Raising Freelance Rates: How & Why to Boost Your Prices
I’ll tell you a secret. Each professional freelancer has had insecurities and fears about their services and skills. Human nature can exert pressure on even the most successful freelancers.
What do you think?
These freelancers overcame their fears and increased their rates anyway.
It’s hard to find specific, good tips for raising rates the first time. we asked professional content marketers, writers, designers, and programmers for their advice.
Learn from the experts how to increase your rates when you are a newbie. You’ll find a bonus at the end of this article after you have read the expert advice. Scroll down to the bottom to find out how you can generate more income.
Your time is worth more than what you charge. According to reports such as Payoneer’s 2018 Freelancers Income Report, your time is worth more than one-half times what you’re charging. Fear can be a major obstacle to your success. You will continue to work hard for clients, but you’ll be underpaid.
You may see rapid growth in the early months of your freelance business, but it could be because you’re charging low rates. Waiting is a bad idea, as the cost of missed opportunities is high.
Consider that you’re a typical freelancer in 2018. You bill $19 per hour and work 30 hours per week.
You’ll earn $29,640 this year and $148,200 cumulatively over the next five years. Let’s now project your income over the next five-year period with a 50% increase in your rates. Next, you can increase your rates by 200% and 100%.
- An increase of just 50% can give you an extra $14,820 this year. And an additional $74,100 if you look at it over five years.
- An increase of 100% can bring you $29,640 more in 2018, and $148,200 extra over five years.
- Finally, a 200% increase in your rates could net you an additional $59280 this year, and $296400 over the next five-year period!
Woah. A 50% raise below the average can bring you 74 grand over the next five-year period.
Are you feeling the pressure to increase your freelance rates?
Start by establishing a strong business foundation
Many freelancers begin with little experience and a small portfolio. Your first months as a freelancer will be filled with hard work to set up your business.
You need to:
- Prove your skill set
- Build leverage
You will need to be a hustler if you want both ingredients. To build a portfolio that demonstrates your abilities, you need to take on large projects. You need to have a steady stream of clients who will pay you regularly and allow you to increase your rates when you bring on new ones.
How do you deal with the first period of hustlers?
Adopt the same mindset as Jacob McMillen, a copywriter and content strategist at the start of his career. “If we are available for an hour and someone is willing to pay to write something we will do it. “
Jacob’s income can be affected practically by:
As we built out my SEO for my site, we knew we could raise my price once we reached a point where we had more work requests than hours available. This would allow me to eliminate the lower-paying gigs while still filling my time. Let’s say that my initial price is around $0.10 per phrase, which we believe to be a reasonable amount. After we filled my schedule at $0.10 per phrase, we started to quote $0.15 per phrase when we received new leads.
He split his customers into short-term and longer-term clients to raise his prices.
Over time, we increased my rates for short-term customers based on demand. When we reach a point where my availability is always filled at my current rate we increase my rates to attract new clients. we do this until my availability is again filled at the new rate. Then we raise the rate again. This is possible because my lead channels consistently bring me, new clients, every month.
The majority of other professionals we interviewed in my research used a similar approach. Sophie Lizard, a content strategist, and writer, said: “The first time we increased my rates were between clients. Just by quoting higher rates to my second client compared to my first client. “
Bamidele Onibalusi, a freelance writer, also adopted a “two-pronged” approach.
This meant that we charged existing clients less than new ones. It meant that we charged existing clients less money than we charged new clients. This was to avoid a situation where we would be in a bad position if the rate increase did not work for existing clients. After we have a few clients paying the new rate, and can afford to lose those who don’t, we tell my existing clients. The situation was still fragile. It was important to avoid being too sudden, as it could lead me to lose clients.
Carol Tice, a writer, also recommends that you raise rates first with new clients as they have never paid their old rate.
Can you identify a common theme in these cases? All freelancers focused on generating an influx of potential clients. Beginner freelancers are rarely able to generate leads for their service.
You can use a variety of strategies to get around this, including optimizing your website, posting guest posts on websites that are popular with your clients, or running targeted ads.
Referrals from current clients are your best leads.
My writing business received early leads by providing my clients with high-quality writing. It is important to provide great work to your clients and get them to endorse you. This will help to build trust among prospective clients. It’s also nice to receive such emails (even if you didn’t ask for them) from existing clients.
It is not very common to get your name wrong.
This email led to my highest-paying gig ever.
In the beginning, we would also recommend finding indirect ways to provide value to your potential clients. You could suggest design/development updates to their website in your roadmapping session, or during the project communication. You could also feature them on your blog in order to boost your reputation.
In one instance, when we were able to land some new high-quality leads, we created a listing of thought leaders within my industry and sent them all an email. This resulted in me receiving many inquiries about my services and generating over $20,000 of revenue.
Ryan Robinson, a content marketing consultant, also suggests cold emailing to attract the attention of potential clients.
Check out the email below, in which Ryan contacted a founder of a startup. He requested a quote for his blog, and was able to generate over $50,000 in revenue as he developed the relationship.
