For the past few weeks, in the Careful Cents Club, the subject of “what to charge” has been a hot topic. I’ve been dealing with this dilemma myself and got some really great advice from everyone’s input.
You might think that raising your rates is a bad thing, that it might scare off your current or potential clients. But in many cases it’s the opposite.
And you’re actually doing yourself a disservice if you don’t charge the proper price. Why? Well the main reason is because if you don’t charge enough, you don’t give yourself enough freedom to fund your creativity.
Especially if you’re an artist, a creator, a painter, a web designer or even a freelance writer like I am – you’re crippling your business (and your creativity) if you don’t charge enough so you can afford to create.
Now is the Perfect Time to Raise Your Rates
According to Carol Tice, the resident expert at Make a Living Writing, the best time to ask for a raise from clients is in mid-November, which makes NOW the perfect time to inform and negotiate for a higher price.
She also suggests that freelancers always be looking for opportunities to raise their rates, even if it’s by 10% or 15%. Why? Because you need to keep up with the higher costs of living and rate of inflation.
Being your own boss is a lot more expensive than working as an employee – since you’ll be paying twice as much for your half of the social security and medicare taxes, for instance.
I also believe that as a freelancer sometimes you just plain old deserve a raise. With that, here are 5 reasons why you should raise your rates right now!
1. Say good-bye to high maintenance clients
We all have that one client who’s demanding, picky and underpays us. But if you significantly raise your rates they will likely find someone else to underpay and overwork.
If you work for cheap or high maintenance clients, and significantly raise your rates, they tend to move on. Of course, you have to be willing to part with the income, but you could probably find two higher quality (and better paying) clients to replace them in no time.
2. Work smarter and not harder
When you increase your prices, it gives you the chance to work smarter instead of working harder. The longer you work with a client, the greater trust factor you’ve built up and the better your skills have become.
This gives you the opportunity to work with companies, causes, or individuals you believe in. And if you do it right, like Amanda, you could earn an extra $1,000 a month from freelance writing gigs.
3. Your value as a freelancer has increased
Another smart time to raise your rates is on the anniversary of your partnership with that client. Since you’ve worked for them for over a year or more, your worth in their eyes has increased.
You’ve learned more about them, their mission, what they’re looking for, what their needs are and for these reasons you need to increase your prices to reflect this (which also makes this a key negotiating point).
You’re also much more experienced than you were a year ago; you’ve honed your skills, learned new techniques and now deserve to be compensated for this.
It’s hard for freelancers to adjust the lens through which they see themselves, but you’ve grown as a solopreneur and now it’s time to adjust your vision to get paid what you’re worth. This is something I’m still working on myself!
4. People will respect you and your time
If people are paying you more for your time, they will pay a lot more attention to the tasks they give you. They will be hesitant to tack on extra work or ask for additional changes if you charge a higher price.
They will also be more upfront with each project and the work it entails. In short, people will respect you and your time more if you charge a competitive (or slightly higher) price for your work.
While a higher price doesn’t always mean higher quality, in many cases it does and that’s what people associate with versus a cheaper price. You need to sell people on value instead of just price.
5. You can do more GREAT work
If you decide to increase your rates and charge what you’re worth, you’ll open the door for the opportunity to do more great work.
The kind of work that feeds your creative spirit as well as puts food on the table and helps you sleep at night (as opposed to the scummy or unfulfilling work you had to do to pay the bills).
You won’t be as stressed about your finances, wondering if you can pay your bills and you’ll have time for more important things like your family, or sleeping.
Another benefit to raising your prices is that you will unconsciously put a higher value on your own work. This will increase your self-confidence and help you start believing you’re worth what you say you’re worth.
It’s true, people are willing to pay more for a product or service, if they think it gives them something truly special or significant – and if you present it in the right way.
How much is too much to charge?
After you finally kick yourself in the butt (like I did) for not charging enough for your products, services and skills – it’s time to figure out how much is too much. What’s the right price and when is it too high?
To keep it simple, you can only charge what people are willing to pay. There are clients that will recognize skilled and quality writing, but it will take extra effort on your part to seek them out – although in the end it will be a worthwhile investment.
As a rule of thumb, keep steadily raising your prices (like Carol suggests) until the majority of your clients start complaining.
In my experience, even when you throw out an outlandishly high price and the client gladly accepts, you’re still not charging enough. So keep upping your rates until you hit a wall.
Is it time you raised your rates and started earning more? What’s your motivation for getting paid what you’re worth?