When you work as a regular employee, there are a few things you can probably count on. You get paid on time, the coffee in the break room is drinkable, and you get an annual assessment.
However, when you’re a freelancer, there’s no guarantees, especially as it relates to your pay. You may be the one running the show, but the fact is, the only way to ensure you get a pay increase is to raise your freelance rates.
The thought of this might scare you. You’re worried you’ll lose clients. Or, you aren’t sure how much to raise your rates. And, frankly, you might even think you “aren’t worth it.” But, you should regularly review and likely raise your rates when you are a freelancer, just like every other business does.
Why You Should Raise Your Freelancer Rates
If you worked a “regular” job, you probably wouldn’t want to work for the same salary year after year after year. If nothing else, inflation eats away at that salary, making it worth less over time.
And, consider this: the longer you work for an employer, the more valuable you become to that employer. You know how they do things, you understand their processes, and, frankly, replacing you is kind of a pain after a while.
Things are no different with your freelance clients. If you’ve worked with them for a while, you “get” them. You know how they do things, and you understand their processes. And, even if you haven’t worked with a client for a long time, you do have a valuable and unique skill.
While nothing is guaranteed, raising your rates may not scare off your clients as much as you fear, because they don’t want to have to deal with replacing you. That said, you may still let fear stop you from raising your freelancer rate.
You know what you charge your current clients. But, how does that stack up to other freelancers? A 2018 study by Payoneer found that, on average, freelancers around the world charge $19 an hour. But the study also found that over half of those freelancers (57%) charge under $15 an hour.
Most freelancers work anywhere from 30 to 50 hours a week. Freelancers that charge the current average and work on the low end of hours at 30 hours a week make $29,640 a year. And for many people, that may not be enough.
How to Raise Your Freelance Rates
When you see the black and white numbers, it’s easy to think that you’ve got to charge your clients more. But, you’ve got to go about raising your freelance rates the right way. You can’t just send invoices with higher rates and expect everyone to pay up.
You need to inform your clients of the change well in advance. And, you may have to explain to your clients not only why you’re charging them more, but how it benefits them.
Even when you’ve given your clients plenty of notice and make a compelling argument why your rate increase is justified, you’ll also need to prepare for pushback. And you need to understand that there is a chance you will lose some clients.
Give Them Plenty of Time
The single most important thing you can do to help successfully raise your freelance rates is to give your clients plenty of advance notice. No one likes surprise rate increases. Even the cable company informs you months in advance that your rates are going up (again).
Make sure the advance notice is in writing and easy to find. While you can put the information on an invoice, make sure you use a large enough font that stands out on an otherwise routine invoice. Consider highlighting the notification, so it’s hard to ignore.
Also, send a separate email notification to help ensure people receive the notice. Use something obvious in the subject line like “Rate Increase Notification” or “Change in Rates,” to get your client’s attention.
While there’s no magic formula for how long “advance notice” is, two to three months is sufficient time to notify your existing clients and allow them time to figure out what they want to do. It also gives you plenty of time to drum up new business if a client leaves.
Same Time Next Year
Inflation isn’t going anywhere, and neither are your expenses. Make the time to regularly review your expenses and compare that to the rates you are charging. At that time, you may determine that a rate increase is in order.
Long-term or repeat clients are rare in the freelance world. But if you do have some, a regular review and notification about rate changes will help “train” your client to the likelihood that it will happen. This makes it less likely they will be shocked or upset when an increase happens.
Ideally, when you take on a new client, let them know that you periodically reassess your rates, usually at the end of the calendar (or fiscal) year, or on their anniversary. This helps prepare them for the possibility of a rate increase down the line.
Don’t Increase New Client Rates Too Soon
On that same note, don’t raise your rates on new clients too soon. For example, if you reassess rates at the end of every calendar year, you may want to skip raising the rate on that new client you just started with in October.
While it makes your life easier, that’s not the case for the client. They just started working with you and may feel blindsided, even if you did warn them upfront. Plus, they haven’t worked with you very long. How do they know you’re worth this increase?
Take the time to work with your new client and prove your value. It may mean missing out on this year’s rate increase. But, in the future, you’ll probably have an easier time raising your rate since this client knows you are worth every penny.
Limit the Increase Percentage
Once you’ve decided to raise your rates, you’re probably wondering how much you should raise your freelance rates. Or worried about how much is too much.
