Deciding When To Raise Your Prices as a Freelancer
When it comes to freelancing, raising your rates strategically is not just about the money—it's a game-changer for your business.
As a savvy business owner, understanding the power of rate increases is like unlocking the door to long-term success. And guess what? I've got some exclusive insights to share with you right now, giving you a sneak peek into the tricks of the trade I share with my students in my signature course for business owners, Creative Entrepreneurship Accelerator (CEA) program.
When I first started my business, I was selling custom digital portraits that took me hours upon hours for $25. I absolutely CRINGE at the thought of the amount of work I was doing for such little payment. But I was just starting out! I had no idea what I was doing, I was a junior in college and I didn’t know the first thing about being a business owner, let alone the value of my work.
Are you undercharging for your work?
When you're just starting out in this gig, it's totally normal to underestimate your skills and charge way too little. We've all been there, fearing we won't attract clients or feeling unsure about our abilities. But here's the deal: undercharging can seriously bite you in the booty in the long run. It not only makes you undervalue yourself but also sets the expectation for clients to expect dirt-cheap rates. As you gain experience and build up your portfolio, it's time to take a step back and reassess your pricing. But you might be wondering, how the heck do I reassess my pricing? What all should I consider?
External Factors That Impact Pricing
Determining the right pricing for your freelance services involves considering various external factors. Let's break it down together.
Industry Standards:
Get to know the pricing norms within your industry. Do some research and see what other freelancers with similar expertise and experience are charging. This will help ensure that your rates are competitive and in line with what others are doing.
Cost of Living:
Where you operate can have an impact on your pricing. Consider the cost of living in your area and any regional differences in rates for your particular services. It's important to factor in the local context when determining your rates.
Complexity of Projects:
As you take on more complex or specialized projects, your expertise and effort level increase. Assess the time, resources, and skills required for each project when determining your rates. It's about recognizing the value you bring to the table.
Client Budgets:
Think about the financial capabilities of your ideal clients. Consider their budgets and tailor your rates accordingly. It's about finding that sweet spot where your rates align with what your clients can afford and are willing to invest.
Value Proposition:
Here's where you shine, my friend. Highlight your unique value proposition and the specific benefits you provide to clients. Showcase the value you bring and articulate how your services can positively impact their businesses. You're not just offering a service, you're becoming a partner in their success.
Remember, setting your rates is a personal journey. It's about finding that balance that reflects your worth, aligns with market standards, and meets the needs and expectations of your target clients. Trust yourself, believe in your value, and let your rates reflect the rockstar freelancer that you are!
Why Strategic Rate Increases Matter
Before delving into the intricacies of when and how to raise your rates, let's explore why this aspect is a cornerstone of a thriving freelance business.
Reflecting Your True Value:
Your expertise evolves with time and experience, and so should your rates. Strategic rate increases are a testament to the increasing value you bring to the table.
Fostering Business Growth
Incremental rate adjustments enable you to invest in your business, whether through professional development, upgraded tools, or expanded services, fostering sustainable growth.
Building Client Perception
Strategic rate increases contribute to a positive client perception. Clients often associate higher rates with increased expertise and a commitment to delivering top-notch results.
The Perils of Cheap Pricing
The only thing scarier than raising your rates, is not raising your rates.
Let's consider the impact of setting your rates too low. While it may seem tempting to offer your services at rock-bottom prices to attract clients, it's to understand how this can affect how clients perceive your value and treat you as a freelancer.
1. Perceived Quality
When clients see extremely low prices, they may question the quality of your work. They might assume that your services are subpar or lacking in value. This perception can make it challenging to attract high-quality clients who are willing to pay a fair rate for your expertise.
2. Lack of Appreciation
Clients who perceive your services as cheap may not fully appreciate the value you bring to the table. They may not recognize the effort, time, and skill that goes into delivering exceptional results. Consequently, they may not provide the level of respect, gratitude, or acknowledgment that you deserve. Trust me, you don’t want clients like this.
3. Difficulty in Establishing Boundaries
Setting low prices can inadvertently lead to clients who expect more work, revisions, or additional services without additional compensation. They may have a mentality of "getting the most for their money" and push boundaries, leading to increased stress and a decrease in your overall satisfaction with the client relationship.
4. Attracting Low-Quality Clients
Bargain hunters and clients solely focused on price often prioritize cost over quality. They may not fully appreciate the value you provide and may be more likely to negotiate for even lower rates. These types of clients may not be the best fit for your business and can significantly impact your mental health, overall satisfaction and financial success.
5. Difficulty in Increasing Rates
Once you establish a reputation for offering cheap prices, it becomes challenging to raise your rates in the future. Clients who are accustomed to low rates may resist any increases, making it difficult for you to charge what you're worth. This can create a cycle of undervaluing yourself and struggling to earn a fair income.
The Power of Value Perception
Remember, pricing is not just about the financial aspect; it reflects the worth you place on your skills, experience, and the impact you can have on your clients' success. By setting your rates at a level that reflects your true value, you'll attract clients who value your work and are willing to invest in your services.
SO…WHEN SHOULD YOU RAISE YOUR RATES
Leveling Up: Post-Education Power Move
Completing a course or earning a new degree/accreditation is more than a certificate—it's a power move. Use this opportunity to not only update your credentials but also to redefine your value proposition. Craft a compelling narrative that showcases how this education has directly enhanced your skills and, by extension, the value you bring to your clients. Make your clients feel the positive impact of your educational investment.
