15. Is it time to raise your rates?!

Welcome to 15 Minute Freelancer, your snack-sized guide to being your own boss and building a business and life you love. I'm your host, Louise Shanahan. My LinkedIn bio says I'm a freelance health copywriter. But for the next 15 minutes, I'll be tickling your ears with practical strategies, behind the scenes stories, and nuggets o' wisdom so you can create a freelance business that works for you. Whether you're just starting out or you've been self-employed for a while, I'll be right here with you to help me navigate the ups and downs of freelancing life. So, grab a coffee relax and join me for 15 minutes of freelancing fun. Don't forget to hit subscribe!  

Good morning freelance fam. How are you today? I just want to start today's episode off with a huge thanks for the really thoughtful feedback that I had on last week's episode. In case you missed it in that episode, I had a little bit of a rant about the dark side of online marketing, and specifically how some well-known celebrity business coaches and marketing gurus are selling a vision and a strategy for online business that we get drawn into, that maybe doesn't always reflect reality. And it's kind of misleading. It's easy to get sucked in and feel like you need to follow their way of doing things to be successful and kind of ignore the pushy, negative, sinister side of things. Really, success means something different to everyone. I'm actually starting to hate the word success, to be honest! I just want you to be able to run your freelance business in a way that works for you. Whether that's making a consistent income, working with awesome clients that you're really excited to collaborate with, feeling in control of your time, working three days a week, having more time with your kids and your snickerpoodle, whatever it is. 

It's funny, last week, I felt awkward about putting my thoughts out there, because I really want this to be a positive and encouraging and supportive space for freelancers. And I was kind of worried that it was going to be a bit of a negative topic to get into, even though in the grand scheme of things, you know, what I said was pretty tame. And in 15 minutes, you can only really scratch the surface anyway. But these things do affect how we run our businesses. I don't want any of us to kind of get fooled into buying courses from people who are not all that they seem. If there are people who are putting out messaging that can actually be harmful, it’s not a safe space for people. So if we keep quiet about the challenges in our industry then we won't see the improvements that we would like to see. Anyway, it got a really great response and I was really encouraged by that. I really appreciate you taking the time to share your experiences with me in direct messages on Twitter and so on. And I guess that also kind of shows that often the things you feel awkward about sharing are the exact things that other people relate to. So maybe that's some food for thought too. 

Okay, today, speaking of success… I have some exciting news for you. You just got a promotion! Oh, you didn't know that was a thing for freelancers? Yes, I'm telling you it is.

If you felt like you needed permission to raise your rates, you just got it. This is me giving it to you. So let's get serious. If there's one thing that strikes fear, and maybe a little frisson of excitement in the hearts of most freelancers, it's raising our rates. 

Why should you raise your raise? Do I need to make a case for this? Well, I'm going to.

A lot of freelancers tend to undercharge to begin with, or they're not sure what everyone else is charging, and they want to stay competitive and appear reasonable. Or they've just kind of got stuck at a certain rate and either haven't got around to or aren't sure how to go about raising their rates. Money talk is often awkward for us for a whole host of reasons. But it's important because when you charge more, you can stop saying yes to everyone that comes your way and burning yourself out trying to squeeze in projects at all hours, you feel in control, you'll do better work and you will actually have a life. 

If you have a steady stream of new clients, you're ending up with a backlog or even a waiting list, then it's probably a sign that it's time to raise your rates. And with long term clients, the longer that you work for them, the more valuable you are. You know their processes and they know they can trust you. And a more general reason to avoid letting your pricing get stagnant and underselling yourself is that it helps the whole industry a rising tide lifts all ships and all that. I'm sure you say that all the time, but honestly, it's true. 

So why might raising your rates feels scary? Why might you hesitate? Like we're talking about more money – who doesn't want that? What stops us from updating our pricing strategy in line with the value that we're bringing? One of the tricky things about freelancing is that unlike in a salaried job, where you have a boss, you have performance reviews and automatic promotion processes and opportunities to move up the ladder in a company, as a freelancer we don't have these things. We have to build our own career ladders, don't we? 

Money conversations can bring up all sorts of deep-rooted stories and emotions. So there might be an identity piece in this for you too, if you feel like asking for more money is being greedy or unbecoming, or you don't deserve it, or you know, whatever the story is. For women especially we're socialised to ask for less. Clients may be socialised to expect us to charge less, and we don't want to upset anyone. And that's a horrible thing to be thinking about. But it's also a reality for some of us that might hold us back from reviewing our pricing strategy and charging what we're worth. I have done an episode on the charge what you're worth pricing advice, so I encourage you to go back and listen to that one. I'll put the link in the show notes here.

