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How to go from $25/hour to $75/hour in 2 weeks

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I’ve been helping a friend earn more money, and tonight was a breakthrough.

Here’s what happened…

My friend has a full-time job, but recently she’s been doing some freelance project management on the side for a small consulting firm, where she earns $25/hour.

After a while, she realized that $25/hour doesn’t really add up to much, and she was getting frustrated with the owner’s poor management skills. (You know how it goes: Very disorganized, non-responsive, took days to get back to emails…)

But I encouraged her to stick around for 2 things: to get referrals and raise her rates. The client knows my friend has been doing a superb job, so she was happy to refer her to a colleague at a different company.

At this point, my friend talked to the new person — a guy who runs a different company — but was skeptical of getting too involved. “I don’t really want to do this for $25 an hour,” she told me. “And I realize that it’s not just the time I’m working…I have to deal with managing clients, who are just really unresponsive.”

I suggested a few things she could do. She went into her first meeting using my Ask Without Selling technique. Then she then went back to him with a proposal.

“You wouldn’t believe it,” she told me on the phone. “I quoted him $50/hour and he didn’t even blink. Shit! I should have asked for more!”

I love it.

There are several non-obvious things going on here:

  1. When you get referred to someone, you don’t drop your rate — you raise it. Many people mistakenly drop their rate, thinking that the referrer will divulge the rate they currently pay (they won’t), or that you should discount for your client’s friend (you shouldn’t). In fact, you should raise your rate since your client has removed all risk by vouching for you.
  2. There are many other options besides quitting. If someone’s paying you — even if it’s under your desired wage — you don’t just quit. Quitting is one of the worst things you can do. There are many other clever ways to help your client and yourself — like asking for referrals.
  3. By charging more, you get a higher-quality client: First, they can afford your higher rate, which means they’re more financially successful and therefore probably have better business skills. Second, since they’re paying you more, they don’t want to waste your time.

So the guy didn’t flinch at $50. How does my friend get to $75/hour?

She needs to package her services properly

I suggested she offer her baseline services at $50/hour, as she discussed, but also offer 2 higher tiers: For example, she could include marketing services for $60/hour, and project-manage the entire project for $75/hour. I just made those options up — she knows her business best — but the important point is to offer increasingly valuable options.

Do you know why it’s critical to offer more than one package? There are 2 reasons, actually:

  1. He might actually pick a higher tier, which would be money in your pocket — and a new hourly rate
  2. By offering 3 options, she’s shifted the prospect’s decision from “Should I buy her services or not?” to “Should I buy $50, $60, or $75/hour?”

Imagine how implementing even one of these techniques could change your earning power forever. If and when my friend closes the deal, even if it’s for $50/hour, she’ll have doubled her hourly rate. That lasts forever — and it only goes up.

You can use these same techniques to earn more money, whether you have an idea yet or not. And the techniques I covered today only scratch the surface.

I teach my very best techniques in extreme detail — including scripts, videos, and case studies — in my Earn1k course. Get a free sample of my Earn1k course here.

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50 Comments on "How to go from $25/hour to $75/hour in 2 weeks"

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Tyler Wells, CPA
5 years 11 months ago

Also, charging more can actually be a marketing ploy; especially if the original base price is below the general market rate. Even as an accountant I’ve been told straight up that I didn’t get a job because I had underbid and that they were afraid that I might start haggling later on to boost the price or charge extra for additional services as a way to get around my original low price. A higher price means that you’re confident in your abilities and that you see yourself as a professional and an expert.

Erin Peterson
5 years 11 months ago

This is a great story. I charge by the project, not by the hour, and have discovered that at most levels, the more you charge, the better you’re treated. But at the most stratospheric levels of pay, clients sometimes revert to treating you terribly—they figure they’ve paid for the privilege.

Brian Painter
Brian Painter
5 years 11 months ago

The right information at just the right time! I’m in a similar situation, and this article just gave me a road map to higher profits! Thanks Ramit.

Chris
Chris
5 years 11 months ago
Excellent advice and I think this part is a huge, key insight: “By offering 3 options, she’s shifted the prospect’s decision from “Should I buy her services or not?” to “Should I buy $50, $60, or $75/hour?” ” I’ve never thought about it that way before, but the idea of changing the framework of their thinking is very interesting. I do have issues with this though: “Many people mistakenly drop their rate, thinking that the referrer will divulge the rate they currently pay (they won’t)” When I refer someone to a service I’m using, it’s often because I think I’m… Read more »
Cat
Cat
5 years 11 months ago
As a long-time independent contractor, I’d warn against offering different prices per hour for different services. It suggests that an hour of your brain is worth less if you’re “just” doing X instead of Y. Also, most projects require a mix of skills, so this approach becomes unwieldy. It’s simpler to find a rate and stick to it, and it’s better yet to charge by the project because then you’re rewarded for being efficient and it becomes a lot easier to charge by value (charge more for work that will net the client more). If you want to offer differently… Read more »
Sophie
5 years 11 months ago

Ah yes I’m also very surprised but the “3 options” advice.

