3 keys to increasing your freelance rate
Value-based pricing is an important part of a successful freelance career, and getting paid what you deserve is on the top of most freelancers’ wish lists.
Increasing your rate for future clients can be a simple task, but increasing your rate for existing clients can feel like the stuff of nightmares.
Luckily, there’s an effective method of increasing your rate whilst minimising the risk of losing clients you’ve already secured.
Working out what you’re worth
Often, in the interest of growing a client list quickly, freelancers offer a lower rate and then make up for that deficit with a bigger client list.
This usually means working long hours for minimal profit, which is the perfect recipe for burnout.
Researching your competitors is important in any business, but in the freelance game this can be difficult – and in any case freelance rates can vary greatly.
Luckily there’s a simple exercise to find out your perfect base rate, and it’s probably much easier than you think.
1. Finding out what you need
Start by listing your target annual salary, and then adding every expense you’ll incur by being a freelancer.
Add those two things together, and you’ll have your total target income.
Next, you need to work out how many billable hours you will work that year. No doubt you started freelancing for more flexible hours, increased time with friends/family or a change in work hours so keep this in mind when working out your schedule.
A good rule of thumb is to then add an additional 30 percent to this number to cover non- billable work and any sick days.
Next, divide your target income by your billable hours.
This calculation gives you your ‘base level’ freelance rate.
This is the minimum rate per hour that you need to charge to meet your goals.
You won’t be using up every single billable hour to begin with, but this is a great exercise in breaking down what you need, and then to comparing that with what you’re worth.
2. Approach the increase with sensitivity
If you work out your base rate and it’s above what you’re getting at the moment, it’s time to have a conversation with new and existing clients.
When increasing your rate for new clients, the method is simple. Simply outline the service the client will receive by working with you, and then highlight the value of that service.
Most importantly, once you quote a rate remain confident in your worth, and the amount you charge.
For existing clients, though, the task can be much harder.
READ: 4 ways to sell a service
After all, clients that have been accustomed to receiving your services at a reduced rate may question why they should pay more for the same thing.
Alerting clients to an increase should always be done with sensitivity and an understanding that increasing your rate can also affect their budget and bottom line.
Giving your clients plenty of notice about the increase is the way to go.
Another way to ease clients into the increase is to add value.
This doesn’t always mean adding additional services, but can be as simple as explaining you’ll be focusing on fewer clients and therefore offering them a more personalised experience.
Whatever value you choose to highlight, the most important thing is to make the client feel like the increase provides them with a more than they had before.
Rate increases should always be announced in writing and a great example of an increase letter can be found on Freelance Lift.
3. Be confident of your value and stick to your guns
It’s important to remember that sometimes a client will decline your increase and choose to look elsewhere.
This can be upsetting and disconcerting, but remembering that this isn’t because of anything you did wrong.
The client might choose this route because their budget just won’t stretch any further or simply because they’re not the right fit for you.
There’s nothing wrong with being prudent, of course, but when clients are unwilling to see the value in what you provide and constantly try to negotiate rates, this is should be a huge red flag.
When you start to work with clients who appreciate you and can understand the value of what you are providing, you will find that you begin to attract a different quality of clientele, which ultimately allows for more rate flexibility down the line.
Although hard, increasing rates is by far the most desirable of the three and one that definitely gets easier with practice.