Somebody emailed me the following:
I am _______ as many people would call me I was a photographer in ______ (Philippine city) but now residing here in ________(U.S. city) I would want to be a photographer here. So I started out small with a home studio and got clients from the _______ industry here because I got an agency who sends me clients. But my rates are low as of the moment and I would like to go to the next level of rates by next month.
My questions are:
How do I do this with my previous clients?
How do I tell the agency that I would raise my prices?
I deleted his personal information so I could share this with you. I would like to attempt to answer it, and would welcome comments and suggestions from other readers.
Dear ________,
Your situation may be a little different from ours, but I’m sure we share the same downward pressures on prices nowadays. I understand the need to make a reasonable profit, so let me share these thoughts with you.
Seriously, you start by computing your breakeven costs. Then you decide what profit margin you would like to make. Those two steps are not as easy as they sound but you can always check the Internet or some accounting books on how to do the first step. As for the second step, you may need to combine a study of your own cost of living and your aspirations. That should lead you to the second component of pricing- your profit margin.
You asked how you can justify raising your prices. If your prices have been really low, maybe you can point out that you did some computations and learned that you were losing with every job that you were making, so you have to adjust prices upwards to earn a decent and reasonable profit.
I used to use the rising cost of gasoline as a reason for raising prices, but gasoline prices are down. 
Sometimes, it’s because taxes or minimum wages were raised. But while clients sympathize with us about our need to raise prices because of rising cost of doing business, they are still reluctant to pay more to get the same service from us. Hopefully, they like you enough to agree to the move you’re comtemplating.
“So, what’s in it for me,?” is a question clients or customers have a right to ask. While you may feel justified in raising prices because you have invested in new equipment, you would still need to translate what benefits your client, not just you, will get from your new camera, lens, digital back, lights or studio.
When we converted from film to digital in year 2000, it was a major investment for us. The only way that we could defend higher prices for switching to the new technology was by pointing out that the new way allowed our clients to see results instantly and get their images at least a couple of days sooner. Plus, they did not have to spend on scanning transparencies. Their savings and enhanced benefits were obviously more than the additional fees that we were charging for going digital.
Whatever your reason for raising prices, you should be able to point out that your additional price means additional benefits to your clients. Remember that nobody likes paying more when they are not getting more, so think hard – what new, additional or improved benefits are you delivering to your clients to justify their paying you more?