How to raise your rates as a freelancer – Step by step guide
When I first started out as a freelancer, I used to make $0.04 per translated word. It’s been 12 years, and I now charge most clients in my specialized niche three times as much. If you are wondering how to raise your rates as a freelancer, here is the step by step method I used to triple them.
Let’s dive straight in!
1. Determine if it’s time to raise your rates
Let it be crystal clear:
The first step to raise your rates is to be constantly booked for however many hours you want to work every week.
Only want to work 20 hours per week (common when you’re starting to freelance as a side hustle)? Raise your rates once you notice you are always booked for all that time.
Want to work 40 hours per week, but you are merely getting enough projects to work for 25? The solution is NOT to raise your rates. Instead, you should focus on acquiring more clients. If you don’t know how, I have a fantastic guide with 10+ ways to get more clients as a freelancer.
The only exception
As always, there is one exception.
As a freelancer, not everything you do is billable work. You also have to take care of invoicing, prospecting, writing proposals and a number of other tasks that you can’t charge for.
If you are already at full capacity counting only your billable work (aka ‘actual’ work clients pay you for), and you don’t want to work more than that, you need to free up some time to take care of marketing and keep growing your business.
In this case, and this case only, take the client you like the least or the client you are applying your lowest rate to, and bump their rate up by 20 to 30%. If they say yes, pick the client you like the least or the client you are applying your lowest rate to (whoever you didn’t choose first) and bump their rate up by 20 to 30% as well.
Trust me, you are more than likely to lose at least one of them and free up that time you needed.
What if they both accept the new rate and keep sending you work?
You just learned a very, very important lesson – you are probably charging WAY TOO LITTLE to all your current clients.
2. Find out what your real rate is for your current clients
I am sure you know what your rate is, whether it’s per-word, hourly or per project. But have you ever stopped to consider how much time you really spend on each client, and how much you receive in exchange?
If all your projects start with a 30-minute discovery call, those 30 minutes are part of your time investment. If a certain client always forgets a couple of things that usually take one more hour of work, consider that as well.
And it doesn’t even end there. Even if you apply the same rate to all your current clients, their needs are different. The file formats they want are different. Even their invoicing procedures can vary!
When needs change, your workflow has to adapt. In some cases, you’ll maintain the usual speed. Other times, these factors will slow you down.
How do you know for sure? Track the time you spend on any given project or client every day. At the end of the month, when you submit your invoice, you will also have a pretty good idea of your real rate based on client and type of project.
3. Start raising rates to potential clients first
Once you have finally filled your time with projects and you know how much you are really charging each client, it’s time to start raising your rates for perspective clients.
From now on, each time you send a proposal, increase the rate you quote, then see what happens.
If you know you usually send 5 quotes each month, and get 3 jobs as a result, your acceptance rate is 60%. If it stays the same, meaning you still get 3 jobs, congrats – you just raised your rates, and you are likely to have room to raise them further!
Next month you raise them again. This time you get 2 jobs out of 5. But now you are making a lot more from these two, and the fact you didn’t get the third one is not a big deal.
The following month, you raise your rate again. This time, only 1 of your quotes gets accepted. As you need more than 1 new project per month, you know you can’t charge this rate yet – you need to go back to the rate you applied last month, or try something in between the two.
There is no standard when it comes to acceptance rates. As you are starting out, if you don’t charge much, your acceptance rate is probably pretty high. Once you become more established and your rates start climbing, though, it’ll naturally diminish.
This is not a bad thing – if you are doing a good job with your current clients (as you should!) they will probably keep you busy most of the time. You’ll no longer need 3 new clients per month. 1 may be just perfect.
How much should you raise your rates by?
The million dollar question, the one that has no right or wrong answer.
If you are wondering how much to raise your rates by as a freelancer, but you’ve only started out 6 months ago, the answer is “significantly”. In your first two years in business, once you manage to fill up your calendar, keep updating your marketing assets and increase your rates significantly – as in, charge potential clients 20/30% more – every time you have the chance.
