Pricing—it’s that elusive concept with no set rules. It’s the most discussed topic among freelancers, the dividing line in the phases of work, and a measure of your continuity, interest, and success. In a previous post, I talked about pricing and its principles from my perspective. Today, I’ll discuss an important aspect of it: increasing your rates.
Let’s break this down into a few questions and answer them. Remember, everything I write here is based on my personal experience and perspective. It may be suitable for some, while others may find it odd or even out of this world.
Why do freelancers raise their rates?
Raising your rates isn’t a whim or a desire to change from an even to an odd number. Experience is the primary factor, along with time, environment, and even the type of projects or clients you deal with. It’s unreasonable for a freelancer to charge the same rates they did five years ago. Even a cup of coffee has become more expensive over that time. Also, if you move to a country where the cost of living is three times higher, would you keep your rates the same or adjust them accordingly?
We must also consider that the time spent improving your skills and work is valuable and not something that comes for free. All these factors contribute to a freelancer raising their rates.
How does this increase affect you personally?
Aside from your love and passion for your work, the compensation you receive directly impacts your motivation and peace of mind. Instead of handling 5 clients a month, you might only need 3. Increased income also reflects on the quality of your work and tools. Upgrading your five-year-old computer, for example, will enhance your speed and productivity, creating a virtuous cycle that ultimately benefits your work and its quality.
How does the rate increase affect clients?
Reactions to rate increases vary. A client who contacted you a year ago at your previous rates might be surprised or upset by the change. Some may see it as an insult or a form of monopolization because they came back to you, while others will respect the decision. The bottom line is that while raising your rates may have some drawbacks, the long-term benefits—assuming your increases are reasonable—are significant. Clients who respect your rate increase are those who work with you for the quality of your work, not because of a low price. These are the clients you need to grow your freelance career and take it to the next level.
What’s the appropriate method and timeline for raising freelancer rates?
In my opinion, gradually and periodically increasing your rates is the best approach. You should raise your rates in stages, without shocking yourself or your clients with a sudden large increase. Even as a freelancer, you might feel uncertain if you increase your rates too much or too quickly, making it harder to confidently present them to clients.
I believe that a one-year interval between rate increases is reasonable, giving you enough time to significantly improve your skills and work.
What’s the reasonable amount to raise rates by?
The answer to this question varies from one freelancer to another and from one field to another. In your early career, your rates might be somewhat arbitrary or misjudged, so during this period, which we’ll assume is between one to two years, there isn’t a fixed rule for rate increases. For example, if the market rate for a logo design is $500 and you’re charging $150, it wouldn’t be reasonable to increase your rate by just $50 in your second year after understanding the market and evaluating your true effort.
In the next phase, when you have a logical rate that suits both you and the market, I think an annual increase of around 25% to 35% of your current rate is reasonable. However, this increase depends on your experience, style, the nature of your work, and the market you’re in.
Conclusion
Raising freelancer rates is logical and not something to be viewed as strange. It’s your right. It’s unreasonable to consider a coffee price hike as logical due to inflation, but view raising your rates as odd just because you don’t have tangible raw materials. The freelancer’s raw materials are their experience, years of work, effort, health, and the equipment they use. If the increase is reasonable, it will not only ease your workflow but also benefit the client by improving the quality of your work.