Fee Increases in Professional Services: How to Do It Confidently, Clearly, and Without Losing Clients

There is a moment most professional services firms know well. The moment when you realise the fee you charged three years ago has quietly become inadequate – and the thought of raising it fills you with more dread than the work itself ever did.

The challenge of increasing fees is more common than you might think.

I recall a conversation with a partner at a law firm. To secure a client an initial low fee was offered; then they developed a long-term relationship with the client. Since then they typically charge new clients as much as 2x for the same work, but feel unable to move the fees for the loyal client.

Fee increases, done properly, are not difficult conversations. They are a normal, professional reconfirmation of the value you deliver and the cost of delivering it. Firms that approach them that way – clearly, confidently, and with genuine relationship warmth – lose almost no clients because of increases. Firms that apologise and hedge lose both clients and margin.

So how do we do it well?.

Before We Get into the How: What the Market is Actually Telling You

Before getting tactical, it helps to understand what the broader market tells your clients – and what it tells you about your own leverage.

For example, according to the ICAEW, audit fees in the UK have risen around 75% since 2017. In 2024 the Law Society Gazette said that top law firms had increased fees by 40% over 5 years. Total revenue for consulting firms has doubled between 2017 and 2025.

Partly this is due to rising labour costs, but it is also due to skills shortages, digital transformation, training investment, and additional value-add.

This is not just the major firms. As larger firms increased fees, second-tier firms raised prices too, and so on down the chain. The entire market has re-priced.

But here is the key point, and the one that separates firms that hold price from firms that constantly justify it: the strongest basis for a fee increase is not inflation. Inflation can be mentioned, but it should not be the main story. The real justification is value repositioning – a clear-eyed assertion that your fees now properly reflect the quality, responsibility, complexity, and genuine outcomes of the service you provide.

The market leaders in both audit and legal services understand this instinctively. PwC talks about trust and audit quality; KPMG about the confidence independent audit inspires; EY about long-term value creation; RSM about bespoke, tech-enabled work. Clifford Chance positions itself around helping clients redefine their business; DWF explicitly promises efficiency and price certainty; Osborne Clarke advertises fixed annual fees for repeatable work. None of them lead their client conversations by saying "our costs have gone up." They lead with what they do and what it is worth. You should too.

Part 1: The Preparation Phase – Before You Write a Single Word

Segment Your Client Base First

Not all clients should get the same increase, the same timing, or the same conversation. Before writing a single letter, segment your client base.

First, grade every client, and segment them across at least four categories:

Clearly underpriced and strategically valuable. These clients should receive a meaningful increase. Be brave.

Fairly priced and good clients. Raise moderately and confidently. This is the largest group for most firms.

Price-sensitive but worth retaining. Raise, but consider pairing the increase with clearer scope definition, service options, or a restructured package that makes the new fee feel proportionate rather than arbitrary.

Low-value, chronically difficult, or unprofitable clients. Use the increase to reset the economics or, if the relationship is genuinely not worth preserving, allow attrition. Not every client is worth keeping at any price.

Within each group, it also helps to consider three specific axes.

First, profitability: run an effective hourly rate report by client from your practice management system. Clients who are underwater at current fees need the largest increases – or an honest conversation about whether the relationship should continue. Firms with structured pricing models and clear service tiers consistently report better margins (around 48% on average) compared to firms still using pure hourly billing (around 30%).

Second, longevity: long-standing clients often expect gentler treatment on percentage terms, but not zero increase – and you can frame both continuity of service and increasingly deep understanding of their business (which allows you to deliver more value) as part of the justification.

Third, complexity and risk: regulatory changes have materially increased the cost of delivering compliant work. Any client whose work has become more complex since you last re-priced should absorb a higher increase.

