If you haven’t increased your prices since becoming self-employed, you’re probably missing out on valuable income. Understanding how to raise your client rates will reflect your growing skills and experience, or any new services you’ve added. It will also help you cope with inflation, or if your own costs are increasing.
Many freelancers and business owners feel awkward about increasing their rates, or worry that it will lead to a drop in projects. But charging more can actually increase your client portfolio, or let you focus on a smaller number of clients and still achieve a similar income.
Signs that indicate you could increase your rates
You don’t need a particular reason to believe that increasing your prices is a good idea. If you can justify the higher cost to current or new clients and secure the right amount of projects, then you’ve made the right decision.
But you may have experienced one or more signs you should be increasing your rates.
You don’t need a particular reason to increase your rates, as long as you can justify the higher cost to clients. But there are definitely signs that indicate you could increase your rates.
- You’re currently fully-booked, and turning away business
If you’ve already sold almost all available hours for the foreseeable future and still receive regular enquiries about new projects, it’s a good sign that demand for your services outstrips supply. And increasing your rates won’t leave you short of work.
- You’ve already secured one or more projects at a higher rate
Even if you’re not actively looking to raise your prices, occasionally an opportunity will come along to secure a higher rate for your services. And if you’ve managed to successfully achieve that with one or more clients, why wouldn’t you try to raise your standard rates?
- You’ve increased the value you offer to clients
There are a range of ways to increase the value you provide to clients, whether that’s from learning new skills, achieving qualifications, or adding more into the services you provide. You may have worked with more prestigious brands, invested in new software to improve your productivity, or brought in a coach or mentor. In all of these cases, it can be a good justification for higher rates.
- You haven’t increased your rates in 12 months or more
A lot of freelancers and self-employed business owners research the typical rates for their industry when they’re starting out. But a significant number continue using the same figures for years, not adjusting them to reflect growing experience and reputation, changes in demand, or simple inflation and cost increases.
- You’re charging less than similar providers
If you’re working in a competitive sector or just starting out, it’s easy to assume the best way to bring in more work is undercutting the prices of your rivals. But simply offering lower prices isn’t the best long-term strategy as you’ll consistently be undervaluing your time and skills.
Potential clients might question why you’re so much cheaper than comparable alternatives, and those you do secure are more likely to undervalue your efforts and expertise. Meaning you end up working even harder just to achieve a lower income.
Check your current client rates
It’s important to regularly check your current client rates, and how they compare within your industry. Schedule time once or twice a year to look at the average income you’re achieving on an hourly, daily or project basis, and to assess whether it shows you may need to change your prices (or the way you work).
There are a range of ways to check the average income in your sector, including the IPSE Freelancer Confidence Index and Self-Employed Landscape reports. Various employment sites also list the average salary for various freelance roles, based on submissions from their registered visitors. Specialist trade bodies may also publish rate cards, such as the National Union of Journalists (NUJ), or the Broadcasting, Entertainment , Communications and Theatre Union (Bectu).
IPSE members can access our guide to setting rates for 2023, which also includes a list of standard freelance rates based on our research and the input of the IPSE community. And our articles on how to become a freelancer in specific careers typically include any publicly available information on industry rates to save you time when researching a new profession.
It’s important to remember that the rates suggested will depend on various factors, including the skills and experience required, location, industry trends and more. A London-based freelancer with a decade of work behind them will generally achieve a higher comparable income than someone six months into their self-employed career living in the Outer Hebrides.
Other useful sources of information on freelance rates include job adverts, and speaking to other self-employed professionals in your industry. Getting involved in the IPSE community, local groups and building up your network will help you discover whether you’re achieving the correct rewards for your efforts. Money can be a touchy subject at times, but many freelancers will be fairly honest and open if they know they’re helping other people achieve a sustainable self-employed career.
Changing your attitude to pricing
It’s understandable to be nervous about charging a higher price for your services. But it’s much easier to secure rate increases when you’re confident about the value you offer.