So one question Ramit, do you think that we should adapt the amount of money to each client? I’m asking because I was considering offering 3 different packages of services at different prices on my website with their price. I noticed that people usually don’t tell the price until after the client already showed some kind of interest. Can you explain why? or maybe refer to another article. I supposed you already wrote about that and I missed it 🙂

Gal @ Equally Happy
5 years 11 months ago

Ramit,
A slight tangent to this pricing discussion. I currently work full time but I’m thinking of trying out some of your ideas and picking up a bit of consulting business on the side. How do you suggest I deal with my current employer? I don’t want to lose my job but I’m a little hesitant about telling them “hey guys, I’m also going to do this other work…”

Have you dealt with situations like these before? What do you recommend?

Kim
Kim
5 years 11 months ago

Ramit,
I have to disagree. I have worked for over 15 years doing consulting and workshops on the side and in each case I first checked my employment contract and then explained it to my employer. Across the board they said as long as it was not a competitor, they were fine with it. By the way, I took vacation days to do this. It’s a nice way to earn vacation money.

RyneG
5 years 11 months ago
Charging more after referals definately makes sense. I would think of the first few clients in freelancing as internships in the corporate world. You would charge lower because you have very little reference and no freelance”experience. After you have worked for low wages of interns (or no wages) you came out with references and the ability to ask for more because of your experience. Of course, none of this matters if you didn’t do your job well. Ramit, what would you say about pre-screening clients, how do yo utell if hte person is going to be a bad reference regardless… Read more »
Justin
Justin
5 years 11 months ago
This is something I’ve always heard of to do… but never really tried. (so this post is kinda a kick in the rear for me) In fact I still haven’t gotten into the freelancing bit, though as an engineer I’m sure there’s a lot I can do. But anyways, this is a perfect example of what most REALLY successful people say- don’t wallow in the mud. If you always try to underbid the other guys, you’re seen as lower quality AND you don’t get what you’re worth. Instead of being the bottom of the food chain, why not be the… Read more »
amandalee
5 years 11 months ago

Awesome idea. I’m really stoked about the class, and I’ve been saving up for whenever you open up the registration again. Any idea when that’s going to be?

Shane
Shane
5 years 11 months ago
Awesome post Ramit, I’ve been following along with the preview course and love what I’m learning. I have a question though – have any recent college grads done well with your course? I just graduated from Cornell with a degree in business and can think of tons of way I can put this material to use, but I’m not so confident that I have enough experience to offer real value to people. I’m convinced this would go far beyond paying for itself over my career, but I’m not so sure the timing is right for someone in my position.
Tyler Karaszewski
5 years 11 months ago
You can’t charge tiered pricing for the same service *on an hourly scale*. Maybe I’m willing to pay you $50/hour for “management services”. Maybe I’m even willing to pay you $60 for “marketing services” (This assumes I think marketing is in some way more difficult or riskier than management, and so garner’s higher compensation but the actual tasks are unimportant). You can not charge me $60/hour for “marketing + management”. An hour is a fixed time period, and an hour of “marketing + management” is actually something like 45 minutes of management and 15 minutes of marketing. That works out… Read more »
Mark Washburn
Mark Washburn
5 years 11 months ago

Ramit,

The offering different rates for different services is BRILLIANT! (As I’m sure you know) humans make value decisions based off of relative criteria rather than absolute criteria, so by putting a more expensive item on the “menu”, you can drive business to the less-expensive options that you prefer!

“Predictably Irrational” by Dan Ariely covers this sort of psychology in extremely accessible terms.

Steve @ Smooth Entrepreneur
5 years 11 months ago

This article is a great reminder that prices are not fixed. One of my greatest rules of thumb in analyzing the strength of a business is whether the answer to this question is a yes or no: If you raised rates today, would you lose customers tomorrow? If no, then you have a strong business. If yes, you need to figure out why they would leave, and correct it.