Determine the Right Level of Increase

Use these reference points for the UK market in 2025:

- 3.6% (CPI October 2025): the absolute floor – anything less and you are going backwards in real terms

- 4-7%: the market norm for SME accounting and compliance work

- 7-12%: justified where scope has expanded, regulatory requirements have changed, or you have historically underpriced

- 12%+: appropriate for clients who have been severely undercharged, but these require a personal conversation, not just a letter

You should always, in your engagement letters, make it clear from the outset that there will be an annual fee increase. A 3% annual increase is easy for most clients to handle; a 10% hike every five years will cause a backlash. If you have been holding fees flat for several years, you may need to implement a larger catch-up increase now, and then commit to annual indexing thereafter. The catch-up is painful; the annual discipline much less so.

It is also worth separating two different types of increase in your own thinking, because they require different conversations. The annual uplift can be modest and expected – it simply reflects the cost of doing business. The re-scoping uplift should be explicit and tied to demonstrably changed work. Conflating the two, or burying a major scope change inside a token annual percentage, is exactly what makes clients feel blindsided and resentful.

Build Your Justification Narrative

For each tier of client, prepare a brief, factual rationale. The key drivers you can cite honestly in the UK professional services market right now include:

Reasons that work well – because they are client-facing and credible:

·       The scope has expanded or the complexity and risk profile is higher

·       Regulation and reporting expectations have increased (AML supervision, expanded audit standards, Making Tax Digital, PIE auditor registration)

·       Turnaround expectations have increased, or more senior attention is now involved

·       Technology, quality control, and oversight have improved

·       You are delivering more commercial support, not just compliance

·       The fee was historically out of line with the work and value involved

Reasons that work less well – because they are inward-looking and invite procurement behaviour:

·       "Our costs have gone up"

·       "Salaries have risen"

·       "Everyone is increasing fees"

·       "We haven't increased your fee for years" as the only justification

All of those things may be true. But professional services clients do not pay you to solve your cost problems. When the justification is about your firm rather than their outcomes, it triggers exactly the kind of competitive review you are hoping to avoid.

Staff salary inflation is the single largest cost pressure for most professional firms right now, with labour shortages driving wage increases of 4-7% annually. Technology investment, professional indemnity insurance, and regulatory compliance costs are all rising sharply too. These are legitimate reasons. But frame them through the lens of what they mean for the client – better-qualified people on their work, more robust quality controls, reduced risk, compliance with expanded standards – rather than as a cost pass-through.

Part 2: How to Structure the Communication

The Medium Should Match the Magnitude

For a small increase, an email or letter will be more than enough. When you are increasing fees significantly, you should call or meet the client first – a phone call allows you to explain and respond in real time, and is considerably more personal. As a practical guide:

·       Up to 2% increase above inflation: email or letter, with an offer to discuss

·       2-4% increase above inflation: letter or email, followed by a phone call three to five days later

·       4%+ increase above inflation: personal phone call or meeting first, followed by written confirmation

The ideal sequence for any meaningful increase is: relationship-led conversation first, short written confirmation second, revised engagement letter or fee schedule third. Do not start with a cold invoice shock. Law firms that perform well on pricing consistently talk about transparency, upfront estimates, and no surprises; the same principle applies equally to fee increases.

The Six Elements of a Well-Crafted Communication

Avoid tiptoeing around the subject or using hesitant language – this makes clients feel they can negotiate. The structure below works because it is personalised, clear, value-led, and forward-looking. It does not end talking about money.

1. Open with appreciation and a specific achievement. "We have really valued our work with you this year – particularly helping you [resolve the HMRC enquiry / restructure your group / navigate the acquisition / agree new commercial terms with your tenants]." This is not generic flattery; it is personalised proof of value. If you have a previous testimonial or a specific result, open with that.

2. Acknowledge the context briefly. One or two sentences on the market environment. "Like all professional services businesses, our costs – particularly for qualified staff and regulatory compliance – have risen significantly." Keep it short. Do not dwell on your problems.

