Thinking of raising your rates? We’re sharing tips on how to do just that, so you can get paid what you deserve.
When you have a regular job, you can expect a pay raise nearly every quarter, or year, that you perform exceptionally. Some jobs even have a regular pay raise scheduled for all employees. However, if you’re a freelancer responsible for making your own rates and pitching those rates to clients, you may forget that you’re also entitled to raise your rates.
Raising your rates as a freelancer is a decision that you make based on how you value your business. As you gain more clients and experience, it’s only natural that you want to raise your rates, and with good reason. Not only are you dealing with inflation and increased business costs as you grow your business, but you’re also dealing with increased competition. To top that off, you’ve established a relationship with certain clients where you’ve developed trust by constantly making or exceeding their expectations. So, do you deserve a rate increase? Absolutely.
Raising your rates is an exciting step for any freelancer. Image by ezhenaphoto.
In today’s article, we’re sharing a few tips on how you can raise your rates as a freelancer and make more money doing what you love. Whether you’re a photographer, illustrator, or videographer, raising your rates can be intimidating. But, we guarantee that if clients see value in your work, they’ll see value in your rate.
When You Should Raise Your Rates as a Freelancer
We’re not saying that you should raise your rates with every contract you complete with a client, but evaluating your market worth is an important first step as a freelancer. Let’s say you have a photography client who pays you a certain amount per image that they purchase from you. That rate should change between what you charged in 2016 when you were just getting started with your business, and what you charge in 2021 when you have five years of experience under your belt. If it hasn’t, it’s time for a change.
Evaluating Your Freelance Business Worth
Before you raise your rates out of the blue, it’s important to evaluate your business. Consider what your competitors are charging, and ask a friend. Often, rates are this hidden thing that no one wants to discuss, but consider starting a dialogue in your community. Not only will you see hidden gaps and opportunities that you may miss, you’ll also support each other in a way similar to how a union operates.
Evaluating your business worth is the first step to raising your rates. Image by Chaay_Tee.
For example, let’s take the wedding industry. If you live in a tourist destination where weddings are popular, chances are, there’s a lot of photographers in your area. Consider forming a photographer group to discuss things like rates and packages to see what competitors are offering, and how your business could adjust to help the market you’re in. We say this with a caveat. When you evaluate your business, don’t compare your first year operating as a freelancer with someone who has an established reputation and business, and vice versa. More experience should equal out to more money, as you pay for that person’s experience when you hire them for your business.
Questions to Ask Yourself About Your Freelance Business
When you’re evaluating your freelance business, there are several questions that you should ask yourself before raising your rates. It’s important to establish a precedent for your rate, because clients may ask why you’re raising your rates. And, coming to them with a background on what led you to that rate only establishes more professionalism for your business. Here are some examples of questions to ask yourself when you’re evaluating your business.
Evaluate your business before changing your rates. Image by Jus_Ol.
How many years have you been operating?Has the dollar changed since you started your business? Has inflation affected it? How many clients have you maintained a relationship with over a long period of time?What’s the market average rate of your industry?Do you feel like what you’re charging now is worthy of your time?How much experience have you had since starting your business?What new skills have you obtained since your last rate increase? What increased costs have you had since starting your business? Evaluate your equipment and business operations. Do you value your time more now than you did when you started your business?
These are just a few important questions to ask yourself when deciding to raise your freelance rates. The vital thing is to analyze your business, how you value your time, and where you see your business in the next three to five years.
How to Raise Your Rates as a Freelancer
Once you’ve evaluated your business and established what you think is an appropriate rate to charge your clients, it’s time to raise your rates. You may decide to raise your rates with certain clients, leaving your rate the same for others. That’s absolutely fine. Different clients may have different budgets, and may also inspire you in different ways, bringing a different sense of value to your business. Each client should be evaluated independently based on how they influence your business and your life.
Sewing-Workplace-1.jpg?w=750" alt="Sewing Workplace " class="wp-image-167505" />Letting clients know you’ve raised your rates can be intimidating, but we have some tips for you to make it easier. Image by goir.
Now comes the fun stuff—letting clients know that you’ve raised your rates. Some freelancers choose to keep it simple, and simply tell clients that their rates have increased with no mention of the reasoning. Others choose to provide some information on why their rates have increased. Your relationship with your client will determine how you approach raising your rates. I’m on the team that more information is better, as it shows that you value yourself and your clients, and are not changing your business without reason. So, if you’re like me and want to inform your clients of why you’re changing your rates, here are some tips to get the conversation started.