Experience Pays: Years and Projects Matter
As you accumulate more years of experience and tackle higher ticket projects, each achievement becomes a stepping stone toward commanding higher rates. Dive deep into your portfolio and dissect the projects that truly showcased your growth. Demonstrate not only the complexity of the projects but the tangible results your expertise delivered. This isn't just about showcasing experience; it's about demonstrating the direct value you bring to the table.
Fresh Beginnings: Ringing in the New Year with New Rates
Imagine starting the calendar year not just with resolutions but with a strategic rate revision that reflects your evolving expertise. This isn't a mere adjustment; it's a statement of commitment to growth and excellence. Reflect on the skills, insights, and experiences gained in the past year, and let these reflections guide you in showcasing how the upcoming year will be a game-changer for your clients. Frame the rate adjustment as a celebration of progress and a smart investment for future success.
Anniversary Bonus: Celebrate Your Client-Provider Relationship
After a year of collaboration, it's more than just marking time on the calendar—it's an opportunity to celebrate mutual growth. Express gratitude for the trust your client has placed in you and highlight key milestones achieved together. Go beyond the typical "thank you" message; provide concrete examples of how your collaboration has evolved and the specific value you've added. Utilize success stories and client testimonials to illustrate the tangible impact of your partnership.
Bold Decisions: Raise Rates When You Feel It
Trusting your instincts as a business owner is paramount. If you're feeling undervalued or witness a significant shift in the demand for your services, it's time to act boldly. Remind yourself that this isn't just about charging more; it's about acknowledging the growth of your business and recognizing your worth. Communicate this confidently to your clients, emphasizing not just the increase in rates but the continuous enhancement of the quality and depth of your offerings.
Research Check: Are You Leaving Money on the Table?
Delve into competitor rates to ensure you're not unintentionally underselling yourself. This isn't about mere price matching; it's about uncovering hidden opportunities and setting your rates in alignment with industry standards. Use this research not only to adjust your rates but to strategically position yourself in the market. Identify service gaps or areas where you excel, and let these insights guide your pricing strategy. Your rates should reflect not just your worth but the unique value you bring to the table.
Balancing Act: Generosity and Growth
One of my favorite creators to follow along with is the Freelancing Queen herself, Latasha James. One tip she always shares is to “surprise and delight” your clients. To me this means overdelivering, surprising them with something valuable and truly showing you care! Embracing the Latasha James method involves more than just adding a cherry on top; it's about creating an experience that leaves your clients thinking, "Just take my money already!" Consider offering additional services, resources, or personalized touches that go beyond their expectations. Share stories of clients who have not just benefited from your services but have experienced that extra touch of care and attention. This isn't about upselling; it's about building loyalty and making your clients eager to invest more in your services willingly.
Shift the conversation from a mere financial transaction to positioning your services as a strategic investment in the health and future success of your client's business.
It's not just about delivering a service; it's about becoming a partner in their journey. Showcase the long-term benefits of choosing you—increased efficiency, enhanced brand reputation, improved bottom-line results. Paint a vivid picture of the transformative journey your clients can embark on by aligning with your expertise. This is about conveying the value of a lasting partnership that extends beyond individual projects.
Proactively addressing price objections is not a defensive move; it's a strategic element of a successful rate increase strategy. Craft compelling narratives that showcase the comprehensive value you provide.
Anticipate common objections and have persuasive responses ready.
Whether through marketing materials or direct client conversations, emphasize not just what you do but why your approach is uniquely valuable. Provide case studies and testimonials that not only validate your rates but showcase the tangible returns on investment your clients have experienced.
The Rate Increase Readiness Checklist
Before taking the plunge into raising your rates, ensure you've ticked off these essential items:
Client Communication Plan
Develop a clear and transparent communication plan for informing clients about the upcoming rate increase.
Craft messages that highlight the continued value they'll receive and express gratitude for their ongoing partnership.
Updated Portfolio and Testimonials
Ensure your portfolio reflects your latest and most impressive work.
Gather recent testimonials from satisfied clients, showcasing the positive impact of your services on their businesses.
Value-Added Services
Identify additional services or perks you can offer to justify the rate increase.
Create a menu of value-added services that clients can opt for, enhancing their overall experience.
Competitor Analysis
Revisit competitor rates to stay abreast of industry standards.
Identify areas where you can surpass the competition and use these differentiators as leverage in client conversations.
Professional Development Plan
Outline a plan for ongoing professional development.
Showcase your commitment to staying at the forefront of industry trends, reinforcing your value proposition.
Feedback Mechanism
Establish a feedback mechanism to collect input from clients.
Use their insights to fine-tune your offerings and address any concerns before implementing the rate increase.
Every rate increase is a deliberate step toward your financial goals for your business.
Remember, you're not just a service provider; you're an invaluable asset to your clients' success. As you embark on this journey, channel the confidence of a business-savvy go getter, trusting your instincts, and unleashing your worth in the freelancing world. The road to higher rates is paved with the brilliance of your expertise, the undeniable value you bring to the table, and honestly sometimes a little bit of delulu (delusional) confidence can go a long way. Now, go on, and let your rates reflect the rockstar freelancer that you are!
READY TO LEARN MORE?
Want to learn more about HOW to raise your rates and for how much? Templates for how to address this directly with a client and what to say? Confused on what your pricing should actually be? Worried you’re leaving money on the table? Don’t worry, there’s answers for all your burning questions!
Get customized coaching and direct tips from me on how to do this in my course for small business owners, the Creative Entrepreneur Accelerator program. The CEA program is my signature course just for business owners like you. It’s a LIVE group coaching program (although you don’t have to show up live because you get access to the recordings afterwards) and CEA will be opening up for yet another session in early 2024! Want to be the first to know when applications are live? Click HERE to join the waitlist!
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