3. State the change clearly and specifically. Be direct: "Our fees will be increasing by X% with effect from [date]. For you, this will mean an increase from £X to £Y starting with your [month] invoice." Clients respect clarity; vagueness breeds anxiety and negotiation.

4. Restate what they are getting. Briefly list the services covered and, if relevant, anything new you are adding. Even maintaining the same service level has value – continuity of team, institutional knowledge of their business, accessibility.

5. Confirm your commitment and invite dialogue. "We remain committed to delivering the same high-quality service and remain very much focused on your goals. Please do get in touch if you would like to discuss this."

6. Close on a forward-looking note. Reference something you are looking forward to working on together – their next audit cycle, year-end planning, a forthcoming project, the next acquisition. Do not end talking about money. Remind them of your value or refer to a specific goal you can help them achieve.

What Not to Say

Do not apologise. Apologising signals that you doubt the increase is justified, which immediately invites pushback.

Do not over-explain. A long justification reads as insecurity. Two or three reasons, stated plainly, is better than six.

Do not use passive or hedging language. – "we have been thinking about," "we may need to," "unfortunately." These are negotiation signals.

Do not make it personal. "Times are tough for us" is not a professional services justification. Keep the framing market-referenced.

Part 3: Handling Objections

Prepare for the following objections – they account for the vast majority of pushback. Role-play these before your conversations. The goal is not to win the argument; it is to keep the conversation anchored to fairness, scope, and choices.

"This is too much of an increase."

"I completely understand – it is a meaningful change, and I want to make sure it makes sense for you. The increase reflects [specific factors – staff costs / regulatory complexity / scope]. The right comparison is not last year's number on its own, but the current scope, complexity, and support you now require. I am happy to walk you through that. And if the current scope is no longer the right fit for where you are, I am happy to discuss that too."

This response validates without apologising, explains without grovelling, and pivots to scope review – which may actually reveal opportunities to either justify the fee or adjust services in a way that works for both parties.

"I can get this cheaper elsewhere."

"You absolutely can – there are firms that will quote less. The real question is what that means in practice: who is actually doing the work, how much partner time you get, and what the cost is when things get complicated. I am happy to help you think through what to look for in any comparison. But I am also confident that what we provide – [continuity of team / sector knowledge / proactive advice] – is genuinely difficult to replicate at a lower price point."

Do not panic, and do not immediately offer a concession. Many clients raise this as a negotiating tactic without any serious intention to move.

As a variation of this, sometimes the client comes back after a few days and says: “Company XYZ has quoted £xx for the same work, can you match it?”. This is also common with brand new clients following the sending of a proposal.

Don’t immediately negotiate. Instead, ask them: “If the fee is the most important thing then you can get the audit done for £xx from XYZ. But there’s something about me and our firm that made you want to come back to us. What is that?”

Then shut up and listen. Whatever they say…

“That’s why our fee is higher than XYZ’s.”

"We are under a lot of cost pressure right now."

"I understand, and I would like to find a way to make this work. A couple of options worth discussing: we could look at whether there are elements of the current scope we could streamline, or structure the timing of payments differently. What I cannot do is hold the fee at the current level – but I want to make sure we find an arrangement that works."

This acknowledges their reality, offers flexibility on scope or terms (not on price), and holds the line respectfully.

"We have been clients for X years – this feels disloyal."

"That is exactly why I wanted to have this conversation personally rather than just sending a letter – your relationship matters a great deal to us. The increase is not a reflection of anything other than the cost of delivering a genuinely high-quality service in this market. Long-standing relationships are actually where we invest most in going the extra mile."

Loyalty arguments are emotional. Meet them with warmth and facts, not defensiveness.

"Can we phase it in?"

This is a reasonable request and often worth accepting. A phased approach – half the increase now, the balance in six months – reduces the immediate impact without actually conceding the total. It also signals goodwill without sacrificing revenue. Be ready with this option for clients who are genuinely budget-constrained rather than simply resistant.