To build a solid business foundation, you should also actively build your network through niche communities such as those on Facebook, LinkedIn, Slack and other platforms. This is how Elise dopson, a B2B freelance writer expert, gets most of her leads. This is especially useful in the lonely pursuits of freelance writing.
Most of my freelance leads come from people in my network. we are active in several Slack communities and run one for freelancers where we have a channel called #jobs to share work or find people to refer. This is a great way to make friends (because freelancing can often be lonely) and also increase your chances of finding more work.
What You Must Do Before Starting with a New Customer
Brennan Dunn teaches that you can justify an increase in freelance rates by anchoring them against the value of your services to a company. The goal is to generate a healthy return on investment for your client.
Rarely, you may find revenue figures for a company. You can then use the industry averages to calculate your value.
I was unable to convince a client that we would charge my desired rate because we calculated ROI based on revenue, not profit.
Bummer. we know.
I did, however, negotiate a rate higher than what he initially insisted.
It is difficult to determine the revenue of an organization in most cases. You can ask for performance metrics before working with a customer.
Lucy Damasceno worked first to get clients who requested some of her monthly services. She then asked for an increase because she could show stats and results.
She says that Google Analytics reports showed the amount of time my visitors spent reading articles. They also showed a lower bounce rate and an increase in conversions.
You must first establish trust with your client before you can request access to sensitive data. Lucy already had a good relationship with her clients, since she kept in contact with them regularly. She doesn’t hesitate to ask for stats right at the start of an engagement.
Even before the first day, we discuss data with them as we talk about my job. They don’t reveal everything on day one. In general, we get my first report after about 3 months.
What type of information does she ask for?
I always ask for relevant reports, and not full access to Google Analytics. Although some clients give me full access – perhaps because it is easier for them.
Lucy’s request for reports and data is clarified in the following way:
“My writing is tailored 100% to the target audience of my clients. we also reuse a lot of content. “I need reliable data for both of these reasons. “
You can sometimes get away with asking for analytics after you’ve done your work. The following screenshot was presented to me when we asked for a review and raise of my performance.
My relationship was not at the point where we could have justified a pay raise. This shows the importance to work long-term.
How to Increase Your Rates with Existing Clients
When your business reaches a certain level of demand, you can increase your fee with your existing clients. Jacob McMillan suggests that you give your client a raise of one to two months’ worth to help them adjust.
Here’s a possible process:
You should consider personalizing your percentage raise for each client, rather than aiming for the same multiplier. Carol Tice suggests aiming for a 5%- 10% increase rather than a 50% or 100%.
Lucy Damasceno’s raise ranged from 30% to 100%. we approached each client one by one, starting with those who were most likely to accept the raise. So we could learn from my mistakes and not lose all my clients at once. “Thankfully, all of my clients responded positively. “
Let’s now look at how you can inform your clients. Sophie Lizard dropped the news of your raise in an email.
It was easy to raise rates with the same client for the first. we sent the client an email and explained:
- A) My rates will increase at a certain date shortly
- B) If they were happy to continue at the current rate, there was no need to change anything.
- If they want to discuss this change, we would be happy to hear any comments or questions.
Does she justify her raise?
I did not give a reason in the email for the rate increase. Instead, we stated it as an upcoming fact. This made accepting the change as easy as possible. we based my decision on the fact that they were very satisfied with my work, and would not want to begin again with another writer.
Sophie still uses the same approach, but she reminds her clients of the successes she has helped them achieve.
Reuven Learner is a programmer with many talents. He approached price negotiations differently. Reuven did not raise his prices for a long, long time. He was happy with the money he received. He only charged slightly more for new clients. However, when he did raise his rates, it was on a “one-off basis, rather than an across-the-board change. “
He said, “I’d explain that my service is more in demand. we are raising them to reflect that. “
He was still undercharging. In retrospect, we think they understood because we didn’t charge them enough.
Reuven suggests the formula below if you are unsure of how much to increase your rates.
First, we raise rates for new clients. If we are not sure how much to increase them, we test it on new clients by giving them a higher rate. When they start to panic, we tell them that we are willing to lower the rate a little. After three or four such conversations, it’s possible to determine the maximum amount that people will pay. Then we make it my standard rate for about a year.
Jacob makes an excellent argument about how you can lose money by quoting high rates. When a client’s email arrives in your inbox you have no idea what their budget is. You lose $3,000 if you quote $5,000 for a budget of only $3,000. If you quote $5,000 on a budget of $10,000, it costs you $5,000.
How do you solve this dilemma? He suggests you base your decision on what you would like to be paid, which is based on market rates and demand.
If we are really busy, we may quote higher than usual because we will want to work harder that month. If it’s a slow time of the month, we may quote lower because we would rather have the money guaranteed than not get the sale.
Elise Dopson does not follow a standard process when it comes to raising rates for a client. Here’s what she does to determine if her prices are too low.
If we receive three inquiries at $500, we will quote $575 for the next set of inquiries. This is the best way to ensure you are not undercharging and determine if your rates are too high (which they are often).
