcast together in New York, and so I'm like, hey, we need to coordinate podcasting in Texas so we can say that we have podcasted in both locations.

Annie
Yeah, we have to, I know, someday we'll have to do that.

Leah
It's so hard coordinating because you know it's not just coordinating me and you, it's. You know all of our crew.

Annie
Yep, all of the family people. Well, today we're going to talk about something that is always like a little bit uncomfortable for you and I to talk about.

Leah
Like a little bit uncomfortable. It just gives my heart some pound in and yeah, I say a lot of uncomfortable.

Annie
Yeah, so we're talking about when to raise your rate, and the reason that this is uncomfortable is because it involves talking about money, and money is something that we spend a lot of time thinking about inside our own businesses, but we don't spend a lot of time talking about it with other people to understand what everybody else's head is at with it and you're always making assumptions. I'm reading Middle March right now, which is like a doorstopper of a book by George Elliott. My book club is reading it. It's so good I've actually read it before and it is so much about money and so much about people not talking about how much money they have, making bad decisions to avoid talking about money, making assumptions about the kind of money people have just based on the energy that they put out into the world, and it's really fascinating. It's like one of the greatest books ever written, I think.

Leah
Really, oh my gosh. Now I'm like do it. It's a nonfiction or it's fiction.

Annie
No, it's fiction.

Leah
It's fiction. Interesting. .

Annie
I think I'm going to go back to my friend who listens to all of our book club books. But anyway, I'm very much thinking about money and the limited amount of money that there seems to be that we have access to as the people, that we are just normal people. There isn't this unlimited pool. There's always going to be more. There's not, but we have to be really smart about it. When we've talked about money before, for you and I, the biggest thing is how we don't want to talk to our clients about money.

Leah
I know I really find that to be so challenging. I think over the years I've gotten better about it, but certainly when I first started out, if everyone had asked me to give them a discount, I probably would have. I probably would have been like, sure, whatever you need. I probably would have been like, yeah, whatever. Because I just felt like, coming from that volunteer mindset, I felt like my services just everyone deserves them, whether they could pay for it or not. Just everyone should get this. And I'll just take the burden of not getting paid, which is a terrible way to run a business. You cannot make a lot of money with that mindset. I do feel like over the years, and certainly with having so many clients verbalize, this was so worth the money. I wish I had done this with my other kids. I would pay twice for this help. All these different comments about how they saw the value they helped me to start seeing my own value. Then, as you begin running a business which I had not ever done before you really see that you gotta be smart about how you run your finances and be really in touch with how much money do I need to actually run this business so you don't get yourself in trouble. And then you have another burden on top of the already big burden that we carry when we do this work. It's like then you're gonna be carrying the burden of like I'm not making enough money, I can't afford to pay my bills or I'm not afford to pay myself because I have to pay all these bills, and then I feel like that contributes so much to burnout and like almost resentment to your clients. So I think there's like finding this money a middle ground to where it's like you feel good about what you're charging and you wouldn't ever like resent having to work for that much money, you know that little amount of money. But it also doesn't feel like I'm gonna push the market to the very limit and I'm gonna whittle my available clientele down to like only the people who could afford, like the highest, highest, highest. You know what I mean. Like I think there's such a middle ground in it. But I hear you and that so much of that really starts to come down to like our mindset around money and how we view money and how we feel comfortable or not comfortable with the idea of talking about money and knowing that we deserve money. Like there's so many interweaving pieces of it, so I think one side of when to raise your rates is like also thinking about where's your mindset around it and kind of pinpointing. Do you have maybe some of these underlying, maybe more negative mindset things that would limit you being able to raise your rates in a comfortable way? And you might need to address those like diving into some books about money, mindset and stuff like that before you push yourself to do something, because there might be more comfort in it if you had some shifts in your mindset about it.