"You have never charged this before."

"That is fair, and part of the reason I wanted to discuss it in advance. The work has evolved, and the fee now needs to reflect the service level and responsibility involved."

Use Options, Not Concessions

One of the most effective ways to hold price under pressure is to offer structured choices rather than discounting the same offer. When a client resists, present alternatives such as:

·       Core compliance / compliance plus advisory / strategic support

·       Standard turnaround / priority turnaround

·       Fixed scope / capped fee / open-ended with agreed range

·       Annual commitment / project-based / ad hoc

The legal market is particularly supportive of this approach – many firms now openly talk about fixed, capped, or tailored arrangements to give clients certainty and control. It works in accountancy too. Clients who feel they have chosen their service level are far less likely to resent the fee that goes with it.

All of these conversations are easier if you are comfortable negotiating – it is worth checking out my previous blog on the latest research in top-level negotiation: https://www.davidabbottspeaker.com/blog/the-importance-of-negotiation-in-achieving-the-best-price

Part 4: New Clients – Setting the Right Level From Day One

New clients present an entirely different dynamic. You have no relationship to protect, and the fee you quote now becomes the anchor for everything that follows.

Anchor High and Justify Proactively

The research on pricing psychology is consistent: people anchor on the first number they hear and adjust from there. A higher initial quote, well-explained, tends to hold better than a low quote that you try to raise later. For new clients, set your fee at the level you intend to sustain – not a discounted entry price.

Before quoting any figure, carry out proper diagnosis. Ask about the outgoing firm's fee – this gives you an anchor to price against, whether above (positioning on quality) or in the same range (competing on service). Never quote blind. And always frame the work around outcomes and risk rather than hours: what is the result the client is seeking, and what is that worth to them?

A useful phrasing that creates an anchor without locking you in prematurely: "Based on what you have described, matters of this sort typically fall into the £X to £Y range, depending on complexity, pace, and stakeholder input. I would suggest we scope this carefully and then I can recommend the most sensible fee structure." This creates an anchor, preserves room to move, and avoids the trap of underquoting too early.

An additional twist to this anchoring is the order of the numbers. When you say “…typically fall into the £X to £Y range”, make £X the larger number – such as ‘£12k-£10k’. Or use language such as “don’t expect it to be above £12k, but it will almost certainly be more than £10k”. This anchors the larger number.

Depending on the specifics of your firm (i.e. fixed vs variable costs), a 1% increase in fee can lead to anything between 5%-10% rise in operating profits. The compounding effect of undercharging new clients from day one is severe – and almost impossible to correct without disrupting the relationship later.

Use Tiered Packaging Rather Than Hourly Billing

The middle option in a three-tier structure naturally attracts the most clients because it feels like the sensible choice between "too basic" and "more than I need." Clients feel in control when they choose a tier, and they rarely feel pressured. Structure your new client offerings as three clear packages – for example, Compliance, Advisory, and Strategic. Although there is no magic rule regarding the ratio between the three fees/prices, a rule of thumb could be to price the middle tier at roughly 150-160% of the entry tier. Most clients will choose the middle. This approach also makes future increases easier to frame as a tier upgrade rather than a blunt price hike.

If you do present more than one option, start with the highest price first. That creates an anchor. The first price becomes the reference point against which the others are evaluated, and it pulls the final choice upward.

Build Escalation Clauses Into Engagement Letters From the Start

A simple clause such as "Fees will be reviewed annually and adjusted in line with changes in scope and prevailing costs" sets the expectation from day one. Clients who sign this have already, in effect, consented to future reviews. This single structural change removes more friction from future fee conversations than almost anything else you can do.

Part 5: Structural Pricing Improvements

Move Away From Pure Hourly Billing

Value-based pricing aligns fees with the perceived value of services to the client – the impact of delivered work, whether tax savings, risk mitigation, or business growth – rather than simply billing for hours. A piece of tax planning that saves a client £50,000 should not be priced at the same hourly rate as routine compliance.

