Why freelancers need to increase their rates now
If you're a freelancer, there’s a good chance you’re not charging as much as you should.
If there’s one instinctive rule that freelancers understand, it’s that putting prices up can drive clients away. When a business outsources or looks for a consultant, they usually look for cheap labor. It’s logical, but it has a consequence for most freelancers, who try to undercut each other with lower prices to draw in those clients.
However, while this used to be the norm, nowadays, the market is different, and you need to start charging more. If you’re a freelancer, it’s time to increase your rates, tells WondaPay.
Inflation is Rising
If you are a salaried worker, you look forward to a slight wage increase year on year. It is usual for employers to reward hard work and loyalty with extra money. Why should a freelancer expect anything less?
In a world where inflation is shooting up, freelancers need to earn more to stay financially secure. They may not have the salary that a corporate worker might get, but they can adjust their prices.
We’re not suggesting suddenly doubling your fees and alienating your entire client base. Instead, try and bring it up a few extra pounds every year and offset the rising inflation costs.
The Fear Factor
You might think that raising your prices is impossible when consulting or working freelance. That’s usually the story your clients tell you, after all.
Most customers are businesses trying to keep their costs down, influencing their attitudes to raise your rates. They’ll cite their need to lower expenses as why they can’t pay you the extra money.
However, if you get past this initial protest, you’ll find that most clients are willing to capitulate to a demand for more cash. They do so because of the fear factor.
Let’s take a hypothetical scenario where you raise your prices. Your client doesn’t like this and informs you that they aren’t happy. If you then tell them it is non-negotiable, most will back down.
They don’t want to lose you, after all. You have a good working relationship, you complete vital work for them, and they trust you to deliver. Paying you more is a small cost against the hassle and uncertainty of replacing you.
Ultimately, when it comes to raising your prices, it’s about self-respect.
You’re a hard-working, qualified professional. You have a loyal customer base, a reputation, and desirable skills. Why shouldn’t you be able to raise your prices a little during these difficult times?
Some freelancers don’t have the confidence in their ability to justify a price increase. For this reason, a lot of professionals will take a financial loss regarding the time they spend on a project against the value because they don’t feel comfortable with raising the costs.
This is a real shame. You’re entitled to earn more and be successful just as much as any other freelancer. Your clients will, if you raise prices properly, be happy to work with you on the issue.
How to Raise Prices as a Freelancer
If you want to raise prices successfully, you don’t just turn up one day and charge double the money you want for your time. That is highly unprofessional and will alienate a lot of clients. Instead, there is a method to raise your prices. You want to do this in a way that reminds clients that your services are still value for money. Let’s look at the top tips for this together:
1. Give your clients time to adjust. If you want to raise prices, issue a formal notice a month before you intend to do so. This should stipulate the new prices, convey your wish to continue working with them, and an offer to contact you to discuss things.
2. Try to be professional about things. A lot of freelancers get defensive when challenged on their rising prices, and this quickly sets the stage for an argument or the end of the working relationship. You need to calmly and peacefully explain why you’re choosing to raise your prices - in most cases, it is to offset inflation and the other financial challenges we’re all facing.
3. Raise your prices a little, and then let clients adjust. If you want to raise your prices from £15ph to £30ph, you don’t just do that overnight. First, you inform clients you’re increasing the cost to £20ph. When this has been the norm for six months or so, raise it again to £25ph, and so on. These slower price raises help clients adjust and ensure the relationship survives the transition.
4. Continue to deliver quality whenever you work. If you’re going to raise prices, you need to make sure that the quality of your work is high. Clients need to know and be reminded that you provide a vital part of their business for them - be it bookkeeping or blogging. It’s all essential. You need to be irreplaceable by your quality, especially if you’re going to charge more.
5. Offer an extra service or two. If you’re going to successfully convince a client that your services are value for money, offer them an additional meeting each week at no cost to discuss the project or deliver something a little extra. These personal touches go a long way in smoothing any negative feelings towards your price increase.
Raising your prices as a freelancer is a scary prospect. You’re always cautious because you don’t know how your clients will react.
Here’s the thing to remember - there are two types of clients.
Some value your time and contribution and don’t mind paying a little more. They understand that inflation is going up - they’ll see it in their costs - and there is a level of respect for your craft.
Alternatively, you get the clients who become angry or defensive when you raise the price. They don’t respect you or your efforts - they’re just annoyed their cheap labor has suddenly become more expensive. Are these the clients that you want to work with?
Raising prices is a normal part of being a freelancer. It is vital to make sure that you raise them a little each year because this will make all the difference. It might be challenging, but if you’re committed and practice working professionally, most clients will be more than happy to accept the rising costs.