Is it time to increase your freelance rates?
Getting a small business or freelance hustle up and running is no small feat. By the time you’ve determined your unique offering, found a steady and reliable client base, and determined a pricing structure that works for you and your clients, it might be time to revisit everything all over again.
When it comes to figuring out your ideal rate structure, this isn’t something you should set and forget. It takes some trial and error to figure out pricing, and depends greatly on your offerings, who your clients are, and the nature and frequency of work you’re doing.
The truth is, your pricing should never stay stagnant for too long; it’s something you should revisit frequently to make sure you’re getting paid your worth and staying competitive within your field. Here are a few clues that will help you decide whether it’s time to increase your freelance rates.
Your competitors are charging more than you
While each freelancer has their own unique offering—and a rate that ideally reflects that—it’s helpful to take stock of what other freelancers in your field are charging for their work and see how your own prices compare.
If you’re using a platform like Upwork or Fiverr to find your clients, it’s not hard to see what others are charging. If you’re operating more on a word-of-mouth basis, finding and reaching out to other people in your field can be a great way to get the conversation going. There’s power in knowledge, and sharing your rates can be eye-opening both for you and your peers.
While it can be tempting to offer lower rates to stay competitive, that should never be your only selling point. Offering prices that are significantly lower than your competition could leave prospective clients wondering whether the quality of your work is lacking. Charging a rate that reflects the value of your work and is comparable to your peers will let people know that you’re the real deal—and it will help you pay the bills. Knowing what competitors are charging can help you talk to clients about rate increases.
You’re taking on too much work
The beauty of freelancing is that you can set your own schedule that isn’t bound by the 9 to 5 grind. The downside, however, is that not having a solid 8-hour workday can make it hard to set a boundary. If you’re taking on more work than you can handle in order to make a living, it may be your prices that need to increase—not the number of hours you’re putting into your work.
Putting some projection and planning into action can be a great way to figure out your ideal rates. Start with an ideal (but realistic) income figure and work backward from there. What would you need to charge—either on a per-hour or per-project basis—to hit that goal? From there, you can play around with different scenarios (“If I charge $60 per hour and work 35 hours a week, I’ll earn $2,100, but if I increase my rate to $65 per hour, I can work 3 fewer hours per week.”) You should also think about whether to charge hourly or by project if you feel your hourly rate doesn't fully reflect the effort you put on.
Your cost of business is increasing
The more your business grows, the more likely it is that your business costs will increase. It’s important to keep track of your cash flow—that is, how much money is coming into, and going out of, your business.
If you’re spending more these days just to cover your day-to-day operations, you should increase your rates to reflect that. Calculating your business cash flow can help you determine whether you need to increase your rates.
You haven’t increased your prices in a while
Maybe you’re staying competitive, working the right amount for your schedule, and making enough money to cover your expenses comfortably. But if you’ve stuck to the same prices for more than a year, that’s another great reason to increase them.
In fact, you may want to set a reminder to increase your rates each year. It’s not an uncommon practice for freelancers, and you’d ask for a raise if you were employed and doing a great job for a year, right?
Whichever cues you’re looking at to determine your pricing structure, at the end of the day, determining your pricing depends on a number of variables and can be a unique and personal thing for each freelancer. You owe it to yourself to continue to check in and make sure you’re getting paid the rate you deserve, at a rate that works for you.