As a freelancer, having to decide on your own rates can be a cause of financial anxiety. However, one of the greatest advantages of freelancing is that you have the flexibility and freedom to rearrange them whenever and however you want. To avoid underselling your services, you should consider taking matters into your own hands and raising your freelance rates.In this article, we’ll go into some of the key reasons why you should raise your freelance fees and charges, and how to go about doing it without losing any clients. (Make sure to read until the end to see our example freelance rate increase letter, which can help you negotiate your hourly rate.)
When should you increase your freelance rate?
There is no freelance fee guide that can determine whether it’s the right time for you to be raising freelance rates. If you’re on the fence, you can try listing the reasons why you should be raising prices as a freelancer. This can help you make your decision easier.For starters, you can consider the questions we’ve compiled in the checklist below.
6 questions to ask yourself before deciding to raise your freelance rate
1. Has there been any unexpected shifts in the economy, worldwide or otherwise (e.g. inflation, recession, tax rate changes)?
This item is almost a given, considering that the global inflation rate is forecasted to reach 7.5% by the end of 2022. If you work freelance, you should definitely adjust prices for inflation. You deserve to be paid fairly within the fluctuating market prices.
2. Have you improved your business and services since you last set your rates?
As you move along in your freelance journey, you gain more experience and improve your skills. This raises the quality of your services, and should be reflected in your rates.
3. Has there been an increase in demand for your services? Do you find yourself more frequently booked than before?
This might mean that your market and niche are in high demand, or that you yourself are becoming a top-notch freelancer in your area of expertise. No matter which of the both options is correct, you might be seriously underselling yourself. Your prices should be in balance with the increased market demand.
4. Are you feeling that your workload is negatively affecting your mental health?
If this is the case, then rearranging your work-life balance by raising your rates and working less hours might help. Giving yourself a break when you need it is an essential part of business planning.
5. Are you making any lifestyle changes that you need to be earning more for?
Life can be unpredictable. Sometimes you want to make changes, whether that’s moving or starting a family. Even the simple level-ups in your work and living environment require better finances. Since you are ultimately your own boss, you should step up to give yourself a “promotion”.
6. Do you want to simply test the market?
The freelance market is open for experimenting. Just to test the waters, you can see if higher rates will be met with good responses from the clients.
How to increase your freelance rate and fees
All of these are completely valid reasons to be raising freelance rates, and there are many more that aren’t on this list. Once you decide this is the right solution for you, it’s time to move on to telling your clients and potential prospects about the change.
Know your value (and ask for it!)
First and foremost, the most important thing to have as a solo worker is confidence in yourself and your abilities. Avoid underselling your services and your skills by staying updated on the current industry market, and placing yourself fairly within it. After all, you know yourself best.Another part of this is to target the right clientele demographic that fits your business. Having a wide client base might seem like the safest solution, but this might increase offers that don’t meet your payment expectations along the way. Unless you’re an absolute beginner trying to find any job that you can, asking for what you deserve is never a fault–never be afraid to negotiate better rates!
Change your pricing model
Even if their current solution is unprofitable, some solo talents might find directly raising their freelance rates to be too much of a risk. In this case, instead of contemplating how to increase your freelance rate, you can try changing your pricing model instead.For example, you might be in a situation where you’re working too efficiently that hourly rates are actually hurting your gains. Or you might be working on an important long-term project that will help your client tremendously, where value-based pricing would make a lot more sense. Having a different pricing model can be the solution to all of these problems and more.
Expand your niche
Another solution to earning more and having higher freelancer fees is to expand your niche and target higher-paying markets.There’s no denying that certain industries generate more profit in the freelancing world than others. By expanding your skillset and market as a freelancer, you might be able to find better jobs and have the chance to reach a bigger client base, which would ultimately help your income.
Keep investing in your freelance business
If you don’t want to diversify your field of work, another way to expand your client base is to improve yourself in the industry you’re already working in. Continuing to educate yourself and trying to become a better freelancer is very important. By effectively investing in your brand and upskilling, you can enhance your services and reach a much wider audience.
Schedule your fee changes, and give prior notice
Raising freelance rates spontaneously can potentially hurt your business relations with freelance clients. Try to build trust with your clients by not springing this change onto them all of a sudden. Instead, schedule your fee changes in a timely manner and give notice to your clients. This will help your clients rearrange their budget, so that you can renegotiate your contract more effectively.Many people try to schedule the increase in their freelance rate to important dates, such as the New Year’s. This makes it more easily remembered by your clients, and also sets the ground for a “fresh start”, so to speak. If this doesn’t match your date preferences, however, there’s no need to force yourself–any date is okay, as long as you plan ahead and communicate with your clients.
Offer alternative packages and deals
Another option that can help your clients is to offer different pricing packages. You can arrange these depending on your workload, earnings, the closeness of deadlines, etc. and arrange prices accordingly. Through tiered pricing, your clients can pick the option that suits their budget the most. You will also have softened the change by giving them a choice, and making them feel accommodated.
How to inform a client of the price increase
If you’re on the fence about how to explain price increase to a customer, don’t worry; there are many ways to approach this. As long as you schedule it and let them know beforehand (as we mentioned above), it doesn’t matter much whether you send an email, call them on the phone, etc. It all depends on your relationship and preferred communication method with your clients.Here are a few things that you can include in your price-raise conversation:
- Your increased workload and market demand
- The outcomes it will produce for the client (support this with data/results if possible)
- The value of your relationship with the client & the desire to continue working with them
- Your hidden costs and expenses (such as subscriptions, equipment, amenities, etc.)
- Alternate deals, packages, or discounts that can better suit their budget
Email template to negotiate & increase your freelance rate
There are many ways of asking for an increase in freelance rate. Here’s a simple email template you can send to your current/long-term clients and (if you have one) mailing list subscribers to let them know of your improved freelance pay rate:Hello [Client’s name], I loved working on [Projects X, Y, Z] with you. Just reaching out to let you know beforehand that, as of [date], my rates will be [x]. I’ve been working very hard to improve my business, and being able to provide my best services is my utmost priority. I made this call considering [market inflation, improvement, new skills, etc.–you can provide data here as well, if applicable]. I would love to keep working with you. Let me know if you have any questions or if this doesn’t fit your budget, so we can talk about different options. Best,[Your name]
The sky’s the limit
One of the best things about being a freelancer is the freedom to set your own rates. As long as you’re confident in your abilities and can place yourself fairly within the market, regular increase in your freelance fees is perfectly reasonable.Now that you know more about when and how to increase your freelance rates, you’re ready to negotiate better prices from your clients. Make sure you keep checking out our blog and connect with us on LinkedIn and Instagram to stay up to date on current freelancing news!