Raise your fees
Stop waiting for your clients' permission to move forward
Hi Friend,
One of the things that keeps good freelancers down is low fees. It happens to the best of us. You’ve set a price your clients generally say “yes” to, you’re comfortable giving that price, and while you aren’t getting ahead financially, you’re also not falling behind. At least not massively.
Charging too little for your work puts you in a low-paying cycle: When you charge less, you appeal to clients who want to pay you less. You have to work super hard to earn a living, which means you have less time to market yourself, establish your authority, and find higher paying clients. Because of that, you’re never getting ahead so you’re always saying yes to low-paying projects, which means you still have no time to market yourself and attract higher paying clients.
Over time, however, if you’re not increasing your rates you’re effectively giving yourself a pay cut (thanks, inflation). Since there’s no employer around to reward you for your hard work with a pay increase, it’s up to you to start charging more as a way to combat inflation, reward yourself for your hard work, and recognize the experience and expertise you’re building up.
You’re working harder to earn the same amount
Let’s math for a minute: If you want to earn $100, you can either charge 10 people $10 or 1 person $100 (or two people $50, or five people $20, the math here is endless). You have to find a lot more people willing to say “yes” to you at $10 than you do at $100. And if you’re targetting the right people, you’ll find some who aren’t worried about paying $100 for your services.
But it’s difficult to find them if you’re stuck on the low-paying hamster wheel. Not only do you not have the time to market yourself, you’ve probably convinced yourself that clients are only willing to pay bottom dollar for your services. So you’ll do even less work to find the higher-paying clients.
Maybe you’ve even tried to raise your fees slightly, but at the first sign of push-back, you reverted to your lower fees again.
“John didn’t want to pay me $100 so clearly I’m not worth $100,” is the kind of thing you might think.
But who is John, and why is his opinion of your value so important to you? After all, he has his priorities. Maybe his business doesn’t make enough to justify the expense. Maybe he just got in a fight with his CFO about spending and is trying to rein it in a little. Maybe he’s a time-traveller from days of yore and doesn’t understand how expensive iPhones are (because he also doesn’t understand electricity and wifi, and is probably imaginary).
Maybe there are a million reasons why John shouldn’t be in your head.
Increase your fees at will
A great thing about freelancing is you can increase your fees whenever you like. Unlike stores with price tags on every item, you can increase your prices 3 times in a week if you want (note: this is one reason I don’t share my fees on my website—so I can increase my fees when I see fit).
Unfortunately, most freelancers wait too long to increase their prices. Usually, it’s because they’re waiting for one of two things to happen: a. They want to feel comfortable raising their prices or b. they want to somehow get permission from their clients to raise their prices.
It’s rare you’ll ever feel super comfortable raising your rates. A voice in your head will tell you clients won’t pay it or you aren’t worth the increased fees. Maybe you need even more experience or education before you do it. Meanwhile, you’re watching for signs your clients are fine with you increasing your rates.
“We just love the work you’re doing for us and I think we’d be happy to pay you an extra $1,000 on top of what you’re already charging. Why don’t you just start charging us more?” is the sort of thing that clients very rarely say. Almost never.
In truth you can raise your rates well before either of these situations occurs. By waiting you’re actually denying yourself increased income and decreased financial stress.
Like most experiences in freelancing, we don’t become comfortable with something by waiting for it to happen, we become comfortable by doing it and realizing the world didn’t end.
There are an awful lot of service providers and organziations that are okay raising their prices without getting my permission to do so. My counsellor has done it, a few times. So have my hairdresser, my lawn person, and every streaming service I subscribe to.
They don’t wait for my go-ahead to do it, they just do it and accept that some people might stop working with them. But that’s okay, because now they need fewer clients to make the same amount of money.
If you raise your rates from $10 to $50, you just need two people of the 10 to stay with you for you to make $100. The eight other people leaving don’t hurt you financially (because, math). And because you’re now working for two people instead of 10, you have the capacity to find more clients who are fine with paying $50.
It would be nice if our clients came to us telling us we should charge more, but how often do we say that to our service providers? Instead, we wait until they increase their prices, evaluate whether their services are worth it to us at that increased price, and then determine whether we’re willing to continue paying them or if we need to find a lower-cost option.
The value we perceive from those services is based on how high a priority that service is, whether we view it as necessary and/or high quality, and our financial circumstances. Where you might not be willing to pay, I might be and vice versa.
And that’s okay.
What are the signs it’s time for you to raise your fees?
Individually, these signs might not mean a lot to you but if you’re saying “yes” to two or more of those signs, then it’s time to review what you charge.
You’re busy to the point of being overworked but aren’t getting ahead financially.
You’ve got a niche or speciality making you something of an expert, but you haven’t raised your fees.
It’s been more than three years since you increased your fees.
Everyone says “yes” to your quotes without batting an eyelash.
Your cost of living has gone up dramatically because of inflation and your fees haven’t (yes, we’re subject to the same inflation as everyone else).
You’re super comfortable giving your price. Freelancers should push themselves past their comfort zones, unless they’re already as comfortable as a koala in every given situation (I assume koalas live with a high degree of comfort, mainly because it seems they can sleep anywhere). If you’re comfortable giving your rate, increase it by at least 20%.
Things to do to get ready to increase your fees
Okay, maybe you’re still really nervous about increasing your fees. That’s okay. There are some things you can do to get yourself in the mindset.
Evaluate your fees regularly. I suggest every six months, but at least every year.
Evaluate the service providers around you who have raised their rates (and you’ve stayed with them). Why did you stay? How did you determine their value to you? What lessons can you take from those service providers?
Imagine a world in which you’ve increased your income by X dollars. Use math to determine how many clients you would need to keep to make the same amount you do now. Also determine how many clients you could afford to lose without taking a massive financial hit.
Build up your business bank account and savings account so that if you do unexpectedly lose a bunch of clients, you’re okay financially for a few months.
Find freelancers who advocate for increasing fees and study how they position their services.
There are moments in freelancing where it’s okay if your stomach is in knots and your elbows sweat from nervousness. Increasing your fees is one such moment. But, if you do it strategically it doesn’t have to be terrifying or disasterous.
This week’s insider tips will go into strategies for raising your fees.
Learn more about finance in my article “I’ve been doing business finance all wrong.”
Here’s to your ongoing freelance success,
Heidi
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Is this Substack fees? What buyers are we talking about?