Learn about the signs you need to update your freelance rates and how to communicate it to your clients!
As a freelancer, money often could be an uncomfortable topic, the fear or anxiety of scaring off potential clients is a very common experience! At the same time though, you deserve of getting paid what you are worth!
In the current economy, everything is steadily raising prices and standard living costs are getting higher and higher. This is a huge sign you need to raise your freelance rates, especially if you haven't done so in the last few years!
If you're still unsure if your rates need updating, watch out for these:
You've been charging the same rate for the last X amount of years
You are hearing "yes, this rate is perfect for us" a bit too often...
Charging a lot less than other peers in the same field
Working at full capacity and having zero life-work balance
... or you just feel like you want to charge more
If you've seen yourself in any of the above, you definitely could use a rate update on your work!
Yes, but...
How to do it?
You can't just randomly e-mail a client saying "hey I will need more money from now on, k thanks bye", you would need some simple form of a strategy. Let's go through everything, step by step.
1. Shrinkflation
This is a term that I recently learned, but you all know its meaning - it is when companies avoid raising the price of a product while decreasing its amount instead. It is quite a sneaky way for brands to increase their profit margins by downsizing.
You can try and adapt this to your current structure by reducing "extra" services for your basic rate.
For example, if you are a designer or an illustrator, and your rate includes 3 revisions, you could downsize that to 1 revision, and put the extra revisions or extra amounts of work at an additional price.
Break down your work process into all its different tasks to determine how to use the shrinkflation to your niche.
Even if we don't live in times of global economic crises and all that shazam, you still should remind yourself that a 10-25% increase of your rate annually is in order. Each year of you working is another year of experience and progress for you as a professional, and your rates should be reflecting that.
2. Test higher rate quotes with new clients
Quoting your new rate to a brand new client that has approached you is a perfect way to test if you are charging high enough. If you are always getting a "yes!" and zero objections to your rate you miiiight have some more room for growth.
Getting a new client on your new rate would let you step down for a lower-paying one, which would generate higher revenue for you! For current projects, you could just wait until you have an opportunity to tolerate a potential loss. Having 1 higher paying client instead of 3 lower-paying ones, you are still getting paid the same amount and having more time available on your hands. Time which you could fill with other higher-paying clients in the future!
3. Timing
A big part of your strategy should be timing. E-mailing clients out of nowhere, and letting them know about your pricing update could often be met with a frown. Some may be able to meet your request, others not so much.
The worst timing for you to announce a rate increase would be:
During Holiday Seasons, or just after one- clients would probably be preoccupied, lower staffed if it is a bigger company, and overall swamped with other priorities. So your request would be met with some extra levels of annoyance.
Right in the middle of an ongoing project. Maybe you have realised you charged them a lot less than you could have, or you need extra cash, or whatever reason- once you've made a deal and agreed on something if there aren't any additional requests, it is not professional to change your rate. They might agree but you would probably be deemed unreliable and the chances of them working with you again would be low.
If the company client has had a financial hit, they would be dealing with their recovery and probably not in the mood for a freelancer asking for more money.
What about the best times?
For one-off projects, you could inform your client about your current rate increase after you have completed your project, so they would be informed about it in the future.
For ongoing gigs, if you are working with a company you could try and learn when they get funding approved and e-mail them then, it is usually at the beginning of the calendar year.
There are of course exceptions to every rule, after all you know your clients especially if you have been working together for a long time.
4. Points to bring up in your e-mail
Points you need to bring up in your e-mail should definitely include the following, in order to make it more compelling:
Results you achieved for them
Extras you have delivered while working together
New skills you have gained since working together
Be brief and professional, state also the great things about the project you have already worked on together, and then let them know about the increase and when it would be taking effect. You should allow for a 1-2 months notice, and probably longer ( 3 or 4 months) for big corporation clients if you have such since all the accounting processes there are much slower because of the size of the company.
Extra tips
You don't have to simultaneously increase the rate for all of your clients. Start with the new ones, and then progressively work on communicating this with your current ones. Work on developing and polishing your work too, and improving your client experience with you.
You could offer some free extra services for your most loyal clients, but make sure they are not time-consuming for you.
For long-term clients, make sure you show appreciation for your work together during the years in your price increase letter.
5. What to do after you've sent The E-mail?
Check your e-mail. Sounds like a no-brainer, but using your best customer service after that could make or break your future with a client.
They may have questions or be willing to have a call to discuss things - be polite and professional.
Don't backtrack on your decision- stay firm. Decide for yourself if are ready to meet in the middle budget-wise. That said, do not let a client push you into going back to your old rate. If it is not working for you, it might be best to walk away.
If they are not ready to meet your expectations, don't leave them stuck if you feel like you could suggest them someone else. I've had job offers that I can not take at the moment due to scheduling or budget reasons, so I would refer them to another freelancer! Leave them with a positive impression of you.
Conclusion
Now you've learned a lot about making the big step which is inquiring about a price rate increase. Use the tips wisely in your e-mail and always offer great customer service. The results would be so worth this one (potentially) awkward moment! The skills and experience you gain each year are worth it, and that is why you have clients who appreciate it. If you are still working on your 2014 you should certainly make the step to ask for a valid increase.
I hope this was helpful for you freelancers! I personally still feel really uncomfortable when talking payment with my clients, but this is my living and it is something you have to do as a freelancer. You should be the first to learn how to appreciate your own work, so that others can too!
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