Over time, your rates will slowly but surely grow to a point where 20 or 30% increases will not be sustainable any longer. For someone who’s been in business for 10+ years, a 10% increase across the whole portfolio of clients is a huge success – and it equals a significant amount of money.
4. Establish a plan to raise your rates to your current clients
It’s just natural – if you keep working on your marketing and getting new clients at higher rates, sooner or later you’ll find yourself with clients who are paying less than they should.
That’s your signal – it’s time to raise your rates.
I want to be extremely clear on something:
The easiest way to get more work as a freelancer is to get in touch with dormant clients. But the easiest way to get work that’s paid better is to find new clients, not to ask more to your current ones.
People don’t like to pay more for something. It’s just the way our mind is wired.
Depending on how steep your rate increase is, be prepared to lose 10 to 50% of your clients.
That is why you should never, EVER, EVER raise your rates to all or most of your clients at the same time. Unless you want to take a sabbatical!
Who to start with
Always start from one of the three:
- The client you like the least
- The client you are applying your lowest rate to
- The clients (all of them) who only send you little work, let’s say less than 10% of your annual income each and less than 25% together
If the client says yes, move on to tell the next one.
I don’t recommend to raise your rates for more than 2 clients at a time. Why?
Because the client may say yes, but it’s actually a no.
Good service providers are not easy to come by – if the client doesn’t have a backup freelancer, they’ll say yes because they know they need time to find someone to replace you. While at first you’ll keep getting jobs at your new rates, slowly but surely they’ll stop coming.
There is no way to know in advance if the client’s yes is real. That’s part of freelancing, and nothing you should be concerned about. If you slowly lose the client, so be it.
That’s why I recommend not to raise your rates for lots of clients at the same time – they may all say yes, and in 3 months from now you find yourself with your income slashed in half.
5. tell your clients you are raising your rates
Now that you have decided who to start with, it’s finally time to tell them.
On the Internet you can find many fancy templates to do that. I prefer to keep things simple and tell the client the truth.
This email does three simple things:
- Provides a common business reason to improve your rates – if you can get paid more for the same work, it’s only natural you can no longer work at that rate
- Proves your worth – if other clients are already paying more, it probably means you are worth more than they are currently paying
- Gives them a discount compared to your new clients, and we all love a good discount
Plus, you are giving your clients plenty of time to rearrange their budget. I like to make my new rates effective at the beginning of the new year or quarter, so that the new rate fits their budgeting schedule.
Raising your rates as a freelancer is only natural, and something you should always aspire to. Sure, it means you will lose some clients. That’s good, too – they have to make room for better ones.
I know that at times things can get more complex than this – e.g. what do you do when the client who sends you more work is also your lowest paying one?
You may need to get creative. At times you’ll have to work a bit more than you’d like to develop solid relations with new clients. Other times you will be working a bit less because not all clients took your new rate. Retainers are also a good way to structure your portfolio in a way that works for you.
No matter what, keep growing your client base and keep raising your rates. In the long run, it’s the only way to run a successful freelance business.
How to raise your rates as a freelancer: Frequently Asked Questions
How do I negotiate my freelance hourly rate?
As a freelancer, you don’t negotiate your hourly rate. It’s yours to choose, and the client is free to take it or leave it. You can, however, suggest slightly lower rates based on volume and other factors.
How do you increase your hourly rate with clients?
There are three ways to make more every single hour:
- You increase your rate
- You deliver less at the same rate
- You become more productive
How often should freelancers raise rates?
I never raised my rates more than once per year for a single client. That’s why I recommend to raise your rate considerably, so that the client stays in your range of acceptable rates for longer.
How do you attract higher paying clients?
In order to attract higher paying clients, you should position yourself as more of an authority in their eyes. There are many ways to do that! My favorites are:
- Work with the best clients in your niche
- Publish guest posts on authority websites
- Create case studies, including client testimonials