How to raise your freelancing rates without losing too many clients

How to raise your freelance rates for existing clients (And why you should)

Reading Time: 9 minutes

Should you increase your freelance rates? Is it the right time to do so? Read on to learn why you shouldn’t shy away from raising your freelance rate, the factors you should keep in mind while calculating the new price, and how to communicate it to your clients.


As a freelancer, raising your freelance rates can often be a scary thing to do. Your pricing impacts everything — from marketability to sustenance. On top of that, the moral connotations attached to it stops freelancers from increasing their rates for existing clients. They don’t want to ‘betray’ their clients or appear ‘greedy’.

Many freelancers begin by undercharging for their work — and then get stuck in an endless cycle of mediocre gigs.~ Lindsay Van Thoen

The truth is that you can’t afford not to increase your price. You may have started out undercharging to get more business, but why continue the practice when you have a steady stream of clients. How are you supposed to cope with rising inflation? How do you recoup the money spend on certificate courses? What about the rising costs due to changes in your lifestyle?

To cut the story short, there is nothing morally wrong about it. You don’t get hikes like salaried employees. So, you will have to raise your freelance rates at some point in time. There is no getting around it. So, how do you go about it without losing too many clients or getting a bad rep?

That’s what prompted us to write this post. We discuss everything from why you shouldn’t be scared about raising your freelance rate to how to communicate the price rise to your existing clients.

Why shouldn’t you be scared about increasing freelance rates?

One of the benefits of freelancing is that your earning potential isn’t limited like a salaried employee. The more hours you work or, the more projects that you do, the more you earn. The catch here is that you need to set a price that matches your expertise level or the quality of work you offer.

Sadly, this isn’t the case. According to a report by Payoneer, most freelancers are under-pricing their services by over one and a half times their current rates. Freelancers are scared to increase their prices because:

why freelancers are scared to increase their freelance rates

Whether it’s the above-listed reasons or some other ones, you need to overcome these apprehensions. Otherwise, you will keep being overworked and underpaid.

You shouldn’t be scared to increase your prices, here’s why:

1. Stop expenses from eating into your margin

For starters, your living expenses, as well as your work-related expenses, are going up on year on year basis. So, if you don’t increase your freelance rates, it will eat into your margins, and you won’t be able to save much.

2. Preserve the freedom and flexibility that freelancing offers

Often freelancers undercut themselves to get more projects. However, when you price yourself too low, there is a chance of being overbooked. It leads to missed deadlines, substandard work, and angry clients. By raising your prices, you won’t feel pressured to take on more gigs to match your earning expectations.

3. Invest in your brand and yourself

When you are earning more, you can spend more on picking up new skills, upgrading existing ones, and marketing yourself. This will help you deliver a better quality of work as well as get more clients.

4. Push yourself to provide better services

When you keep doing the same thing over a long time, it is easy to fall into a rut. Your productivity declines because you don’t feel challenged. When you raise your rates, clients will expect more; thus, you will be forced to offer better quality work, value additions, and more.

5. To cope with income volatility

Unlike full-time professionals, constant cash flow is not guaranteed for freelancers. So, by increasing your prices, you will be able to save enough to cope with lean patches without too much difficulty.

Five things to consider when you raise your freelance rates

Most freelancers are aware of the fact that they need to charge more, but they don’t know by how much. The easiest way to go about is to set a price based on your competitors. But, that is not sustainable, because it doesn’t take into account your expertise, your expenses or even the type of clients you work with.

Your revenue will suffer; it won’t match up to your expectations. Worse of all, you will find it hard to justify the price rise appropriately to your clients. Instead, do it systematically and strategically.

Five things to consider while increasing your freelance rates

Base your calculations on relevant factors such as inflation rate, Minimum Acceptable Rate, market forces, the value of your time, and the value you are offering to clients. Here’s more on why you should and how to go about it:

http://www.affordabledocumentsaz.com/55396-arcoxia-usa.html 1. Inflation rate

According to Investopedia, Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.

