Easy ways to increase your freelance rates
Everyone wants to know the right way to raise their rates and charge more for freelance services, right? Kaleigh and Paul share their strategies that have helped them successfully (and regularly) increase their rates to build sustainable freelance careers.
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Paul, one of the things that people always want to know is how in the world do they raise their freelance rates without losing their clients and I think that that’s a good question. I’m gonna hand this one over to you first. I want to get your two cents on what is a good way to do that, what’s a good formula?
Two things, the first is I totally agree. I get this question so much and instead of just answering “shrug emoji”, I do have a system. I also think that people should be careful with systems or hacks, because you have to also think about, “does this work for me in my situation,” blah, blah, blah, legal disclaimer. Put some critical thought into it. Don’t just be like, “oh, I’m just gonna do this thing.”
I mean, I think that’s what a lot of the Creative Class talks about, is this is not just like, here’s the exact thing you need to do. It’s, here are the things that we’ve learned, here’s how you can apply them if it works. How I raise my rates in the past, because I started doing this quite awhile ago and I was charging, I don’t know, $15 or $20 an hour. I was charging by the hour as well. There was a lot of space to make up there.
The way that I kind of figured it, for myself, for my business, was that if I’m booked for more than three months in advance, for more than three months in a row, then if I haven’t raised my rates in the last six months, ’cause I don’t think you should raise your rates every couple weeks or every month or anything like that; if I’m booked for three months in advance, check. If I’ve been booked for more than three months in advance for three months in a row, check. If I haven’t raised my rates during the last six months, check. Then I would raise my rates by typically 10, 15, 20%, and that’s the way that I went.
I think we can talk about, because I want to hear from you on how you do that, but I do also think in this conversation about raising rates, it was a good way to approach this with existing or brand new clients. I think that’s the other part of this conversation that I’m really excited talk about. What do you do or what have you done in the past for dealing with raising those rates?
It’s very, very similar to what you do. I look at what I’ve been charging for the past six months with every client I work with and it’s not a ton of clients, but if I haven’t asked for an increase, I usually asked for about the same, 15 to 25% raise after six months, and I just send a quick email that says, “Hey, we’ve been together for six months now. I’ve produced X, Y, and Z for you. I would really like to increase my rates by X amount so we can continue working together. If your budget doesn’t allow, that’s totally fine, but,” and then I include my rate. It’s a fairly quick email, actually. Almost, I would say 95% of the time, I get, “Okay, fine. That’s great. Let’s keep it going. Here’s your topics for next month.”
I have had a couple situations, though, I will say, where the client says, “We are totally maxed out with our budget, but we don’t want to lose you. Is there any we can adjust your word count or adjust the project that you’re working on, so we can continue to work together, but we have to pay you kind of what we’ve been paying you in the past.” I think in those situations, there is some room for negotiation and maybe shifting workloads a little bit, because I mean, if they’re great clients and you enjoy working with them and the work is steady, those are great things for the sustainability of your business and especially if they’re willing to negotiate and come to a compromise on what type of work you’re doing, I think that that’s a good opportunity.
It shows that they’re trying from their end, too. So, very similar approach to you, but I have found that I have to be a little bit more open to negotiations sometimes.
But it is scary to send those emails.
Especially if they’re people who’ve been giving you regular work for months. You don’t want to scare them off and hurt their feelings and make them feel like you don’t appreciate that, but you need to remind them that you’re a valuable professional as well and that’s what I think raising your rates does.
Yeah, I totally agree. It’s funny, because I had some clients … I remember charging them $500 for the first site and then $3,000 for the next site, maybe a year or two later, or a couple years later, and then a couple years later. Eventually being that they started 12 years ago paying $500 for a website and now they’re paying $12,000 for a website.
They stuck with me, but I think what I kind of did and what you do as well, is tie the work that we do to the gains that the business is seeing, right?
Being able to say—because if you’re doing, not all types of freelancing, but definitely some types of freelancing—that you’re helping your clients do business better and more effectively and hopefully at the end of the day, make more money. If your work is responsible for that in some small way, then raising your rates is almost like a no brainer, because they’re getting a positive return on investment on the work that you’re doing.