You need to communicate and position yourself well when it comes to increasing your freelance rates.
Reuven would usually communicate an increase in his rates after some time. “I value our relationship so much that we have grandfathered in my old rates to cover the past year. You’re my last client who paid this amount and it’s time to raise the rates.
It works mainly well!
They like to hear that they’ve been paying less and that we value our relationship. “The only pushback that we get from clients is to ask me not to raise rates in the future for a little while. “
Increase revenue per client without increasing freelance rates
Another way to increase revenue is by retaining your current clients.
You’ll probably discover that if you analyze your client’s needs about what you offer, there are a few more business needs they could meet.
Your job now is to make a product more valuable for your client. You’ll get more money from your client if you relieve them of additional duties. The best brands in the world use this classic strategy to upsell.
Jacob McMillen is always looking for upselling opportunities to offer his clients. “I am always trying to turn writing gigs into content marketing gigs, where we manage the strategy, promotion, and SEO. “In addition to the writing. “
Mayank and Prerna are doing something similar at Content Bistro. To build credibility and attract more clients, they started by offering packages at reasonable prices. They approach the issue of increasing their rates from a “skill development” perspective.
We began by offering social media services that were done for you. Then we added SEO services, marketing, data analysis, and many other services. We began to package and productize services to charge higher prices and build long-term relationships.
What is the secret to avoiding price pushback from repeat clients?
Our current specialization is Conversion copywriting, CRO services, and launch and marketing strategy. “We continue to provide more value to our customers every time they return to us and therefore we’ve never been pushed back on price. “
What If You Get Objections To Your Rate Increases?
You can avoid the tension of raising rates by setting a flat fee for a project that takes into account your preferences. Janelle All who helps companies create customized online courses swears by the technique. “I’ve never had any friction when raising my rates. “I charge a flat fee for projects, rather than hourly. we simply build my preferred rate into the project fee. “
She believes that the best way to eliminate friction is to “educate and add value” before discussing price.
However, it’s inevitable. Your clients may not be pleased to hear about the increased prices.
You can still work with these people?
Yes. Negotiating the scope of a project instead of the rate is one way to handle objections. Janelle has done it and I’ve done the same. My pay remained the same but the work of uploading WordPress posts was reduced.
Bamidele Onibalusi sent the following email to announce his promotion many years ago.
The client did six articles per month. He accepted the increase but reduced it to five to stay within budget. It’s still a win since we get paid the same amount for one article.
Bamidele believes that the proposal above was accepted because of certain essential elements:
- I don’t raise the salary too much, like in this example. The majority of clients can easily accept a 20% increase over one that is 50% or higher.
- I explained the reason for the increase, focusing on improving the article so they could get better results. To justify a pay increase, we would mention that we had so many clients and we would have to eventually drop them if we continued to charge the same rate.
Caution: Making an article “better”, as Bamidele suggests, is a tricky tactic. This could cause the client to question why you didn’t do your best work.
You need to explain how the “extra” service you offer will benefit your client in achieving better results. Writing “better” in the case of blog articles could mean adding screenshots, references, and anything else that adds value. Business metrics that could be associated with this include increased website engagement, improved time on page, and improved search ranking.
A client offered me $150 to write detailed blog posts of 1,000+ words. we asked to negotiate the price as writing such detailed content took a long time. we offered my long-form content, which has been proven to perform better in search engine rankings.
I included in the email proof that such content had worked well for me and my clients.
We settled on $200 for each piece after a few email exchanges.
I gave them time to prepare. In this case, we gave them more than two weeks to prepare. Some people recommend a month’s notice. “Regardless, an abrupt ‘I’ve raised my rates immediately’ notification to clients will likely cost you the relationship. “
If you are still not satisfied with the pushback, you can walk away from the agreement.
It makes sense, as your time and availability are limited, to choose clients who you enjoy working with and who pay well. Pareto’s principle was the foundation of my business. we built it by focusing on a small group of clients who generated 80% of the revenue. we concentrated on providing quality services to 20% of clients and ignored the rest.
Do not overthink raising your freelance rates
Remind your clients that this is a professional relationship. It’s nothing personal. Reuven gives the perfect parting advice.
It can be intimidating to tell someone what you plan to charge when you are new in consulting. It’s hard to believe that someone will pay (and pay a lot!) for your consulting services.
What about raising your freelance rates to compensate for the increase in costs?
You feel even worse because:
a) they may leave me and give me nothing instead of giving me more.
They may see it as some kind of betrayal.
It is not the case.
They know that it’s a commercial relationship and sometimes the prices will have to increase.
Bonus Website Review: What is stopping you from raising your freelance rates?
Do you think about adding a few more projects to your resume before you are “ready” to increase rates?
If you answered yes, then I’ve got bad news for your: You are likely undercharging.
You’re worth MORE.
Share your website link in the comments below if you are a consultant, freelancer, or struggling to raise rates. For the 15 first people to comment, we will look at your site and offer specific strategies for upselling, positioning, branding, and communicating your value. This could help you increase your rates and generate additional revenue.