You may feel worried that if you raise your rates, you'll lose all your clients. I'll just tell you now, that's unlikely to be the case. The reality is that no one is paying as much attention to your rates as you are. If you work with small businesses, a small raise may be noticeable to them, which is why you only go up in small increments. The chances are that they know you well, and they'll be supportive of you growing your business. And if they're not all that's kind of on them, isn't it? For larger companies, the amounts that we're talking about are really not going to make a huge difference to them. Plus, the person that you're dealing with, well, it's probably not their money, so they're not going to have an emotional connection to it. If they can show their boss that they get the return on investment that's expected for them, then they're happy. And we're talking small increases here. I think we can talk ourselves into thinking that the difference between two amounts is going to be a lot more significant than it really is. This goes for pricing generally, too. So if someone pays you £1000 a month just now, and let's say you raise your rates by 10%, that's going to be £1100. That's not going to make a massive difference to them – £1000, £1100 – it's not going to break the bank for them. If they say no, there's maybe more going on there, and it's maybe not really about the budget. From your point of view, adding that up across all of your clients is going to be a significant amount. So you're potentially selling yourself quite a bit short on that. And remember, this is just part of running a business and your clients will be doing the exact same thing with their customers and clients. It's just it's just a fact of business.

So how do you raise your rates without freaking out yourself or your clients? There are a few ways to do this. And the good news is you can pick whatever way works for you. I'll run through some of the common strategies that people I know use. The most obvious way to do this is simply to do it at the same time every year. So every January, or every April, at the start of a new financial year, maybe every six months. This is a nice way to do it because it feels natural, it feels automatic, you can just say, “oh, I do this every January.” Maybe email your clients or speak to your clients and say, “it's January, just to let you know, my prices are going up.” You know, it's nice and straightforward. There's not too much thought or planning involved. 

Another way to do it is with each new project. This is closer to what I actually do. Instead of having a fixed date, where you review your prices, you nudge them up as you take on new projects. The nice thing about this is that you don't really need to have any awkward conversations, you're just starting off new clients at the new rate. And this makes a lot of sense if you tend to work on one off projects, and you find yourself suddenly being in demand. 

If you do have regular clients, you'll want to communicate any changes to them with plenty of notice. So you might let them know that the prices are going to change in two to three months. Let's say you're going with the example where you change your prices in January. Maybe you'll contact them in October or November, and say, “just to let you know my prices go up every year in January, you can book in now at the existing rate.” And that might actually spur a flurry of activity, which could be a nice little cash injection. You're just making sure that they can plan as well, you don't want to spring it on them. 

Another option, if you don't feel you need to raise your rates across the board, but you have a couple of clients on lower rates, is to maybe just focus on them. Just speak to the clients where you think actually our work is reflecting a different level of value, or I'm putting more time into it or you know, we've had this rate for a while. Maybe just have that conversation with them. 

With any increases, I would start small, maybe just 5 to 10%. That's usually what people go with, or something in line with inflation. You can look at surveys in your field to see what the going rates are as a rough guide. And if you realise that you're actually quite a bit lower than that, it should maybe motivate you to think about raising your rates. You can also consider any new expenses that need to be factored in. Pay attention to your outgoings and see if there are any costs that you should have been building into your rates, but maybe hadn't for some reason. One example might be bank charges or currency adjustments. I consider these as the cost of doing business, so I don't pass them on to clients explicitly. But of course, they do need to be factored into your overall pricing. 

Another completely different approach is to change the way that you charge. So instead of raising your rates explicitly, you might say you're shifting from hourly pricing to project-based fees and building your promotion that way. 

A final option here is to consider reducing the scope or setting some boundaries around the way that you work with clients. Either instead of or in addition to raising your rates or changing the way that you price your projects, maybe you change the way that you run the project. So maybe you keep the rate the same, but you find a way to work more efficiently.

You get the same output in less time. That might just be a personal thing, you maybe don't even need to communicate that to clients. Obviously, the output is the same from their point of view. But if you find a way to deliver the work more efficiently, you can keep the rate the same. And you freed up a lot more time for yourself to either attract new clients, take on new projects, or just have a little bit more breathing space. Another way to do that might be to say that from this point on, you're no longer be offering XYZ as part of your service, or you'll set firmer boundaries around, for example, the number of phone calls you have. You get the idea. So that's less focused on the income but more about the way that you deliver the projects to make them more cost effective and efficient. 