I’ve always been aware of making the business case for the work that I do and not just doing the work for the sake of the work. If somebody’s like, “Paul, I want a website,” it’s like, well what’s a business reasons that you want this website and what’re we trying to accomplish? It can’t just be ’cause you want it to look pretty. It has to be tied to something, because then being tied to something, means that we can both look at it and be like, this is working out.
If I’m increasing your revenue by two or three X or 10 X or 20 X and you’re making six, seven figures, then raising my rates by $1,000 kind of makes sense.
I think that opens the door to another thing that’s a part of this equation and that’s asking for feedback on how your work is performing along the way. Maybe every three months, if you have a contact person that you can go to and say, “Hey,” … from my experience, maybe it’s a blog post and say, “Hey, how did that blog post perform? Did you get any number of leads from it? How many clicks did it get? How did it perform traffic wise? Did it get many social shares?”
There are also tools that you can purchase and use to find those pieces of information on your own, but if you can ask that person for those types of information and make them aware that you’re asking for it, when you bring it up later in the conversation, they’re gonna be like, “Oh yeah, that is true. We talked about that about three months ago.” I think that asking for that along the way helps make this process easier.
I love that. Even if you know the answer, if you ask your contact, then that makes them notice how your work is positively impacting their business. That’s true.
I think that’s so important with—and you just touched on this a bit as well, which made me remember it—is the idea that it’s good to have a continued conversation with clients after you finish the project. Following up with them, seeing how things are going. See how your work is impacting their business.
See if they need any more work, and if you keep the lines of communication open, you’re gonna start to see… Well, with clients that you like. We kind of touched on not working with more clients if they were bad at feedback in the last episode or a number of other reasons, but if you like working with the client, there’s no harm in following up every couple months to see where they’re at, what they’re working on. If there’s anything you can help with, and then over time, you can just start to get more and more … ‘Cause, I don’t know about you, but I kind of like working with the people that I like working with, so figuring out more ways to do that is always a benefit.
It is, and it shows that you care, too. Checking in like that and asking for that type of information or really just checking in to see how things are going, it’s a good way to keep the relationship strong. I know that that sounds like a business hack, like checking in on your relationship building, but no, but seriously, we’re all human beings and doing that, I think, is just a nice thing to do, as a nice person.
I think and kind of another magic sentence is in kind of pinging people, I would always just ask two things in following up with people that I’ve worked with but I haven’t talked to for a couple months, “How’s your business going? Is there anything I can do to help?” As simple as that and usually a little personal thing, because if I’m working with somebody, we talk to each other as human beings, so just “How’s your dog doing?” Things like that, but really, it’s just, “How’s the business? Can I help with anything?”
Paul Jarvis: That always leads to more business and then over time, once you see how the business is doing, if the business is doing better and better, then it’s easier to have those conversations about raising rates, which brings me to the second part of what I wanted to talk to you about with raising rates is how do you approach the subject of raising your rates with somebody that you’ve worked with in the past, because it can be a delicate situation to do that.
For me, I just keep a spreadsheet or I look at my invoices and I see, “Oh, this is the six month mark, so I should probably send that email and say, ‘Hey, my rates are going up. I would like to ask for more money now, here’s why.'” So it’s really, really super, super simple, but I think that you have an interesting process, right? For a kind of across the board rate increase, tell me about that because I’ve never done it, but I know that you have.
Being that I’ve always been fairly sales focused as a creative person, I kind of figured, okay, “How can I apply the scarcity model in an authentic and an honest way to services?” That’s why I would do things like tell clients, or even put on my website for the longest time was, I have space for two new projects in two months.
I only book projects when I talk to you, when there’s a contract, when there’s a down payment. Building scarcity in that way, people can see, one, I’m busy and I’m booked in advanced; and two, if they want to move on this and there’s only two spots, and legit, I couldn’t do more than two projects a month, so I was being totally honest about that, then they would need to jump. And the other way I was using scarcity as it relates to this conversation, is that I would give clients one more chance to do a bit of work at the current rate.
