Freelancers! Here’s How to Successfully Raise Your Rates
How much should I charge? This is one of the questions I hear most often from people who are thinking about going into freelance work. I never know what to say; negotiation has never been my strong suit. I usually advise them to assess the market, decide what they’re worth, and settle on a minimum acceptable rate. That’s what I did. Lately, however, I’ve been asking a question of my own: should I raise my rates? Because here’s the ugly truth: even after a year of freelancing, I still dread working out client quotes.
When it comes to my per article rate, I’ve been consistently raising it during the last few months. I started out charging very little, so it only made sense I worked my way up. Once you’ve been in the business for a while and heard some horror stories, it becomes easier to determine your true value and start charging accordingly. On the other hand, I have a client who I’ve been working with from the very beginning on a per hour basis and I’ve recently been thinking about slightly upping my hourly rate. After all, it’s been a year now. He shouldn’t have a problem with it. Right?
Well, not exactly. Raising your rates for existing clients is basically like asking for a raise when you’ve been with the same company for a while. The same rules apply. You should only do it when you feel like you’re truly helping the client earn more money, when you’ve been diligently going the extra mile for the company, or when you’ve gained new skills that help you perform better. As long as you’re doing the same job without any standout results, it’s unlikely you’ll get the extra cash, regardless of how long you’ve been an employee.
In my case, I’ve been slammed with new projects and actually just did the minimum required for my longtime client in the last few months, so raising my rates at the moment is out of the question. I can come up with a strategy to up my game and consider this possibility again in a couple of months, but that’s about it.
That being said, if you’re confident that should raise your rates, there’s a right and wrong way to do it. To make sure that your existing clients will stay on board after the price bump, read on.
Why It’s a Good Idea to Raise Your Rates
Let’s start with the obvious reason: you’ll earn more money. But this isn’t the only benefit that comes with price bumps. Clients can perceive you as being more professional and valuable. You can look more experienced, which means there’s a greater chance you will deliver better quality work. And if people think you’re better at what you do, this can actually lead to more work, not less.
Plus, you can free up your schedule a bit – drop those projects that aren’t bringing in much cash and focus on those with the higher earning potential. You can devote more time to assignments that are really important and deliver even more impressive work. Moreover, there’s a good chance you’ll attract better clients – if they’re willing to pay more, it’s unlikely they’ll haggle you down to the last penny. Yay! Last but not least, raising your rates allows you to keep up with the current market rate. It’s much harder to catch up when you fall behind.
What Not to Do
While raising your rates is a good idea, doing it the wrong way can lead to losing longtime clients. Here’s what you should never do when considering a price bump:
- Don’t raise your rates because you simply want more money. This might work for new clients, but existing ones will see right through you and bolt. Remember: there’s only one reason to raise your rates - because you are providing more value to clients.
- Don’t do it too often. Raising your rates every month is not sustainable in the long run. It’s unlikely clients will stick with you if they’re faced with higher invoices month after month.
- Don’t be unreasonable. Doubling your rates is a bit rash. A 15-20 percent bump is generally OK.
- Don’t apologize. You might be tempted to send your client an email in the lines of: ‘I’ve decided to raise my rates by 15%. I’m sorry to do this, but you know how it is.’ This makes you look unprofessional and timid. Two words no one wants people to associate with their personal brand.
Now that you know what not to do, let’s see what works when it comes to discussing price bumps with longtime clients.
How to Approach Existing Clients
Conversations about money are awkward at best. To make sure you put your best foot forward, follow these tips:
- Give them your reason – a logical reason as to why you’ve decided to increase your rate will go a long way. Tell the client that you haven’t raised it for a while, that you’ve recently become more qualified, or that you feel like you’re providing valuable work that should be better compensated.
- Be brief – while giving them a reason for the upcoming price bump is great, don’t over-explain yourself. You will only appear uncertain and invite them to challenge your decision.
- Be confident – whether you approach your clients via e-mail, phone, or face-to-face, stay confident. Smile politely, sit up straight, use a calm tone.
- Allow them to ask questions - once you explain your decision, tell them you welcome any questions they might have. Have a list of all the good work you’ve done for them handy and share it if necessary.
- Flatter – don’t forget to tell the client that it’s been wonderful to collaborate with them and that you’d really like to continue your working relationship. You can also explain that you’re becoming more selective about your clientele because you want to focus on delivering better work. That’s always a good reason for bumping your rates, at least in my book.
- Over-perform – do exceptional work in the weeks leading up to our big announcement. Do your best to make yourself indispensable, so that the client will be more open to discussing your new rates.
It can take time to learn how to value your own work and charge accordingly. If clients don’t accept your new rate, you can always negotiate. But if that doesn’t work either, moving on might be best. It’s scary to dump a longtime client, but it’s worth it if your new ones are willing to pay more. At the end of the day, you’re running a business. Better make sure that business is as profitable as possible.