Prepared Ground: Communicating a Fee Increase to UK Clients

A rate change is an operational event. It has a date, a contractual route and a set of people who must be told in a particular order. Treating it as an apology, or as a marketing exercise, usually produces a worse outcome than the number itself. The letter is the last artefact in the process, not the process.

Begin with the contract, not the letter

Before drafting a sentence, build a rate change register. For every live client, record the contract or statement of work, the clause that permits a change, the notice period, the required method of notice, the named recipient, the effective date and the account owner. Check order forms and side letters too; a framework agreement may set the route while a call-off contract sets the rate. If the contract is silent, do not assume that silence permits an increase. Take advice and decide whether a variation is needed. The register should also flag clients in public sector procurement, where notice requirements and approval routes can be stricter.

Notice periods are deadlines, not formalities. If the contract requires 60 days' notice and the change is to take effect on 1 April, the notice must be issued by 31 January. Put that date in the calendar with an owner. Late notice can turn a straightforward increase into a concession, or into a dispute about whether the change is valid at all. Check how notice must be given: email to a named address, a portal upload, or a formal letter. A correct letter sent the wrong way is still a problem.

Build a cost-based rationale that survives scrutiny

Prepare a one-page cost bridge. Set out the input, the change, the period and the evidence source. Typical categories include payroll and pension contributions, subcontractor rates, software licences, insurance, travel and regulatory compliance. If the increase is linked to an index, cite the index and the reference period. Do not rely on 'market rates' as the whole explanation. The rationale should answer three questions: what changed, when did it change, and why does it affect this service?

Do not disclose margin or commercial detail that is not required. The aim is to show a defensible basis, not to open the accounts. Be consistent across clients. If one client receives a lower percentage because of contract terms, record why. Selective explanations create a credibility problem later. If the rate has not changed for several years, show the cumulative position since the last review, not just the latest annual figure. Keep the evidence in a shared folder so that account owners can answer questions without reconstructing the calculation.

Segment before you send

A single letter for all clients is efficient to produce and poor at managing relationships. Segment by contract type and by current service position. At minimum, separate clients with a clear contractual indexation clause, clients with a notice-based variation clause, clients on framework agreements, and clients where the contract is silent. Then overlay relationship factors: live complaints, open service credits, recent escalations, or a renewal in the next six months.

The letter may be similar, but the route differs. A client with an indexation clause needs notice and evidence. A client with a discretionary arrangement may need a conversation before the letter. A client with a live complaint should not receive a rate increase as the next communication from the firm. Agree in advance who can approve an exception, a delay or a scope change. Ad hoc concessions given by account owners in the moment are difficult to reconcile across a client base.

Script the conversation

The account owner should call the client before or on the day the notice is sent. Prepare a short script: the reason for the change, the effective date, what remains the same, and the next step. Avoid repeated apology. One expression of regret is enough; the rest should be clear information. Use plain language: 'I am writing to let you know that our rates for [service] will change from [date].' Then explain the basis in two or three sentences.

Prepare for three common responses. 'Can you hold the old rate?' Answer with the agreed position, not an improvised one. 'Why now?' Return to the cost bridge and the date of the last review. 'Can we reduce scope?' That is a commercial discussion, not a reason to abandon the notice. Record the call, confirm the key points in writing, and keep the record with the rate change register.

A workable timeline

Work back from the effective date. Twelve weeks is a practical runway for most UK service firms. Weeks one and two: complete the contract review and the rate change register. Week three: finalise the cost bridge and approve the percentages. Week four: segment clients and approve letter variants. Weeks five to seven: hold client calls. Week eight: issue formal notices. Weeks nine to ten: confirm receipt and answer questions. The final weeks are for follow-up and for updating billing systems.

If notice periods are longer, start earlier. If the change is small and the contract is clear, the same sequence can be compressed, but the contract check and the evidence pack should not be skipped. The billing team needs the approved rates and effective dates before the first invoice, not after.

A client-ready notice

Use a template that reflects the contract. The example below assumes a notice-based variation clause and should be adapted.

Subject: Notice of rate change - [Client name] - [Service]

Dear [Name],

I am writing to give formal notice under clause [x] of the [contract name] that [Supplier] will revise its rates for [service] with effect from [date]. The change is [percentage]%. It reflects [brief cost categories] over [period], supported by the cost summary enclosed.

The scope, service levels and delivery team remain unchanged. [Optional: The new rate will be [amount] per [unit].]

I will call you on [date] to discuss any questions. If you need the notice in a different format for your records, please tell me.

Yours sincerely, [Name]

Send the notice from a monitored address, copy the account owner, and log the date and time. Ask for confirmation of receipt where the contract requires it. Update the contract register, the billing system and the client record on the same day. A rate change that is correct in the letter but wrong in the invoice is still a failure.

The strongest rate change letter is unremarkable. It arrives on time, cites the right clause, explains the cost basis and is followed by a conversation that does not wobble. That is not a matter of tone alone. It is the product of preparation.