How to raise your rates as a freelancer
Working too hard for too little? Learn five signs it’s time to raise your rates – and how to do it.
Money can be a tough topic to discuss, yet it’s such an important part of your career as a freelancer or contractor. It can define your level of experience, match your skill set and show how you value yourself professionally.
So what happens when it’s time to raise your rates? In this blog Jenny Winslow from Intouch Accounting advises on how to charge your perfect rate without losing clients, and get paid your true professional value.
Five signs it’s time to raise your rates
There may be many reasons as to why you’re considering raising your rates; here’s a few common reasons why it’s a good idea to raise your rates:
1) You’re charging below market value
How much do other contractors and freelancers offering similar services charge their clients? Do they charge an hourly or day rate, or do they charge per job?
A quick search once every few months will soon show you whether your rates are compatible.
2) You’ve got too much work to do and not enough time
Having a strong flow of work is every contractor and freelancer’s dream, but if you’re always busy doing lots of little jobs that demand just as much attention as one larger, better paid job, then it’s worth re-evaluating what’s important to you.
3) Your skillset has increased
It’s only natural that over time you’ll become quicker and better at what you do, and no doubt you’ll pick up new skills – so why not charge more for this? Afterall, your client is the person who will benefit from this, and if they value this they should pay more.
4) Your overhead costs are increasing
You have to be able to afford to do what you do, so if the cost of being able to is increasing, you’ll have to pass this onto your client.
5) You want more money!
When in permanent employment if you wanted more money you simply had to ask your boss for a payrise. It doesn’t always mean you’ll get it, but at least there’s a simple way of asking. If you want more money as a contractor or freelancer, you’ll have to ask your clients.
How to raise your freelance rates with clients
If you already have an established client base, asking for higher rates can be slightly more tricky than introducing a higher fee when you’re working with new clients. You’ll probably feel more inclined to justify why you’ve raised your rates, and will have to be transparent.
One good way to do this is to write an email or letter to your clients, outlining how much you’re raising your rates by, why you’re doing so and how much you value your relationship and their business.
It might be worth also reminding them of a successful project of theirs you’ve worked on, which will reinforce and remind them of the value that you’ve added to their business in the past.
Know your value
Always remember that a good freelancer or contractor is worth their weight in gold to a client, so if you know your value then a small and justifiable price rise will not be a huge problem.
If a client isn’t willing to pay more for your services and you don’t see any value in your professional relationship, you’re better off looking for a new client who’s willing to pay your rates, rather than charging less for one who don’t value you.
Struggle to know your value? Read these articles:
- The five secrets of charging what you’re worth
- Are you afraid to charge what you’re worth?
- Four reasons why clients think you’re too expensive
- How to put off clients with small budgets (and why you should)
How to write your letter
When writing your letter or email, be sure to include the following:
- Outline how much you’ll be increasing your rate by.
- Explain why you’re doing so. If it’s because you’ve increased your skillset, outline what those new skills are, and how they’ll benefit the client and their upcoming projects.
- Remind them of successful projects you’ve collaborated on in the past. Tell them why you enjoyed working on them and how you look forward to contributing to their future projects.
- Be sure to give your clients plenty of notice of your price increase. The more open and honest you are, the better it will be received.
- Let the client know of the pride you take in your work, and how an increase in your rates mean you’re able to continue to provide the same level of work they’ve come to know and expect from you.
- Invite the client to discuss your price rise should they wish to. It shows you’re not afraid to discuss inflammatory topics and you’re open to hearing their thoughts on your increase.
What to do after you’ve sent your price increase letter or email
Be available to speak to your clients to answer their questions and queries. If you haven’t heard back from them in a week, follow up with a courtesy email to ensure they’ve acknowledged it.
And remember why you’ve requested a price increase in the first place! You have an end goal, and once you’ve implemented one price rise, you’ll find future rises much easier.
Jenny Winslow works for Intouch Accounting, the expert contractor accountancy firm for Limited Company contractors.
Photo by Tatiana Niño