Tip #1: Inform Your Clients in Advance that Your Rates Are Changing
Once you’ve established a change in your rates, you may want to reach out to your clients directly and let them know, even if you don’t currently have a contract with them. There are a few reasons why I like to do this. The first is that it opens a new dialogue with your client. Maybe you haven’t worked with them for a while. This is a good way to establish a new connection. The second is that if you do work on a long-term contract with certain clients, you’ll want to give them notice that your rates are changing in advance so that they have time to prepare or adjust their end of the contract. Giving your client notice allows them to evaluate their business, and ensure that they can meet your new payment expectations.
Informing your clients gives them time to adjust their expectations. Image by insta_photos.
When you inform clients that you’ve changed your rates, make sure to inform them of how and why it benefits their business. A relationship isn’t one-sided, and your clients should see value in your rate changing. Whether that means you’ll be taking on fewer clients so you’ll be able to dedicate more time for that client, or you’ll be able to better operate and run your business, chances are, an increased rate will result in a better relationship with your freelance client.
Tip #2: Consider Basing Your Rate Change on Percentage vs. Dollar Amount
An easier pill for some clients to swallow is a percentage change vs. telling them a dollar amount. For example, if you raise your rates from $50 to $100, that’s a pretty significant dollar amount. However, if you’ve worked with a client for two years and are raising your rates by 20% from $100 to $120, that’s a bit of an easier rate change to understand. Once you establish a rate change schedule, every year you’ll want to adjust your rate. So, raising your rate 50% every year may be too much of a substantial change. Instead, raising your rate by [X] percent each year (or quarter, if you prefer) is something that your clients can plan and prepare for.
Craft-Brewery-1.jpg?w=750" alt="Craft Brewery" class="wp-image-167511" />Your rates can also increase by a percentage vs. dollar amount. Image by Dejan Dundjerski.
Tip #3: Establish a Rate Change Schedule
Expanding on that last tip, establishing a rate change schedule is an excellent way to ensure that you’re setting up your freelance business for success in the long term. Rather than informing your clients that you’re changing your rates on a one-time basis, inform them that going forward, you’ll be raising your rates on a quarterly or annual basis to account for increased experience, skills, and inflation. Chances are, your clients will applaud you for your ability to understand the market and adjust your business accordingly. This also ensures them that you understand the market and your value, and that you value your partnership enough to consider them in this decision.
Clients should understand when they can expect your rates to change. Image by polinaloves.
Similar to this, if you take on any new client, ensure you inform them that this is how you operate your freelance business. If you set a precedent for rate increases, there are no surprises down the line in your partnership. This is an excellent way to ensure they are prepared for rate increases seasonally within your relationship.
Tip #4: How to Actually Tell Clients Your Rates Have Changed
It’s one thing to prepare for changing your rates, it’s a whole other ball game to actually inform them of that decision. Once you’ve settled on your rates, the hardest part will be telling your freelance clients. Be prepared for the unexpected. When you change your rates, there’s always a chance that a client will not be able to afford it and you’ll lose that client. However, if this happens, remind yourself of why you’re raising your rates. Some clients may not fit into the vision you have for the future of your business.
Costs, such as materials, can have a huge effect on your rates. Image by semeyes.
Here are a few things you can include in your email to your clients:
Explain hidden costs of your business that they may not realize, such as increased cell phone costs, internet, rent, new cars, or new equipment. Show some of the fantastic work you’ve produced for them, and how your work has increased in quality over the time you’ve worked together. Share any data or results you have from your work together, whether it’s an increase in social media followings or any ad campaigns you may have run together.Explain how you value them and hope that this rate shows the value you have in your work together.
Example of a Rate Change Email from Freelancer to Client
No matter what type of client you have, your individual relationship with that client will dictate how and when you tell them your rate changes. The most important thing is to be professional, clear, and talk to the client from both your heart and the head behind the business. This is an example of a template I’ve used in the past to explain a rate change in my freelance photography business:
I hope this email finds you well. The reason I’m getting in touch with you today is that after evaluating my business over the past several months, I’ve made the decision to increase my rates effective [Insert Date]. This isn’t something I’ve done in the past. However, after several incredible years in the business, I’ve made the decision to adjust my rates going forward on a more frequent basis.
Because I value our partnership, I wanted to share a few reasons why I’m adjusting my business rates. I am absolutely committed to providing you with the best quality of service in the work we do together and want to ensure I can dedicate an appropriate amount of time to serving your business through that partnership. In addition, due to the rising costs of my business operation and inflation over the past few years, adjusting my rates feels like a natural step to ensure the success of my business in the long run.
Starting on [Insert date], I will be raising my freelance rates from [Insert range]. This results in roughly a [Insert percentage] increase in our rates together.
Thank you so much for your continued business and support over the past [Insert time frame]. I look forward to continuing our work together as it’s work I truly value. If you have any questions or concerns, please do not hesitate to reach out at any time.
We hope these tips help you evaluate and grow your freelance business in whatever field you operate in. We can’t wait to see what you create next. To get started contributing to Shutterstock, sign up here.
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