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How to Raise Your Rates, and Not Lose Clients in the Process

How to Raise Your Rates

As you gain more work experience, it’s only natural you will want to raise your rates. With a regular job, wage increases are usually part and parcel of employment. However, this takes on a different scope if you’re a freelancer or self-employed. As such, you’ll need to negotiate raises directly with clients, which sometimes might mean losing them.

Regardless of which field you freelance in, you should raise your rates periodically. This reflects your expertise and, more importantly, the value of your time. Knowing a few negotiating basics (and having a little tact) goes a long way in talking to clients about remuneration.

In this article, we’ll go over several tips to help you raise your rates without losing clients.

We have a lot to cover, so let’s dig in!

How often should you raise your rates (and by how much)

Knowing when and how often to raise your rates is perhaps the hardest part of the equation. As a rule of thumb, you want to review your professional rates at least once per year. In fact, looking at this twice to four times per year is not out of the question either.

Increasing your rates like this gives existing clients enough breathing room, so they don’t feel like you’re raising prices on an almost monthly basis. You can also justify raises a little better, as three to six months can be an eternity in work time.

If you haven’t increased your rates in a long time, you need to get the ball rolling right away. While the figure will vary from client to client, it will depend on a few factors such as:

  • Inflation. You can never escape it, and it should always factor into annual or bi-annual raises.
  • The scope of your work. If it has increased since your last rate review, your number needs to go up accordingly.
  • Professional experience. Have you obtained any new certifications lately or leveled up your skills noticeably? If so, this could warrant raising your rates.
  • Work relationship. With some clients, you’ll spend almost as much time managing them as doing billable work. If you find yourself working with clients who consume more of your time relative to others, you’ll need to adjust your rates accordingly.

Keep in mind that regardless of how you currently bill for your work (whether per hour or a fixed price per project), most clients will understandably balk at sharp increases if this is your first attempt to raise your rates.

For example, even an increase as ‘low’ as 20% could represent a significant strain on your client’s budget for your services. As such, they might not want to renew their contracts. In our experience, it’s often best to keep individual rate increases within a reasonable range (below 10%), and even make exceptions on a per-client basis (if the work is ‘easy’ for you).

Over time, you can raise your rate to a more significant number. However, as a freelancer, it’s in your best interest to cultivate long-lasting relationships with your clients. If they’ve been with you for a while, they’ll understand the value you can provide and will be less likely to balk at a raise.

Four tips to raise your rates without losing clients

You can decide to increase your rates at any time, but how you approach the negotiation will affect the way your clients react. Unless you’re comfortable losing business overnight, you need a soft touch. The following four tips should help, so let’s take a look.

1. Bring up potential rate increases in advance to give clients time to adjust

raise your rates in advance

Most people don’t react well to financial surprises. There’s a big difference between telling a client you’re going to start charging more overnight and doing so well in advance. If you inform clients when you usually conduct rate reviews, they won’t be blindsided by the topic.

Ideally, this discussion should take place when beginning with a new client. It doesn’t need to be a big deal, either. Simply bring it up during the onboarding process, or as part of setting the terms and conditions of service. For example:

For long-term projects, I usually sit down with my clients every X months to re-assess my rate depending on the scope of the work. We can touch base later on about this.

For consecutive fixed-term projects, you have an even better opportunity to bring up the topic. After all, each project should have a different scope, so it makes sense to review prices based on how much effort and time you think you’ll need to put in.

2. Perform well at your job before asking for a rate increase

raise your rates based on performance

If you’re going to ask someone for more money, you want them in a good mood. Clients that aren’t happy with your work aren’t likely to say “yes” to rate increases.

You should have a pretty clear picture of how happy clients are with you based on their feedback, the way they communicate with you, and any other interactions you have. The better things are going, the more smoothly discussions about your rate should go.

If you know you’re going to raise your rates shortly, this is a great time to reassess whether your work for this client is up to snuff. If you’re not objectively turning in your best work according to the feedback you’re getting, you may need to make changes. If the signs look good, there’s always room for maximizing your output.