Do you need to justify the change in prices to your clients? People fall into two camps here, I think on one hand, you might want to explain that you have more experience. You know the industry and their business more intimately and can add more value, you can point to the results that you've got for them. Maybe you're doing more strategic work than you have been before, which comes with a higher value. Any new training or qualifications that you may have done or any new tools or systems you're adding to your process that will add value for them. Maybe it makes sense to refer to some of that if you're explaining why your prices are going up. On the other hand, a lot of people feel that it's your business and you don't really owe people an explanation, you could just say your rates are increasing on this date and they can let you know if they have any questions. A middle ground might be saying that you do this annually in line with inflation, and therefore your rates will change on whatever date as I mentioned earlier. Maybe it's an internal conversation you need to have about how you justify it if you feel awkward about it. But outwardly, I kind of fall into the second camp there, I don't think that you really owe people an explanation. 

So now, for handling the response. Once you've communicated this to your clients, yes, you might get people saying that they can't afford it, and get a little bit of pushback. But if you lose a couple of clients and keep the others at the higher rate, your overall income will be unaffected. And you'll have more time to attract new clients. So let's say you have 10 clients a month paying £1000 pounds, and you raise your rate to £2000 pounds, and three of them say that's a bit steep for us, we will end our contract with you, but the remaining seven say that's fine, you're going to be a lot better off and you'll have less work to do. Obviously, you wouldn't necessarily double your rates. But that's easier math for me. 

If you do get nos, see that as useful feedback. If you don't get any nos, your rates are probably on the low side. If you get a few people saying no, then that's the Goldilocks zone and your rates are probably about right. If you get a lot of people pushing back, then maybe you've got a little bit carried away, and your rates are too high. And it's maybe worth rethinking what your increase is. Or maybe you just haven't found the right service-market fit, which incidentally, I talked about in episode three. So you might want to go back and listen to that one. 

Are there any instances where you might not raise your rates? Maybe. While it makes life easier if all your clients are on the same rate, in reality, no two projects are the same. So it's not always possible to just say this is the service and everyone's on the same rate. You might be happy with a slightly lower rate if the client is flexible and easy to work with, if they bring you lots of new projects, refer you for other work, and it's still at a level that makes sense for you business-wise. And there might be life circumstances too, where making a change doesn't really feel right. I know that around last April, for example, I was thinking about raising my rates. Some of my contracts had come to a natural renewal point and it might have been a sensible time to review pricing. But, you know, the pandemic was kind of just kicking off at that point, I didn't know what was going to happen. I had a couple of clients sort of murmuring about how they were going to need to postpone work. And clients were really in a difficult position. Some of them were losing a lot of business. So it didn't really feel like a good time to raise rates. At that point, I decided not to raise my rates. In hindsight, maybe that was unnecessary, I don't know. At the time, I didn't know if the world was going to implode or not, so I played it safe. And that was the right decision for me. These are things that you will want to factor into your decision-making process. As I say, I'm just sharing what I've done. You can take the lessons from that and decide what you want to do yourself. 

Of course, let's just be clear, you mustn’t be raising your rates if you're not actually delivering good work. And this is a tough one. I can't answer that for you. That's up to you. I'm sure it goes without saying that you really shouldn't be raising your rates if you're not already doing a brilliant job for your clients and you have satisfied customers. A couple of ways to make sure that you're achieving that and being consistent is to under promise and over deliver, set clear expectations and always uphold your end of the agreement. Be flexible within reason. And always be proactive in your communication. If you're doing all of those things, I think you can feel pretty confident that you're not taking the piss when you think about raising your rates. 

So, if you haven't raised your rates for a while, it's probably overdue. I know it can be a tricky subject, so I invite you to at least think about putting it on your to do list. Otherwise, enjoy your promotion. As always, thanks for listening. Please subscribe and leave a review. If you find this helpful.

You've been listening to 15 Minute Freelancer with me, Louise Shanahan, freelance health copywriter and content marketer at thecopyprescription.com. If you enjoyed this, please hit subscribe, leave a review or share it with a freelance friend. And if you've got a freelancing question you want answered on the podcast find me and say hi on Twitter, LinkedIn or Instagram. Thanks, and until next time, happy freelancing!