Annie
Yeah, and you know, for me you know growing up on the East Coast and being very much in the culture of you don't talk about money. Your nobody's, your parents, are not gonna tell you how much money they make. You have a sense that there are people who that you have more money than some people, but then, you know, I went to private school and I was like there was a lot of people there that had a lot more money than I did and having no sense of what that actually means in reality, like just sort of thinking, like I don't want less, I'd love to have more, but I have no idea what we're actually talking about, what these numbers are, how do you even decide what a what even is a salary? What is a living wage? Like all of that? It's just kind of financial illiteracy that comes out of this. You know it's rude to talk about money.

Leah
Yes, I grew up like that too, like I, for the longest, was. I remember even asking my parents, like how much money do we make? Like I had no idea and my dad was just like you know, that's not anything you need to worry about, you know, like trying to like call me down, like it was something that I just didn't need to think of, worry my little head about, and I was like, but I wanted to understand it and for good or for bad, I mean, maybe it was nice that I didn't have to think about it so much as a kid, but also it didn't help me understand finances or things as I got into adulthood as well. But then also this idea of running a business and I still feel like there's so much I need to learn about finances around running a business. That's why I have gotten help in that area, because it's something that I just really struggle with and I think now we talk to our kids a lot because of that experience. Like we talked to our kids a lot, like we got them you know accounts and like taught them about bills and we've got them like you know, doing a lot of things around that, because I wanted them to have a little bit different money mindset, experience, you know. But then the other thing I think is really hard when to like when to raise your rates. And I love to hear what you think about this is like scanning the market and like, how often do you look at what other people are charging? Like, how do you keep your you know awareness of the area that you're in and what other else these are charging? And then you know, do you match them, do you go middle ground, do you? I mean, it's really hard to analyze that piece of it because you're trying to understand, like, what will the market bear? But then do you want to be the most expensive LC in town? Do you want to be the less expensive LC in town? Do you want to be the middle ground LC in town? I feel like that's sometimes really challenging and I feel like some very new LC's might be like well, I can't make my rate higher because this other LC who's been doing this for 10 years has this rate. So I certainly couldn't be at that rate. So I'm going to put my rate way lower or something like that. You know, but what are your thoughts about that? Like, do you, you know, for your business? Do you kind of check out what other people are doing? Do you just kind of say, well, this is what I'm doing and I don't really care what everybody else is doing? Like, how do you decide? I'm so curious because you are a little bit more savvy than me on this part.

Annie
Well, it's funny because I have always been like my early parts of my career I was a freelancer, which is different than being a business owner in that you aren't necessarily for the kind of work I was doing. I was not really setting my own rates. And so, for example, I had a job where I was reading screenplays for a film competition, a film festival, so they gave out an award. So people would submit their screenplay. There were hundreds of screenplays that we had to get through and they would pay $25 a script. So that was what they paid. So I would go down there in the morning as early as I could. I would say how many am I allowed to take at a time? They said you can have 10 at a time. I'd be great, I'd fill my bag. I'd get like 10 scripts. I'd be like I'm putting $250 in my bag, I'm going to race home and I'm going to read these as fast as I can, which is very fast because I can speed read.

Leah
You are the super fast speaker, yeah.

Annie
I can actually do that. It is a superpower, and I'd also been doing it for years that, like I knew how to read a script quickly and I read books too, and I knew how to read them quickly, which is different than reading them for fun. So then I would like come back and I would be like, can I have 10 more? And I knew I was like the faster I am, the more money I make, so this is just a volume game. That's what this is, and I want to do a good job. But, like I know I can do the good job part, so that it just came out like, how fast can I actually go? I got pretty fast, so I may have, like, when I started out in private practice, had that kind of mindset in terms of like, okay, this is how much money I make is a volume game, so I'm going to charge what feels comfortable to charge, which was less than less than what. I didn't really know what anybody else charged. I mean, this was in 2012. And so a lot of people had websites. I just knew what I had paid Kathy Jenna in 2007. So I'm like that seems reasonable and like, maybe, like, maybe a little more. It's because it's five years later and I just did that and I'm like, okay, so the amount of money I make is just going to be about how many clients I can see in the time that I have to see clients, which also at that time was not that many and that was a super limiting belief because I was putting the burden on me to get the volume versus really thinking about what is a fair price for the service that I'm providing and the experience that I bring and the value that I'm giving to them. So I've eeked my way up and now it's so much easier to find out what people are charging.