This may mean turning in deliverables sooner, beating deadlines by a better margin, being more prompt in your communications, and more. The better your standing is in your client’s eyes, the more room you’ll have to negotiate.

3. Offer flexibility when negotiating rate increases

be flexible with your rates

It’s tough to say whether to expect some back and forth about your new rates, and we’d suggest dealing with this on a client-by-client basis. This isn’t a bad thing per se – it’s merely a negotiation. The client’s first reply will set the tone for the discussion, which will indicate the ‘wiggle room’ you have.

In most cases, we’d advise being firm and sticking to the proposed rate. After all, you’ve taken the time to work out just what your deliverables are worth. In contrast, the client has other concerns – such as maximizing value – which often won’t align with what you know you should be paid. Again, this isn’t a bad thing, just a natural by-product of a working relationship.

Depending on the circumstances, some flexibility can help negotiations move along smoothly. If clients can’t afford to pay you higher rates, they might be willing to compromise on a lower output, for example. That way, you can free up time for additional work without losing valuable business. Over the long term, it’s better for you to negotiate specific aspects of your work relationship instead of budging when it comes to your rates since it sets a bad precedent.

This last part is crucial. Many freelancers believe that being flexible on the actual rate is good business. However, if a client knows you’re devaluing your services based on some push back, the door has been left wide open for similar situations in the future.

4. Approach rate increases in a professional manner

be professional

Money is a universally awkward subject. However, you can’t be awkward or shy when it comes to asking for more of it. You need to approach raises as a professional, with clarity and authority. If you start negotiations with an opening such as “I’ve been thinking about maybe raising my rates…,” you’re inviting a discussion about the worth of your work.

For more on this, check out the classic How to Win Friends and Influence People for timeless advice on talking to clients in the best possible way. There’s a reason this has been one of the best business books for years now.

Ideally, you’ve already broached the topic of a future increase at some point. Given this, a much better way of introducing the subject would be:

As per our earlier discussion, I'm currently reassessing my rates for ongoing projects. Starting from our next billing cycle, I will be increasing my per hour rate to $XX. Please let me know if you have any questions about this.

The message is short and to the point, and it shows you’ve already decided to raise your rates. Also, while there’s room for negotiation based on specific factors, you’re not going to accept a blanket negative.

However, some clients will come back to you with a blanket “no”. They’re entirely within their rights to do so, and for reasons beyond the scope of this article, it may be desirable for you to hear. Let’s talk about what to do in those situations.

What to do if clients reject your rate increase

If a client refuses to increase their budget for your services, it puts you both in an awkward position. Should you decide to keep working with them, it alludes to you taking a punt that didn’t work out. In other words, they didn’t feel your work was worth the raise and you didn’t push back.

As we discussed, this could factor in future rate negotiations. Your best solution, in most cases, is to finish any ongoing work you have with the client and part ways. Of course, we’ve talked about some of the situations in which you’d open negotiations in previous sections.

As freelancers, it’s only natural that you’re always on the lookout for new clients, so ‘breaking up’ with one shouldn’t be a big deal. Of course, if this particular client is important to you, it’s smart to consider their role in your diverse client base.

Although you’ll want to treat this on an individual client basis, you may also want to consider extending your working relationship on a temporary basis – maybe by carrying out some initial project aspects for your old rate – until you find more work to fill the gap.

How to raise your rates: conclusion

If you’re a full-time freelancer, you should be reviewing your rates at least once or twice a year. How much you raise your rates by can vary between clients. However, it should depend on your expertise and the value you provide them.

Convincing existing clients to pay more is often a challenge. However, if you consistently perform well and let them know in advance, a lot of clients can be open to negotiating. If they can’t afford your new rates, then it may be time to start looking for new work.

Do you have any questions about how to negotiate your rates without losing clients? Let’s talk about them in the comments section below!

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John Hughes

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