To raise fees with existing clients, review each client’s fee against the time you actually spend, decide the new fee, and tell the client in writing well before it takes effect, ideally when you renew their engagement letter. Explain briefly why the fee is changing, what it covers and when it starts, and give them a named person to talk to.
A fee increase is far easier for clients to accept when it is planned, explained and confirmed properly. This guide covers when to review fees, how to explain an increase, how to time it around engagement letters, and includes a template email and a checklist.
When to review client fees
An annual review is the minimum. Fees that are left untouched for several years tend to drift well below the cost of the work, and a large catch-up increase is much harder to explain than a modest yearly one.
Beyond the annual review, look again whenever:
- The scope has changed: the client has registered for VAT, taken on staff, added a property or started a new business.
- Compliance has changed: new rules, such as quarterly reporting under MTD for Income Tax, mean more work for the same client.
- The client takes longer than the fee assumes: late records, repeated chasing or frequent ad hoc questions.
- Your own costs have risen: salaries, software and insurance all feed into your hourly rate.
Work out the new fee first
Before you write to anyone, decide what the fee should be and why. Pull the time recorded against the client over the past year and compare it with what you charged.
For example, a fictional practice charging £80 an hour has a client on a fixed fee of £1,200 a year. Time records show 19 hours spent. At £80 an hour, that is 19 × £80 = £1,520 of time, so the practice is £1,520 minus £1,200 = £320 short. A new fee of £1,560 a year (£130 a month) covers the time with a small margin.
To rebuild fees consistently across every client, Engager’s pricing tool lets you build pricing formulas from client data, and the prices feed straight into quotes and letters of engagement.
Sort clients into groups as you go. Some need a standard increase, some need a bigger change because the scope has grown, and a few may be clients you no longer want to act for at any fee.
How to explain a fee increase
Clients do not need a long justification, but they do need to understand it. Keep the message short and specific:
- Say what is changing: the old fee, the new fee and the date it starts.
- Give the reason in one or two sentences: more work, new obligations or rising costs. Use the reason that is true for that client.
- Remind them what the fee includes: clients value the service more when they can see it listed.
- Offer a conversation: give a named contact and invite questions.
- Avoid apologising: be polite and clear, but do not undermine the fee.
If you are an ICAEW member, its fee information helpsheet is worth reading before you write. It covers giving clients the basis of fees in writing, explaining any amount that exceeds an earlier quote or estimate, and providing a fee breakdown if a client asks for one.
Timing around engagement letter renewal
The engagement letter is where your fee and scope are agreed, so it is the natural place to change them. Tying increases to the renewal of engagement letters has several advantages:
- the new fee and the updated scope are agreed in one signed document;
- clients expect to review terms at that point, so the change feels routine;
- you have a clear record of what the client agreed and when.
Give clients reasonable notice. As a rule of thumb, allow at least one month between telling the client and the new fee starting, and longer for larger increases. Avoid sending increases in the middle of a deadline rush, when clients and your team are both stretched.
If you are updating letters for other reasons this year, our guide to updating letters of engagement for MTD for Income Tax covers what to change at the same time.
Template fee increase email
This is a template for a fictional practice, Fernbrook Accounting. Replace the details in square brackets and adjust the wording so it sounds like you.
Subject: Your fees from [start date]
Dear [client name],
Thank you for working with Fernbrook Accounting over the past year. We review our fees each year so they reflect the work we do for you, and I am writing to let you know about a change.
From [start date], your fee will be [new fee] a month (currently [old fee] a month). This covers [list of services, for example annual accounts, your Self Assessment return and quarterly updates]. The change reflects [reason, for example the additional quarterly reporting now required for your business].
Your updated letter of engagement is attached for you to review and sign. If you would like to talk anything through, please reply to this email or call me on [phone number].
Kind regards,
[Name], Fernbrook Accounting
Fee increase checklist
- Time spent on each client over the last 12 months reviewed.
- Scope checked against what the engagement letter says.
- New fee calculated and recorded, with the reason.
- Clients grouped by type of change.
- Start date chosen with reasonable notice, away from peak deadlines.
- Email or letter written for each group, with a named contact.
- Updated engagement letter prepared with the new fee and scope.
- Direct debit or billing amounts updated once the client has agreed.
- Replies and questions tracked so nobody is missed.
Frequently asked questions
How much notice should I give a client before raising fees?
Check what your engagement letter says about changes to fees first. Beyond that, at least one month is a sensible minimum, with more notice for larger increases.
Should I raise fees by the same percentage for every client?
Not necessarily. A flat percentage is simple, but reviewing each client against the time spent shows which fees are furthest out of line and need a bigger change.
What if a client pushes back?
Listen to the concern and explain what the fee covers. You may be able to reduce the scope to fit a lower fee, but avoid discounting the same service, which only resets the problem.
Can I raise fees part way through the year?
You can if the scope changes significantly, but it is cleaner to agree the change in writing and issue an updated engagement letter, so there is a clear record.
How Engager helps
Engager’s letters of engagement can be sent with the updated fee and scope and signed online using built-in e-signatures, so you have a clear record of what each client agreed.
The value-based pricing tool helps you rebuild fees from your services, and bulk email lets you send your fee review messages to groups of clients at once.
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