If you’re currently charging less than you should for your work, or struggle to manage financial negotiations with clients, you’re not alone. But whether it comes from imposter syndrome, social anxiety or low self-confidence, there are ways to improve your mental wellbeing and prevent it from impacting your ability to earn.
Separating your personal identity from your business life will help you cope with any negative feedback around pricing, and enable you to take constructive criticism. It can also be really useful to find a good coach or mentor, who can help you with a different perspective on your business.
As long as you’re reasonable and respectful in discussing prices with your clients, you’ll be able to keep options open on both sides. And you shouldn’t feel stressed or scared to raise your rates, as it’s a part of running any business.
How to justify higher rates
Whether you’re pitching new business or negotiating with existing clients, you need to know how to justify your higher rates.
Clients always want to know that they’re getting great value, even if they might be paying a slightly higher price. Which means it’s important to look at what you offer from their perspective, and clearly communicate the reasons behind your pricing policy.
Simply acquiring a new qualification probably won’t convince a client to pay a higher rate for your existing services. But if it means you can contribute to their business more effectively with specialist knowledge, or at a more strategic level, then you may become more valuable to them.
With existing clients, it’s useful to re-examine your original contract, and see if the scope of work has expanded substantially over time. It’s easy to find that you’ve agreed to an increasing number of tasks over time, using more than the allotted hours, without putting additional compensation in place. And any evidence of the projects and results you’ve delivered may also help to demonstrate your value.
Another option is to reposition how your business works with a client. Switching from an hourly or day rate to project-based pricing could allow you to earn more for your time. You could also consider informing new clients of potential increases as part of any initial agreements or contracts, which means you can refer back to those documents if there are any issues.
In every case, the important factor in securing higher rates will be that the client feels that they’re going to get more value from your relationship as a result.
Communicating your price increases without losing work
You’ll need to plan your rate increase in advance, and let clients know in appropriate time. Typically, this could be 60 to 90 days before your prices will change. A last-minute notification is likely to annoy previously happy clients, any between two or three months not only allows them time to respond, but also gives you the chance to replace anyone who doesn’t agree to your new prices.
Your rate increase letter or email should be clear and concise. You shouldn’t need more than 150-200 words to state your price change, share some specific details and justification, and provide them with a courteous option to respond.
It’s important not to drop a potential rate increase into general work conversations, where it can be overlooked or forgotten. And agreements should always be confirmed in writing to prevent complications in the future. Generally, it’s advisable to state exact prices rather than percentage increases, as clients may not immediately recall what they’re currently paying.
When closing your rate increase letter, it’s important to allow clients the opportunity to potentially negotiate or take up other options. You may decide to accept a lower amount to continue with a client or project you enjoy, or to continue at a lower rate by working less hours. Another option may be to offer a gradual increase over a period of months to reach an agreed amount.
And if you are unable to come to an agreement with a client, then don’t take it personally. It’s important to try to remain on good terms, as they may have a larger budget available in the future, or refer you to another business which is more suitable.
What if you can’t raise your rates?
If you’re already charging a rate higher than the industry average, it may be difficult to increase it further. Or your industry may be particularly price sensitive, particularly if there is an over-supply of eager new freelancers ready to try and undercut you.
There are still various options if you want, or need, to increase your income. One option is to look at adjacent freelance occupations which are experiencing higher demand at the current time. This is often the case in creative fields, moving between different areas of design, or from writing blog posts to white papers, for example.
You can also improve your earnings by either making financial savings within your own business, or exploring new productivity methods. There are lots of ways to save money as a freelancer, especially if you don’t regularly audit your costs and expenses. Alternatively, if you can cut the time it takes to perform your work, then you’ll free up space to take on more clients.
Another option is to diversify your revenue streams, which has been explored by an increasing number of freelancers and business owners. Side hustles and projects can reduce your reliance on client work, and can grow into significant businesses in their own right. Or you may have assets which could be earning you money, including property or vehicles.
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