I don't believe you need to explain, most service businesses in general review contracts at least every year. When gas prices go up, the oil companies certainly don't call us to explain, utility services, etc. A simple letter and new contract works best. An explanation almost certainly leads to the client thinking it's negotiable or combatable. Since I bill flat fee based on time/expenses, once a year I look at reports I run in my CMS and it tells me the story, if I need to raise my rate I do, if I'm spending too much time on one account but my rate is fair, I just cut back on time. I then will send a letter to the clients I need to adjust rates for and so far, none have even questioned it. In all my original contracts there is a clause that I can raise / adjust rates with 30 days notice and that the contract is amended so the client doesn't need to sign again as they signed knowing the rate would be adjusted and I send them the amended contract.