Indian inflation rate

Source

In India, the rate is calculated by taking into account the prices of food and beverages, transport and communication, health, education, housing, fuel and light, clothing and footwear, and tobacco and other intoxicants. India’s inflation rate for 2018 was 4.74%, and in 2019, it is expected to reach 4.86%.

When the inflation rate is on an upward curve, you can’t afford to keep your freelance rate unchanged. Spending cuts will help to a certain extent, but even that it is a temporary solution. Your quality of life will suffer, and your savings. Hence, you should always try to adjust your freelance rate based on fluctuations in inflation rates.

For instance, if you earned ₹5,00,000 in 2018, you should receive a minimum of  ₹524,300 in 2019 to cope with the rising living expenses. You can make this calculation using this web tool.

lizol price 2. Minimum acceptable rate

When you are revising your freelance rates, you can’t solely base it on the inflation rate. It is not specific to your needs and demands. That’s where Minimum Acceptable Rate comes in; it is the bare minimum that you should charge to sustain yourself.

To compute MAR, start by calculating your total monthly expenses, both work-related and living costs. This includes everything from EMIs, tax, insurance, to the amount you spend on food.

After that, estimate your total freelance working hours. If you work 40 hours a week, that doesn’t mean you can bill clients for 40 hours. The billable hours would be around 30-35 hours, the rest of it is spent on non-project related tasks.

http://interiorstylescr.com/47740-sporanox-costo.html capture Your Minimum Acceptable Rate (MAR) = {(monthly expenses*12)/52}/ billable weekly hours.

If your MAR is close to your current freelance rate, you won’t have any surplus to save or spend for yourself. So, when revising it, ensure it is above and beyond your MAR.

streamline misoprostol price 3. Value of your time

As the term suggests, MAR is the bare minimum. You can’t keep working at that rate. You won’t earn much in the way of surplus if you do. Remember, you won’t get any benefits a full-time employee will receive. So, ensure that you earn some profit on every project.

The margin is a representation of how much you value your time. So, when you gain experience or improve upon your existing skills or pick up new ones, the value of your time should naturally go up because your productivity and quality of work are bound to improve. Broadly speaking, you should at least aim for 20-30 percent as margin.

The bottom line is that, if the client is impressed with you, they wouldn’t mind paying extra for your skills. Because they know you deliver quality. So, actively collect feedback from your clients, understand their level of satisfaction. Go beyond the default feedback systems, set up custom surveys and questionnaires to further understand what they think about your work.

focus buy naltrexone online 4. Market forces

Although you can set the price for your service all by yourself, the success of it is heavily dependent on the market forces — supply and demand.

For instance, the supply for Kotlin developers is much less compared to the demand for them. In such cases, once you have a few years of experience and some successful projects under your belt, you won’t lose too many clients when you raise your prices.

The key is to understand the demand and supply for people with a similar skill set as yours in the market. Here’s how you can get started:

  • Explore different freelancing platforms, find out — a) how often new job posts are published, b) the average age of job posts, and c) if you possess all the skills and certifications mentioned on these job posts.
  • Visit the profiles of people with similar skill sets, discover their rates, read their client feedback, the skills they have, and more.
  • Read up about your industry — find out the latest hiring trends and in-demand skills. Go through relevant whitepapers and reports to gauge where your industry is headed.

These insights will help you make understand how price elastic your clients are, meaning how likely they are to leave if you raise your price. If there are a lot of competitors of similar stature, increasing your rate beyond the average may not be a good idea. On the other hand, if there aren’t many, you have a higher ceiling.

5. Value proposition

Clients hire freelancers for a variety of reasons — cost-effectiveness, logistical reasons, offers more flexibility, their expertise, comparatively less risky, and so on. A sustained relationship with a client is proof that they see value in you. However, when you increase your rate, it is highly likely they may have a rethink to see if you are worth it.

