Now you’re a year or two in, and you’re working too many hours and not bringing in enough cash. You know it’s time to raise your rates, but you’re worried about scaring away your clients and going back to square one. So what do you do?
Well, first of all, keep in mind that you’re not alone. Everyone has to raise their rates at some point. I remember when a Venti black coffee at Starbucks cost less than $2. So while you may think raising your rates is like stabbing your clients in the back, it’s actually something they’re very familiar with. The trick is in how you approach it.
1) Decide Why You Deserve a Raise
There is really only one reason to raise your rates: You’re bringing more value to your clients.
Just because you’ve been around for a few years, that doesn’t mean you deserve a raise. Your clients couldn’t care less about your longevity. What they care about is the value you bring to the table. What does value mean? It could be…
- More skills
- More experience
- More services
- Higher quality of work
Think through why you’re worth more now than you were last year. What experiences, skills, awards and successes have you gained that make you a more valuable freelancer? As you approach your clients about your increased rates, you’ll want to have your reasons down pat.
2) Put Some Serious Thought into What You Are Worth
Before you let your current clients know about your price hike (ahem, “increased rates”), take some time to consider what your new rates will be. And don’t just think about what you want to be making today; think about what you want to be making a year or two from now. Done right, your clients are probably going to be receptive to your increased prices. What they won’t be receptive to, though, is you increasing your prices again in six months. There is a balance here, of course. If you don’t want to raise your rates too high too fast, then 20 percent is a reasonable ballpark for a rate increase.
3) Research Your Competition
It’s important to know where you stack up in the marketplace. What are your competitors charging, and why are they charging that much? If your current clients balk at your proposed rate increase, it might calm them down to know that you’re simply keeping up with the marketplace.
4) Explain Your Rate Increase to Your Clients
Now that you’ve figured out why you deserve to increase your rates, what your increased rates will be, and how those rates stack up against your competitors’, it’s time to do the thing you’ve been putting off: It’s time to tell your clients.
How you approach this conversation will make all the difference. It’s important to be honest (i.e., don’t chicken out and lowball yourself). Be direct. Don’t be apologetic. Before you talk to your client, review the jobs you’ve done for them, the results you’ve gotten, and the ways your work has improved. Be sure you remind them of all of these things at the beginning of the call, Skype, or meeting. (This is not something that should be communicated via text or email.) Then be very transparent about the need to increase your rates: not only are prices increasing across the market as a whole, but the value of your skills has increased as well.
You may want to let them know you’re being more selective now about the clients you’re working with, and you’d very much like to continue working with them (flattery works). But the bottom line is you need to tie your increased rate to the increased value your client is receiving. They are paying more because they are getting more. If they aren’t comfortable with that, let them know you’d be happy to refer them elsewhere.
Increasing your rates isn’t just about increasing the amount of cash you have coming in each month — it’s about increasing your value as a whole. By valuing your work more highly, your clients will value it more highly as well. They will respect you more. Trust you more. And at the end of the day, those are the only clients you want to be working with anyway. Now get out there. You got this.