The shift to fixed-fee or value-based pricing also removes the client's incentive to scope-creep downwards ("can we just cut the number of hours?") and instead focuses the conversation on outcomes. It also removes the perverse incentive on your side to be slow.

Institutionalise the Annual Review Cadence

The most effective firms treat the fee review cycle as a systematic commercial event, not a one-off awkward conversation. For example, the rhythm could be:

·       September/October: review all engagement letters, profitability reports, and scope changes for the coming year

·       October/November: communicate any increases, effective January or April

·       Avoid January to April: this is when clients are stressed about tax compliance deadlines and least receptive to financial conversations

Conduct Scope Reviews Separately From Fee Increases

Scope creep is often the real reason fees have become inadequate, rather than inflation alone. Before raising fees, it is worth reviewing what you are actually doing versus what the engagement letter says. In many cases, you will find you have been doing materially more work for the same price – which gives you a stronger and more defensible case: "Our fees are increasing partly to reflect the additional work we have been doing over the past 12 months." That is far more compelling than a general reference to rising costs.

Even better is to manage scope continuously throughout the engagement. For example, if a piece of work is expected to take 4 months, review work completed against expectations at the end of each month, and summarise activity and progress for the client. If the amount of work has increased due to additional requests from the client, or late supply of information which required evening and weekend work, bring this to their attention early and explain that there will probably be a fee impact because of it. Open up a conversation with them. Do not surprise them at the end of a project or matter with a bigger bill.

Part 6: What the Market Leaders Do – and What You Can Learn From It

BDO has surpassed £1bn in fee income; Grant Thornton UK and RSM hold strong positions through deep national footprints and sustained growth. In commercial law, firms like Freshfields, Clifford Chance, and Eversheds consistently position increases not as cost pass-throughs but as the natural consequence of better-defined, higher-responsibility, more valuable service.

What the leaders do well – and what you can replicate regardless of your size – comes down to a few consistent practices. They communicate fee changes as a normal, expected part of the engagement cycle rather than a difficult conversation. They justify increases by reference to investment in quality, regulatory compliance, and service depth rather than internal cost pressures. They use tiered service structures that naturally migrate clients upward rather than simply raising existing rates. And they use the annual engagement letter renewal as a systematic pricing event, not an administrative formality.

The practical implication: treat your engagement letter renewal not as paperwork but as your primary commercial lever. Every renewal is an opportunity to reprice, rescope, and re-establish value.

Summary Checklist

Before implementing any increase, ensure you can tick the following:

·       The client has been segmented by profitability, complexity, and loyalty

·       The level of increase is justified and benchmarked against market norms

·       Chosen communication channels match the magnitude of the increase

·       All letters or emails are personalised, specific, and free of apologetic language

·       The justification is client-facing (scope, complexity, outcomes) rather than inward-looking (costs, salaries)

·       Objection responses have been rehearsed

·       New engagement letters include an annual review clause

·       A follow-up call is scheduled for 3-5 days after written communication

·       The internal team is briefed so no one contradicts the message in a passing conversation

·       The scope has been reviewed – are you already doing more than the engagement letter says?

The Bottom Line

The best fee increases in professional services do not feel like price hikes. They feel like the logical commercial consequence of a better-defined, higher-responsibility, more valuable service.

The single most important mindset shift is this: the fee conversation is not a confrontation. It is a natural, professional reconfirmation of the value you deliver and the cost of delivering it.

So the winning formula is straightforward. Be early. Be specific. Be client-centred. Be evidence-based. Be firm. And give choices without giving way.

The most effective positioning is not "we are increasing fees because our costs went up." It is this: "We are resetting our fees so they properly reflect the quality, responsibility, complexity, and value of the service we deliver."

That is a statement that requires no apology. Because it is simply true.