Are you happy with your freelance rate? Or would you like to earn more per hour or day? To help you increase your income, we’ve put together the complete guide to successfully raising your freelance rates.
Working out how much to charge freelance clients is, for many new freelancers, one of the trickiest parts of the job. Even for me, after years of freelancing, I hate working out client quotes!
But what do you do if you’re not happy with your freelance rates? Stick with them and become increasingly poor (and miserable)? Or bite the bullets and let your clients know your prices have gone up.
To help you work out what do do, we’ve put together the complete guide to raising your freelance rates, so you can work out how much you’re really earning now, understand why it’s important to raise your rates, get tips on how to do it – and find out how to respond to clients who complain.
How to work out your real freelance rate
So just how much do you earn per hour? Most freelancers, while we may have an idea of our fixed hourly or daily rate, often vary it for some clients.
For example you may have some old and loyal clients for whom you have never raised your prices, or have negotiated a bulk rate discount. Or you may have some small start-up clients that you have offered a special fee because your usual rates would be beyond their budget.
Then you have your main regular clients who you charge your usual rate, as well as a few clients (such as large businesses with generous budgets) who pay slightly more.
Your real hourly freelance rate is the mean average of all of them. To find out how much that is, calculate how much income you have brought in over the past month, and divide it by the number of hours you have worked. This will tell you what price you are actually working for per hour.
(And of course this doesn’t include any hours you may spend on administration, accounting, marketing and networking – when you factor this time into your monthly income, your hourly rate drops.)
Why it’s good to raise your freelance rates
Aside from the fact that you’ll earn more money, there are a number of good reasons to raise your freelance rates:
- You’ll look more professional – when you charge more money, potential clients are likely to perceive you as more experienced and delivering better quality work.
- It could lead to more work, not less – if people think you’re better at what you do (because you’re charging more) they’ll be keener to work with you.
- You can do less work, and still earn more – working for a higher freelance rate means you can actually work less, while earning more.
- You’ll have more time to spend with your family – as a working mum, your time is limited and highly valuable. Being able to earn what you need in a shorter time means you can be with your family more, or do more of the things that you enjoy.
- You can devote more time to your projects and do better work – if you have fewer clients, you can afford to take your time with the work that you do, and practise new techniques and skills that will add to your offerings.
- You’ll be more motivated to work – being paid a good fee for the work you do will help increase your motivation for work, and even help you to enjoy it more.
- You’ll attract better clients – often clients that haggle you down to the last penny are the ones that are the trickiest to deal with. Charging a more professional rate for your work will help to attract more professional clients, who generally need less handling, again saving you time (and stress).
- You can afford to drop difficult clients – if you do have any difficult clients, raising your rates can help you to get rid of them, either because they decide to stop using you, or you can earn enough from other clients to be able to afford to turn down their projects.
- You’ll keep up with the current market rate – if you don’t raise your prices regularly, you’ll gradually find yourself falling further behind other freelancers, which means you’ll gradually earn much less than the current market rate, and will eventually need a big rise to catch up.
How can you earn more without raising your rates?
If, once you’ve worked out your average hourly freelance rate, you’d like it to be higher, there are a few things you can do to earn more without raising your rates:
- Work faster – if you work faster and smarter you can complete an hour’s billable work in less time, and either take on more projects, or have more time for other things.
- Pick projects – identify work you are better and faster at, and specialise in that – and drop projects that take you longer or you don’t enjoy.
- Outsource – if there are aspects of your work that you can outsource to a freelancer or business who charges less than you, then do so.
- Pick clients – do less work for the clients on your lower rates, and more for clients who pay you more.
- Add a service – offer a new service that’s related to what you do now, but can attract more work from your existing clients (preferably at a higher rate).
- Bundle services – repackage your offering by bundling services together in a way that enables you to up-sell and earn more for a shorter period of work.
- Create a pricing strategy – allocate work into price bands to create a pricing strategy – for example you can charge a lower fee for some types of jobs, and more for others, or offer discounts for larger projects or regular work (eg, charge one rate for 5-10 hours of work, and less when clients confirm more, say 10-20).
- Charge by project rather than by hour – by quoting a project price you can decide what hourly rate to actually set on the work.
- Do less – are jobs taking you longer because you’re over-delivering (going above and beyond your clients’ expectations),maybe by doing a bit of extra work to keep them happy, or delivering more options than you’d agreed? Or are you spending too long doing ‘free’ work for clients – perhaps by not charging for lengthy meetings and phone calls in which you’re offering them advice. If so, either stop doing extra work for free, or start charging for it!
But by far the easiest way to earn more money is to raise your rates – and it’s something you should be doing regularly to keep your prices competitive, and ensure your clients properly value your work.
How to tell your freelance clients you’re raising your prices
You may have considered changing your rates in the past, but for most of us, conversations about money are quite awkward, and ones we’d much rather put off.
But unless you have ‘the chat’ you’ll gradually earn less and less per year, and feel resentful at working so hard for such low prices.
To make it easier to broach a conversation about raising your freelance rates with existing clients, try these approaches:
- Be confident – don’t let doubt creep into your tone, whether you’re telling clients by email or speaking to them face-to-face or on the phone.
- Be logical – give them a logical reason as to why you are raising your prices. For example, you haven’t raised them for a few years, your costs have risen or you have invested in new equipment, you are conducting an annual review of your accounts, or you have recently become more qualified.
- Be brief – don’t over-explain your decision, as this will come across as lack of confidence, self-doubt or uncertainty, and will leave room for your clients to challenge your decision.
- Be open to discussion – once you have explained your decision say that you are happy to answer any questions about it if the client wishes – without giving the impression you are inviting negotiation.
What to do if your freelance clients challenge your price rise
It’s quite normal for companies to raise their prices over time (just look at the soaring cost of energy bills and fuel!). And no doubt your own clients are happy to increase their own periodically. So most clients won’t find it unreasonable for you to put your fees up.
But if clients do challenge your rate increase, there are a number of ways you can respond:
- Be firm – whatever you do, don’t backtrack on your decision. It will make it look arbitrary and leave you in a weaker position if you try to raise them again. You’re not asking for a massive rise, just a reasonable rate for your work. If a client really has an issue with it (beyond those that genuinely can’t afford it) then you need to consider whether you really want them as a client.
- Negotiate – if you believe that a client genuinely can’t afford your higher rate, and you want to continue working for them, you can choose to negotiate a new fee somewhere between your old price and the proposed one.
- Work smarter – alternatively, if your clients can’t afford your new rate, offer to do less or work differently. For example, you could work for shorter periods but at the higher rate, or agree to deliver less for the money. Or you may suggest a new solution for delivering what they need that takes you less time, so in the end works out the same rate for them.
Value your work and charge accordingly
While few freelancers want (or can afford to) lose clients, sometimes the only way to get paid your worth and attract the kind of clients you want is to be brave and charge more.
If it doesn’t work out – or if you discover that you’re pricing yourself out of the market – you can always drop your rates back down. But if you don’t try, you’ll never know. And if you do price yourself competitively, experience shows that raising your rates does pay.
What’s your experience? Have you raised your freelance prices? And if so, what happened? Let us know in comments below!Hannah Martin