For example, raising rates 50% has a significant impact on your overall income. However, raising rates by 50% in one year may cause all of your clients to flee.
To illustrate, if you’re the average freelancer and you’re charging $19 an hour, when you raise rates by 50%, you’re now charging your client $28.50 an hour, which is, well, a lot. And, while you may feel you’re worth it, it’s not likely your clients will feel the same way.
So, as dreamy as a 50% raise sounds, try to limit your increases to between 5% and 10%. While a 5% bump that may not sound as impressive as 50%, it is still significant to your bottom line. Instead of earning $570 for 30 hours of work, you’ll earn $598.50. And though that may not seem like a lot, over time, that extra $28.50 a week can add up.
Explaining Why You’re Raising Your Freelance Rates
Once you’ve settled on your freelance rate increase, you need to inform your clients. This is undoubtedly the hardest part of raising your rates. You need to tell your clients what is happening in such a way that it proves you’re worth the added expense. Do this incorrectly, and you risk angering and losing your clients.
Before jumping into the how part, know this: there is always a chance that you will lose clients when you raise rates. Some people just aren’t willing to pay more for anything, no matter how incredible it is. If your client leaves because they won’t pay your increased rate, remind yourself that you are valuable, and work on finding new clients that are willing to pay what you are worth.
One way to explain why you’re raising your rates is because of “hidden costs.” That doesn’t mean you’re calling things “service charges” and not explaining what they are. Hidden costs are the costs businesses (like yourself) incur every day, but your clients probably don’t think about.
For example, you may need to print documents as part of your work for that client. That means you’re spending money on paper and ink. And, if you have a chatty client that likes to text or call a lot, you need to pay for a cell phone plan. While there are a lot of free services out there that help your business run, you’ve probably upgraded to the pro version, which isn’t free.
A client may argue that that’s the cost of doing business. And, that’s true. There’s just no way around certain expenses. However, that doesn’t mean you have to shoulder the full expense of that cost. While no client should have to pay 100% of your software platform, you should be able to charge some of that expense to their fees.
Explain that as the costs of goods rise, you need to increase your rates to help cover those expenses. While you’re willing to pay for some of the cost, you can’t pay for all of it because once you get done paying those bills, there’s nothing left for you. And, as a business, you do need to pay your employees (that’s you) a salary. If you’re spending all your money on paper and bills, you won’t have anything left over for a salary.
Show Your Worth
Some clients may want you to prove that you’re worth this additional expense. Saying “look at all the great stuff I’ve done for you” probably won’t cut it. You need to dig deeper and demonstrate to the client that the “great stuff” you’ve done has had a positive impact on their business.
For example, if you’re a writer, can you show that your articles have added value to a client’s site? Do you have numbers that show exactly what you did (increased engagement by X amount) and how that helped the client (more website visitors signed up for the newsletter)? For social media pros, how many more likes and shares did your client get? And how many of those likes and shares became paying clients?
When you can demonstrate with numbers and data that you had a positive impact on your client’s bottom line, you’re more likely to get past the protests and get that rate increase because you can prove you are worth the added cost.
How to Tell Clients You’re Raising Your Rates
While every client situation is different, below is a sample freelance rate increase email that you can use to inform your clients that you’re raising your freelance rates. You may need to adjust it to better suit your needs, and it doesn’t address specific client concerns, but, hopefully, it gets you started.
As you may be aware, once a year, I review and raise my freelance rates. This is to help me cover the increasing costs of running my business and is part of my commitment to providing quality services to you.
Starting [on this date, in two to three months], I will be raising my freelance rates from X to Y [this can be per word, per hour, or whatever works for you]. Overall this represents a X% increase in your fees over last year.
Thank you so much for your continued business. I look forward to working with you in the future. If you have any questions, please contact me.
Finding Freelance Jobs
While the word “free” is part of “freelance,” freelance doesn’t mean free. It means you are free to choose your clients, free to choose how often you work, free to choose when you work, and free to turn work down.
You should charge what you’re worth. Just like a job with an annual review and (hopefully) salary bump, your freelancing business deserves the same review and reward for a job well done.
Whether your clients stick around or not for a rate increase, FlexJobs can help you find jobs during your freelance journey. We post freelance gigs in over 50 career categories, and we always verify that every job listing is legitimate and free of scams!
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