The Price is Right: know when to raise your rates
April 28, 2011
Every employed person has the hopes that, as time goes on, they’ll be rewarded for their good work, loyalty and commitment with a raise in pay. Freelancers are not guaranteed such raises and must find the right moment to renegotiate the cost for their time. Changing the terms in your contract can feel tricky – you don’t want to threaten your relationships with your client yet adjusting your price to reflect your ability is important.
We’ve collected some of the main considerations about timing that can help you design your approach.
5 sure-fire signs it’s time for a raise
1. If you are always feeling swamped, then you may be putting in more hours of work per week than actually fits your schedule. It’s obvious that you have talent and skills that are pleasing your clients or you wouldn’t be getting so much work. Raising your rates may weed out a couple of clients who don’t want to pay any more than they already are which in turn reduces your workload and helps you get focused with a smaller number of clients.
2. Perhaps your originally discussed rate was lower than you intended and despite your hard work, you’re on just getting by. A recent blog post from IT Freelancers and Contractors suggests setting regular rate reviews and sticking to them. That doesn’t mean you have to raise your rates every year, but make sure to look them over regularly and consider whether it’s time (or not) to ask your clients for a raise.
3. Freelancers sometimes start out trying to undercut the competition but this kind of pricing model is only sustainable for a short while. There comes a time when freelancers have proven their abilities and value, at which point it is time to stop competing on price.
4. Beginning freelancers may need to take a year or two before raising their rates while they cultivate a more varied portfolio. As you build your reputation as a talented freelancer you will have proven your abilities and should consider notifying clients that your experience now translates into a higher value for your service.
5. When the stress level is so much that you start wishing you had a staff job, then it’s probably time to raise your rates. Freelancember lists 10 red flags that indicate a contract has become too stressful (granted some are quite tongue-in-cheek).
A freelancer who advised me years ago would tell me a story about how she chose to raise her rates at a point where she became too busy. Sure, she lost a few clients but, to her surprise, many didn’t even cock an eyebrow when she upped her rate. She capitalized on how businesses expect to pay for work, and work priced too low is worrisome. Looking like a confident professional means charging professional rates, so take a self-assured stance when updating your rate to accurately reflect your ability and talents.