Your freelance fees are too low low if either of these things are true:
- You are feeling busy and overwhelmed, or
- You don’t have time for business development.
Raising fees is intimidating — if not terrifying — for most freelancers. Many of us are often frozen by emotion rather than driven by economic sense. We make up nutty logical fallacies to justify doing nothing and continuing on with the freelance fees we have charged for years.
But if you can put emotion aside and look at at your business logically, you may see there is a strong economic case to be made for raising your freelance fees.
After all, as we showed in our roundup of gig economy data, many freelancers come for the lifestyle but stay for the money. More than 20 percent of us make more than $100,000/year.
And as our friend Ed Gandia at High-Income Business Writing argues, there’s no reason a copywriter (where there is lots of competition and price pressure) can’t make six figures if they have a good strategy for their freelance business.
Now, these two factors aren’t the only signs that your freelance rates are too low. For example, if other people with the same skills are making more money than you, that’s also a strong sign you need to buck up. But comparing skills is more subjective, and your clients might not rate your skills as highly as you do.
But “not enough time” is as close to an objective measure as you can get. Let’s take a look at these two dead-obvious signs that it’s time to raise your freelance fees.
Related reading: Getting the Freelance Rate You Deserve
I’m so busy
I’m amazed at how often I have conversations with friends and colleagues that go like this, almost verbatim, as if they are always working from the same script.
“I can’t meet for lunch for a few weeks. I’m really under the gun. I’m so busy.”
“You should charge more money.”
“But then I might lose my clients.”
Losing clients is the point of raising your freelance rates! Up to a certain point, that should be a goal.
You know you need to lose clients when you don’t have time to enjoy the flexible lifestyle that being a freelancer is supposed to afford you.
I don’t know about you, but one of the reasons I left a traditional office job is because I was always eating lunch at my desk. You will have your own indicator that you are in control of your own fate. You can make dinner for your kids. You never have to work on Saturdays. You actually work out as often as you resolved to at New Years.
For me, never having lunch with colleagues as one of those signs I wasn’t in control of my own fate. If I can’t do that now as a freelancer, I might as well go back to the cubicle life.
If you are too busy to complete the work you have and live the way you want, you aren’t charging enough money for that work. Remember: Jobs are for working. Gigging is for living.
The solution to being too busy is to steadily raise your freelance rates until you find the right balance between income, what your clients will tolerate and the amount of time you are putting in.
Let’s say hypothetically, you have 10 active ongoing clients. (Every field and every business model in that field will have a different situation, so your numbers will vary.) You call up the first one and tell them that when your contract renews, you’re going to have to increase your rates 25 percent.
What’s the worst-case result here? They say hell no, they let your contract lapse and your income has declined by 10 percent.
The best-case scenario is that they don’t even blink. Your income has increased by 2.5 percent, and you have some evidence that your total income can possibly increase by 25 percent if you are able to pull this off with the rest of your clients.
Gaming it out a little further, let’s say that the net result is that you lose one fourth of your clients and raised your fees by 25 percent on the others who stayed with you. That’s a wash financially, but you are better offer, because you have gained back 25 percent of your time. You now have more time for lunch.
Even if the worst happens, it’s only temporary, because now you also have additional time to work on business development. Which leads us to the other sign that your freelance fees are too low.
I don’t have time for to look for new clients
First of all, stop thinking of business development it as a search for “new clients.” You are looking for better clients.
Better as in the sense that they value your time more.
And better by other measures that may be important to you . . . because you learn new skills, break into other industries, make new contacts, get the warm fuzzies from them, etc.
You should always be looking for better clients. You aren’t actually running your freelance business like a business if you don’t have a serious business development plan. Real businesses don’t just let stuff happen to them.
If you are too busy to look for new clients, then your freelance fees are too low. Your current clients should be paying you enough that you have time left over to run your business.
If they want to pay you the hourly equivalent of what they would pay an employee, then they don’t understand that you have a business to run. They should hire full-time employees to provide the work you provide. If the flexibility of outsourcing is important to them, then they need to bear the costs of that.
After all, your clients have customers, and the price they charge those customers builds in the expense of sales and marketing, right?
The time you need to spend on sales and marketing is an expense that should be built into your freelance fees. If you don’t have time to work on developing your freelance business, then you don’t actually have a business. You’re a day laborer. You need to raise your fees.
Related reading: 7 Powerful Strategies for Getting Recurring Income as a Freelancer
How to raise your freelance fees
Knowing it’s time to raise your freelance rates is one thing. Knowing how is another.