Leah
Yeah, yeah, it is.

Annie
You know, I just want to. I feel like I just want to be in the upper. I don't want to be the number one, but I feel comfortable being just under the highest charging person. I don't know, I feel good about that. I've been doing this for a long time.

Leah
Yeah.

Annie
I know that we deliver value and we work really hard for our self-pay clients to really help them. So, yeah, what about you?

Leah
Well, I've done it many different ways and I usually it kind of sneaks up on me. I think, man, I just something doesn't feel right, like you know, of course. Recently it's like all the inflation up, like everything costs so much. And then, like everything that I'm buying to run my business is like, hey, we're increasing rates, we're increasing rates, we're increasing rates. And I'm like, oh man, I, I'm going to be in trouble here soon if I don't then in turn, increase my rates. And and then you know, because of COVID and everything, I just hadn't really thought about it in a while and I was like, whoa, I really need to do another assessment. And to my surprise I was like, oh oops, everybody else is going up and I have just been cruising over here and not paying attention and I was like, okay, I've got to, I've got to change this. And I took I mean, like you said, it's pretty easy now to see and I tried to take a good look in my local area, but kind of like all over Texas, because it's helpful to see all of the towns are similar-ish, the big towns, you know. So took a real deep dive and then tried to just feel my way through it a little bit like where do I feel the most comfortable? And like you, I'm like I don't. I don't have to be very most expensive, but I know that I have a lot of value to offer and I know that the way me and my team do things is really worth more than being the bargain crew. You know, so. So every time I do it, though, I really struggle with the change, because I always think you know, you always get. The people are like, oh, I can't afford you. And the week before I was going to change my prices, I was like, is this the universe testing my endurance and strength? Because it was like I had two or three people, you know, right back, like, oh, we can't afford that, and your prices are expensive. Right before I was going to up my prices and I was like, oh, no. Like, if this is already, they're already uncomfortable with where I'm at. If I go up, like am I going to just have everybody saying the same thing? Thankfully, that's not what happened, but it was really like a bit of a mind game there, because I almost said, oops, never mind, Like, maybe right now it's not the right time, but then I said, no, like, this has to happen, it's, it's pertinent for our business and for accommodating, you know, like I said, all those other places that I, or services that I use that increase their prices. I had to do it, so I felt good about it in the long run, but it really is hard to figure out and it's hard to know how often to look and when to look, and I feel like I don't really have a big plan around that. I just feel my way. I heard a lot of people say that, like, if you're feeling resentful or too busy to raise your prices, do you have any like when? Do you kind of decide like, okay, this is when I'm going to, this is when I'm going to start looking if I should raise my prices? Do you have any things that come to mind for you?

Annie
Yeah, I think a lot of that. Like has it been a while? How am I feeling about just looking at the numbers? And you know, if I'm seeing like my expenses are increasing, that's one you know one time to kind of look at, like well, if that's going up, my prices has to have to go up. I tend to think about them happening, like those increases happening like either at the first of the year or in September. Those are like the natural times for me. Like I'll think about it. But the other aspect of raising your rates is that for me I have self-pay is only a small part of my clients and I take mostly insurance. What I decided to do last year was request a raise from one of the insurance companies that I'm in network with and I sent them a letter and I explained how this is how long I've been in network. I've been having being paid the same rates for the entire time I've been in network. But here is how much cost of living has increased in my area. You can find that information and that's another way to see. Like are you, is it time to raise your rates and also buy how much? I was able to show that cost of living in my area had increased 50 percent in the time that I'd been in network and I sent them that letter and they raised my rates. So those are things that like if you've been in network, I would say you probably need to be in network for at least a year, maybe three, before putting out that kind of letter. Or look at when the renewal period for your contract comes up, and most of the time, if you have an in network contract, it's going to auto renew anyway unless you both agree not to. But find out when that date is and that's a good time to do that analysis and nothing is going to happen. The worst that will happen is that they'll say no, you can at least ask and therapists do it. This is how I found out this is a thing is because therapists will do it. Yeah, they get it. They get increased fees from the insurance companies, so that is also another way to really look at it. To look at it in terms of cost of living Okay, so if prices at the grocery store for me, we rent, so our rent goes up every single year? Yeah, yes, that is in our lease. That is something we expect that will happen, and we can't expect that what I was getting paid in 2018 can pay my rent in 2024. Exactly.

