Raising your freelance rates is a necessary part of being a freelancer. After all, as you gain more experience and expertise, your services become more valuable. Before you increase your prices, it’s a good idea to evaluate the market to make sure now is the right time.
1. Check Your Financial Health
Your personal and professional budget should play a role in your decision to raise rates. If you’re not charging enough to cover expenses, your business isn’t sustainable. Not sure? Start by listing all of your monthly expenses. Then, use an accounting program like QuickBooks to generate financial reports for the past year. As a freelancer, your income probably varies from month to month — to account for that variation, you can take the average of the last 12 months and compare it to your monthly expenses. If your income is lower than your expenses, or if you’re just breaking even, raising your rates can go a long way toward improving your finances.
2. Research the Market Rate
To a certain extent, the rates of your competitors affect your rates, mostly because they set an expectation among customers that can be tough to overcome. Before you decide to raise your prices, see how you compare to similar freelancers in your area. If you’re charging considerably less, it’s probably time to charge more — lower prices often give the impression of lower quality. If you’re already at the higher end of the rate spectrum, you might need to do more research to see if the market can bear a pay rate increase.
3. Compare Your Services
Once you have an idea of the market rate, it’s helpful to compare your service offerings to those of your competitors. Do you offer premium services? Are you delivering more with each project? Do you have special expertise or experience that benefits your clients? If so, it’s reasonable to raise your rates. As a bonus, this type of rate increase is easy to explain to customers.
4. Evaluate Your Customers
When you’re considering a rate increase, it can be helpful to evaluate your customers. What type of businesses do they run? Are they likely to have room in the budget for higher rates? How strong is your relationship? If you’re working for successful large businesses that love your work, you may be able to raise your prices without causing much of a fuss. After all, professionals understand that increases are necessary and normal. If your clients are individuals or nonprofits who are already stretched thin, raising your rates might force them to choose another freelancer.
5. Calculate the Time Since Your Last Rate Increase
Can you remember the last time you increased your rates? If not, look back at client invoices and contracts. If you’ve been using the same pricing structure for more than one or two years, it’s reasonable to start charging more. In the time since your last price hike, you’ve built more skills, gotten better at your work, and gained more knowledge — all things that add value for your clients.
Raising your rates can be intimidating, but it goes a long way toward building a sustainable freelance career. When you choose the right time, it’s easier to increase prices while maintaining your customer base.