We’re not going to get into this comprehensively here, so I would really appreciate you sharing some of your experiences with raising freelance rates below in the comments. But here are some basic principles to keep in mind when it comes raising fees for your freelance clients.
Related reading: How to Smartly Raise Your Rate (and Handle Unsustainable Clients)
One, never ever charge a new client less than an existing client. It’s disrespectful. Behavior like that is why people hate cable companies. Don’t run your business like a cable company.
Conversely, never raise fees on an existing client and then turnaround and charge a new client the old fees. The last money in always pays as much or more. The first money in always pays an equal amount or less.
Once you have successfully started raising your rates with existing clients, that’s your new minimum for new quotes to new prospective freelance clients.
Obviously, this is referring to an apples-to-apples comparison. In practice, you may be charging an old client more money because the service or the value you are providing differs in some way to what you are offering a new client.
But if your business sells “standard units” that treats all hours of consultations or all blog posts or all hours of design as equal, then the above rule applies.
Two, don’t raise freelance fees on existing clients suddenly and without a conversation. Have your rationale prepared and let them know a reasonable point in the future when the change will take effect.
Have the courage of your convictions, and don’t apologize. You’re raising your fees because your freelance business requires it. Tell your freelance clients that you appreciate the relationship you’ve had and enjoy the work you are doing together. Tell them that you believe you provide a lot of value and look forward to continuing to do that.
Most of all, don’t sound like you are asking permission to raise your freelance fees.
This is your business, and you’re making the decisions. Is there one single expense in your life where the seller asks your opinion about whether they should charge the price they are charging? Do you walk into the coffee shop and see a sign that says, “We’re thinking of raising our prices next week. Will that be okay with you?”
Now, in practice, you may then end up negotiating. If you tell a client you need to raise the fees X percent, they will probably ask for a discount or push back in some way. Then the usual advice on negotiation applies.
(For example, if they insist they have absolutely no more budget, then you negotiate dropping some of the deliverables you provide for that budget, thus getting you more time for the same money. i.e. “My hourly rate is going up, so here is the reduced number of hours I can give you for that budget.”)
But, while you may get into a negotiation over the final numbers, do not negotiate your need and right to raise your freelance fees.
Third, get comfortable with losing clients. That’s actually part of the goal. You want to find out who can bear higher freelance rates and who can’t. And the only way to do that is to keep pushing the rates up until you find the breaking point of at least one client.
It sucks to lose a client. But it sucks even more more to go for years underselling yourself because you’re afraid of these difficult conversations.
Fourth, get comfortable with losing prospects, at least if you are busy. Remember, the point isn’t to get new business.
The point is to get better business.
So, every quote to new prospects should be at a higher rate than you are currently charging to current clients.
If all those prospects keep saying no, that’s not a problem. They aren’t better clients for you in that case. Just more of the same. And you’re too busy to mess with that.
Now, this is not a set-and-forget tactic. You will lose some of your current clients eventually as part of the natural cycle of freelance life. So you need to keep a pipeline of prospects flowing.
If you are worried about the prospect pipeline running dry because your quotes are too high, then you can experiment with different quotes until you find the sweet spot. But, assuming you are busy with current clients, the next quote should always be based on higher rates.
Fifth, be strategic about it. And here’s where I hope to get some insight from you, dear reader, because every freelance business should have its own unique pricing strategy.
It might make sense to raise your rates by choosing a target number and rolling it out to each of your clients, one at a time.
It might make sense to raise your rates by choosing a breath-stopping high number and testing it out on the client you can most afford to lose.
There’s an old piece of negotiating advice that you should prepare by looking in the mirror and saying the highest number you can without laughing out loud at how absurd it is. Then practice until you can say that number without laughing.
It might make sense to raise your rates by just announcing the new fees (with a reasonable effective date) to all clients simultaneously and see who balks. Then you let those clients go and start developing better business to replace them.
My own preferred method, assuming that I’m plenty busy with existing work, is a client-replacement two-step. First you can give meaningfully higher quotes to prospective clients until one of them says yes. Then you go to the one client you can most afford to lose and let them know the next contract will be based on a higher rate.
If you lose that client, then you have improved your overall mix and overall pay. If that client sticks with you, then you should probably keep raising your fees on the rest of your old clients.
Then you are on your way to dramatically improving your freelance income, getting more time in your schedule or both . . . and kicking yourself that you didn’t do it sooner.