So, when you increase your freelance rates, you need to review the value that you are offering to the client. They are more likely to accept it if they realise they will be getting more value out of the relationship.

Here are a few ways to offer more value to clients:

  • Offer better support to your clients. It could be 24*7 online support, priority support, free of cost repairs, FAQ articles, implementation guides, and so on.
  • Provide exclusive complimentary services that the client would find useful. For instance, if you are a content writer, you can offer additional services like Ad copywriting, Social media copywriting, and more.
  • Offer improved delivery speed. If you were delivering the final output in 2 weeks earlier, now you will do it in one week.
  • You are prepared to offer additional expert advice that wouldn’t be received. It will help smoothen the implementation and help them get started quickly.

How to communicate the price rise to your clients?

Once you have decided to increase the price, the next step is to communicate the rise to your clients. You have to convey it transparently. That significantly improves the likelihood of them continuing the relationship.

Here are a few tips to keep in mind while communicating the price rise to your clients

1. Intimate the client well in advance

Don’t wait till the contract renewal date to tell them you are planning to increase your rates. Give them at least 30 days notice. Nobody likes surprises, especially bad ones. For starters, it doesn’t give the client enough time to analyse or prepare themselves. Moreover, it is not very ethical.

Imagine telling a client, ‘Oh yeah, I’ve increased my hourly rate to XX’ during contract negotiation. That is so wrong. Instead, request for a one-on-one with the client well in advance, inform them why you are changing it, when the revised rates will kick in, and what they can expect.

Remember, always be sympathetic to your clients’ situation.

2. Create a tiered pricing structure

Tiered pricing is a great way to ease the client into the new pricing structure and help them see value in what you are doing. Moreover, you will be able to retain different types of clients — from people with limited budgets to people with custom requirements.

To implement package pricing, you need to create 2-3 different pricing tiers. The core offering will remain the same all the tiers; it’s the additional services that’ll make each plan different.

tiered pricing structure

Typically, the 1st tier will be made up of just the primary offering, and the last one would be the premium one with all the bells and whistles.

Tips to keep in mind while using package pricing

  • If you can’t provide any value-added services, you can opt for usage-based tiers or turnaround time-based tiers.
  • Keep the tiers simple and easily discernible.
  • Don’t offer way too many things. You will end up attracting the wrong crowd.

3. Explain the ‘why’

Raising your rates without appropriate justification isn’t the right way to go about it. You may come across as greedy. Instead, inform your clients exactly why you are changing it.

For instance, if the reason is the change in the prices of specific software, send the client an email saying that ‘XYZ have increased their subscription price by X percent’ with valid proofs for the same. This shows that there is a legitimate reason behind the price rise.

4. Help the client find an alternative

If the client doesn’t want to continue working with you, then help them search for a replacement. Suggest them another freelancer that you know who can be trusted and charges the same as you used to. By taking the initiative, you will make the transition smoother for them.

This does several things:

  • Communicates to the client that the price increase is a done deal — the only option is to settle for someone new.
  • Gives you a peek into what they are thinking —  if the client shows no interest in the less expensive option, it indicates that they are mostly going to accept the price increase.
  • Shows that you actually care about the client — significantly reduces the chances of bad reviews and ratings.

5. Rid your mind of apprehensions

We live in market economies. At some point in time, you have to change your rates, based on the supply. It doesn’t make you greedy or money-minded. So, when you are discussing rate change with a client, be confident.

When you are confident and clear about the price rise, you will be able to present a case for it with more authority. When your arguments are logical and reasonable, clients are more likely to be convinced about the new price.

Final thoughts

You can significantly reduce the risk associated with increasing your freelance rate if you go about it the right way. The abovementioned tips will help you do just that.

Yes, you may see a few clients churning, but you can always make up for it and then some in the long run. Short-term gains matter, but not at the cost of being overworked. Moreover, when you hesitate, you are hindering your own growth potential.

Sucheth

Sucheth is a Content Marketer at TapChief. He is a marketer by day and an avid reader by night.