Chase What You’re Worth: 6 Signs it’s Time to Raise Your Freelance Rates
December 6, 2016
Raising freelance rates is part of the business. So as the year draws to a close, now is an opportune time for you to revisit your rate card and adjust accordingly for the coming year.
Whether you bill by the hour, the word or the project, you’re leaving money on the table if you’ve been cruising on autopilot, rather than revising your freelance rates as you gain new skills and experience. Here’s a look at several scenarios. If you fall under one (or more) of these instances, it’s time to swap your rate for a new one.
You Never Raised Your Prices… Ever
Many newbie freelancers start with low rates to attract clients but forget to increase their pricing as their skills improve. The cost of living has crept up over the past several years, and the cost of many goods and services have increased faster than inflation. If you’re still charging the same rates as when you first started freelancing, consider giving it a little bump.
You’re Priced Well Below Competitors Doing Similar Work
Not all freelancers charge the same rate for similar work—so your colleague could be earning nearly twice as much from the same client through mere negotiation. If you know what other freelancers in your industry charge (generally or specifically to that client), it can help you negotiate higher rates. Freelance writers should check out Who Pays Writers and the Editorial Freelancers Association’s rate chart, while photographers might be interested in SmartShoot’s pricing survey results. In some cases, you can also see rate information through online forums or by chatting with other freelancers. Remember: knowledge is power!
Here’s a look at how FreshBooks customers from different industries charge for their work:
You Gained More Experienced (and Can Show for It)
As you gain more skills or build on your existing once, you become more valuable to your freelance clients. If you charge by the hour and you’re getting more efficient as you move from project to project, then your clients are getting a bargain. But, you’re not getting ahead financially. Even if you don’t charge by the hour, extra skills like advanced SEO knowledge, project management, communication or negotiation skills can also help you justify higher project rates.
You Attract High Maintenance Clients
Paradoxically, the low-paying freelance clients are often the highest maintenance, emailing 20 times a day to ask for updates and demanding countless iterations. High-paying clients often value your expertise more and don’t try to micro-manage, but since your low-ball rates don’t instill confidence, there’s a chance they may shop elsewhere. If you’re attracting lots of clients with sky-high expectations and bargain-basement prices, it’s time to rethink your pricing.
You Receive More Work than You Can Handle
As you gain more skills or build on your existing once, you become more valuable to your freelance clients.
If you consistently feel like there aren’t enough hours in the day to finish your work or meet your income goals, then you’re probably charging too little. You could subcontract some of that work to other freelancers, but you’ll likely want to increase your rate so that you can make a little money on project management and pay your subcontractors a decent rate. Raising rates for your own work will also naturally help weed out some clients and allow you to earn more in less time so you don’t feel as frazzled.
Your Prospects Never Balk at Your Prices
Frankly, some clients just have unrealistic expectations of what a service should cost. If prospects never try to haggle or raise budget concerns, it could mean you’re great at communicating your value and attracting clients who appreciate your expertise. Or you could be leaving money on the table. You know you’ve reached a pricing sweet spot when not all prospects can afford you but you’re still getting enough work to keep you busy.
Of course, there’s always the difficult dance of communicating your price hike to existing clients. Once you’ve decided to raise prices, you have a few options.
If You Can’t Afford to Lose Existing Clients, Raise Prices for New Clients Only
The easiest way to test the waters of new pricing without the risk of losing existing clients is to simply quote higher rates for new clients and maintain the status quo with your current ones. By quoting higher with new prospects, you can see what the market can handle and ensure that you’re attracting new clients who truly value you.
If You Have Preferred Clients, Raise Prices for New Clients and Those You Feel are Under-Paying You
If you want to continue serving low-maintenance, long-time clients, you could leave your pricing alone. For instance. maybe you’ve established a good relationship and you don’t mind slightly lower rates for these legacy projects. In this case, implement higher pricing for new clients and the high-maintenance existing clients. If your high-maintenance clients agree to higher prices, then the rate hike should help you justify the extra work (and headaches). If not, then you’ve just walked away from a high-maintenance client. Now, you can focus on your legacy clients and work on attracting new ones.
If You Feel Like You’ve Been Undercharging Completely, Raise Prices Across the Board
If you plan on raising prices for all existing clients, do your due-diligence and notify them in advance. This way they can adjust their budgets and continue to work with you. In this instance, you might want to roll out your new pricing gradually. Send a letter or email stating that you value their business and want to continue to provide a high level of service, so freelance rates will increase as of January 1. Some of your existing clients may decide to jump ship, freeing you up for better-paying work. But, hopefully, the higher rates will help offset the loss of any existing clients and help you attract higher-quality clients.
Many freelancers despise negotiating, yet it’s a necessary part of the job (or any job, rather). We’re fortunate not to be limited by a salary, but we also have to hustle to negotiate payments more often than salaried employees. And, unless we ask for what we’re worth, we won’t get it.