Leah
Exactly, yeah, and I think when we run our own business, a lot of times that is not on our radar and we're not assessing those things. Like maybe a big corporation that gives you a cost of living, raise X number, they have a percentage laid out and blah, blah, blah, blah, blah. Yeah, so I think it's a really important way to protect our business, to protect ourselves, because I think there is a real mental piece around this, around valuing yourself, valuing what you're contributing to your family, you know, and seeing that like your worth and taking ownership of like part of it is what I do and what I know I can do and offer, but part of it is also like a necessity to pay my bills, to be able to, you know, run my business and pay the overhead and everything, and it's really important thing to reflect on. I think I like your idea of like maybe just kind of having a mental note, like in these months I'm going to think about it, or at least once a year, you know, I'm just going to make sure that, like December is my, you know, a lot of times we're reviewing in January and December, you know, for taxes and stuff like that. It might be a good time to just check back in and be like, hey, where am I at, how am I doing with, you know, any pricing increases that other services have given me? Am I covering everything you know? And like just check in and maybe just have a regular time that you're going to assess that. And I also feel, like you know, if you have a community of lactation consultants, it's great to keep in touch and kind of feeling out what where other people are to you and noticing if the community around you is changing, then you want to follow suit because again, it's not fun to realize that like, oh hey, we're at the bargain, the bargain level LC. I mean, we certainly don't want that either. So anyway, I think it's such an interesting conversation. We had a great deeper dive about, you know, money mindset and raising prices and stuff like that. So if you want to hear a little bit more about this, we had one just recently and it was a really good conversation as well.

Annie
Yeah, it was. That was our deeper dive into pricing. You can just purchase it. You can also sign up for our deeper dive subscription. For $15 a month you get access to all of our deeper dives going back to January 2020. They're all recorded. You also get automatically enrolled in our live deeper dives which you can come to live because we love that, but we always record them and everybody gets the recording. Our next deeper dive that is coming up on March 19th at 3pm. We're doing a deeper dive into allergies with Hope Lima, who is a registered dietitian and an IBCLC, has so much insight into this whole allergy mechanism, which can feel so overwhelming and so mysterious and so stressful for families, and really excited to get to talk about that.

Leah
I feel like that is one area we're seeing all the time and it's so stressful because it's hard to help navigate it and help explain it in terms that the parents and the families can have conversations with you but also be able to turn around and ask questions to their other healthcare providers. I cannot wait to have this conversation. I think it's much, much needed because there is so much information out there and I can't tell you how many families I have there on these crazy diets before they even get to me, and so it's just super interesting but also super complicated. So I am excited about that deeper dive with so many good ones coming up. I just cannot recommend enough that you sign up for that subscription, because not only that vault is amazing that's like years and years of us doing deeper dives with just amazing people but also I'm so excited about this year and all the good ones we have coming. I'm excited and ready for them all too, so I can't wait for everybody to join us on those. Well, it's been fun talking to you today, Annie, even though this is not my favorite subject, because I really don't want to ask my clients for more money, but I'm sitting in my truth that I am worth it. I recently changed my rate, so I'm living it out right this second. So I love hearing your insights and having this conversation so we can motivate other people to get those prices at a fair rate for themselves and feel good about it. You're worth it. You are definitely worth it. Thanks so much for showing up.

Annie
All right, bye, See you soon.