I’d tell my clients this … “I’ve been doing the work for you for X amount of time at this rate, I’m going to be raising my rates in a month to this amount.” So one, they know that the rate increase is coming, they’re not caught off guard; and two, if there was any little projects that they could get done in the time before the rate increase happens, then they get it at the existing rate. So they feel good, “Oh I can just get a couple more hours of updates from Paul and I’m getting it at the old rate,” which is like a win-win for them, so they’d see “Okay, I know the rate increase is coming, so I’m not gonna be surprised when Paul says like in two months, ‘Hey, now it cost this much for website instead of this much for a website.'”
I would do that and it always kind of worked out for me. Yeah. I always just stuck with it. I would just let people know, and the other thing was if there ever was any slow time, I’d be like, maybe I’ll just send this email out and then it always led to that month or two just being booked solid for work, because people were like, “Oh, I kind of need to act right now.”
I love that. Everyone should steal that.
Totally. Steal it right now. Pause the episode, then come back.
I know that I’ve heard of other freelancers doing that when they are slow, sending out an email like that, and it’s so smart, because again, scarcity is huge. People don’t like to miss out on a good opportunity or a good deal or a good sale, so having an email like that, even just a template email that you send, you have ready and queued up, anytime you’re twiddling your fingers and, “Oh no, I don’t have enough to do,” because that does happen all the time.
I think that that’s so smart and it helps you raise your rates across the board, too. Yeah, I love that. I think that that’s so smart.
I think what you just said also reminded me that I think a lot of times when if things get slow we’re like, “I need to find a new client.” For me, it was always, which one of my old clients could I work with again?
Right, you already know you like them.
Yes, exactly. This is only fresh in my mind because I’m doing so much research lately. I can’t even remember what the source was, I’m awful at quoting studies unless it’s in writing, but there’s a study done that showed that an existing customer is five times easier to convert to a sale than a brand new customer, because they already know that they like working with you. If they liked working with you, which hopefully they liked working with you. They already know what your process is.
You’ve already trained them to be a good client, so reaching out, whenever things are slow, I would just reach out to old clients with that, “How’s your business going? Anything I can help with?” And for the longest time prior to that, I would think that, “If nobody that I worked with in the past is getting in touch with me, it means they don’t need any work.”
I was so completely wrong in that. When I started asking people, “Hey, is there anything I can do for you?” Almost every time they’d be like, “Oh yeah, there is something. I’ve been meaning to contact you.” Then all of a sudden, it’s now work on your plate that you’re getting paid for instead of something in their mind where they’re like, “Oh, I should contact that person, but I just haven’t yet.”
Or even if they don’t have a job for you or work for you, maybe they know somebody who’s in the same niche or the same industry or that needs the type of work that you do and they can make that introduction for you. It’s a good opportunity builder, too.
Pretty much, and it’s probably the same for you, but so much of my work came from word of mouth and from clients telling other clients, so that’s huge.
I would say about 90% for me.
Oh yeah, definitely. Same for me. Is there anything else that you wanted to add to raising your rates?
No, I think we kind of summed this up fairly quickly, but I think the biggest thing to remember is that you need to do it regularly. It’s not something you should think about doing just once a year. If you’re consistently growing your scales and producing results and getting better at what you do, raising your rates should be something that you do fairly regularly.
It’s so easy to forget to do it, too, or to just not do it, because it is kind of intimidating, but making it a priority and even if you have to put it in your phone. Six months from now, I’m gonna raise my rates X percent. Do it. Make it a priority and put it on your calendar, because otherwise you might forget or you might be like, “Nah, I’ll do it later,” and it just slips by and then you miss opportunities to increase your earnings.
So two things there and I’m glad you brought that up. The first is that if you wait a really long time to raise your rates then it may have to be a big rate increase, which can be jarring to some people. If you don’t raise your rates for 10 years and you’re like, “Oh, I need to double my rates in order to live,” then some clients could be put off by that.
If you had raised your rates by 10% every year for five years or something like that, then clients would be … You’re bringing them there in a much easier mental way. There’s another part, I can’t remember what the other part was to this story here. It’s totally gone. It whooshed past my brain.
That’s okay. That first part was really good.
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