Razwana
5 years 11 months ago
Hi Ramit, I’ve seen so many people have ‘a good idea’ and then failed to research it properly before implementing – which means they get minimal business in and then give up. The content of your course is gold dust for this element of it alone. Earn$1k sounds like the perfect course for me but I can’t justify financing it right now – vicious circle, I know ….. As for adding tiers of fees and services – I’ve seen a lot of businesses do this – from mobile phone and broadband providers, to hotels and gyms. It’s the perfect way… Read more »
Tim Rosanelli
5 years 11 months ago
Many of the comments are about the how of increasing your prices, but there is an important underlying why. Psychologically asking for the higher price is difficult for most people. If we attempt to increase our price from $50/hr to $75/hr, most people get hesitant and the client feels this hesitation. If the client feels this hesitation and says “No”, we automatically assume that you’re not worth that price. Using a tier method is a safe way to present a higher price and to prepare YOU for the price increase. Notice I didn’t say the customer because we are usually… Read more »
Tim Rosanelli
5 years 11 months ago

Thanks Ramit! I wish I could take the credit for these ideas but they are the culmination of lots of business coaching ($5000 to 10,000/yr worth), applied reading and hard learned experience. Your posts touch me because I remember fighting through many of the barriers that you write about. I just hope that my comments help others make the same breakthroughs.

Justin
Justin
5 years 11 months ago

I love the idea of crafting your offer so that the client shifts the question from “Should I buy?” to “What package/rate should I pay for?”. Psychologically I can see this being effective because it gets the client focusing on value and not price. They can ask themselves WHAT problems they want you to solve for them, and what they should pay for these problems to be solved, rather than ask if you are the right person to solve their problems at that price point.

Another great post. Thanks Ramit.

cheska
5 years 11 months ago

Genius. Thanks for this. You just gave me an idea. will start thinking ASAP how to re-package my services. I’m a freelance make-up artist BTW. thanks again!

Gal @ Equally Happy
5 years 11 months ago

Ramit, So if I don’t mention it to my boss, how do you recommend finding time to work on side projects like these? I can take days off but then it costs me vacation time. I can try to work early in the morning or late in the evening but most consulting clients want regular business hours. With the exception of a few lunch time meetings, it seems like it would be difficult to maintain a full time job and do consulting gigs on the side.

Any advice on the time management aspect of this?

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[…] Great tips from Ramit at I Will Teach You To Be Rich on how to raise your hourly rate […]

jason
jason
5 years 11 months ago

But in the end you are still paying her by the hour. Wont the employer simply ask her to do whatever he wants her to do whether its included in the profile or not during the time she is hired?

jason
jason
5 years 11 months ago

I mean, if a staff told me he could get up to 75/hr elsewhere with the additional package but doesn’t mind charging me 50/hr today for basics, it just doesn’t make sense because you cant be doing two things at once. Time spent working for 50/hr meant less time spent earning 75/hr. The fact that your willing to go lower if at all, might send the message ‘I can work for you, but if you pay me for basic services, i’ll just be less efficient within the time I work for you’

CriticalCareNurse
CriticalCareNurse
5 years 11 months ago

Ramit,
Do you have any ideas/advice for a young healthcare professional looking to increase my income? I currently only work 24 hours per week and make full time money and full time benefits. I definitely have lots of free time but it seems like a lot of freelancing, consulting, earning more, etc is definitely more geared to other industries.

Thanks!
Brad

Financial Uproar
5 years 11 months ago

Great post Ramit. I just take a little exception with your comment “Quitting is one of the worst things you can do.” Sometimes, of course, this is true. Other times, someone would be much better off quitting.

I’m struggling through this with my side project. Making the decision to quit (even though I haven’t actually quit yet) has set me free.

Mike @ Tech and Biz Gadgets
5 years 11 months ago

Ramit,

I am happy for your friend, that what usually happens when you start believing in yourself, others do too. Knowing what is your time worth is so important! Many people undervalue their talent and work they do.

How is your move to NY? Liking it? So different from bay area I bet! I have been to both places and they are so different, almost feels like different country sometimes.

Snowballer
Snowballer
5 years 11 months ago

This is all very interesting, but I’d cut off a couple of my fingers to make $25 an hour! XD

Jaime
Jaime
5 years 11 months ago

great tips, thanks

Republic Monetary
5 years 11 months ago

I just entered the world of freelance work so this is a great post to motivate my. The second non-obvious really stood out to me – I just have to hang in there. What a great idea on the tiered option, too! Thanks for posting this!

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[…] who is now on TV, talks about going from $25/hr to $75/hr which I actually know someone who did (close […]

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[…] I was reading one of my favourite blogs on money by Ramit Sethi (I Will Teach You To Be Rich) and he’s talking about raising your charge out rates. […]

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[…] Teach You To Be Rich: Worried about what clients would think if you raised your rate $10 an hour? How about tripling your rate with a smile in return? It’s a no-brainer technique too.Freelance Folder: I know I fall out of practice of searching […]

her every cent counts
5 years 10 months ago
Thanks for this post. It’s amazing how much more respect you get when you charge more money. You may lose a few jobs by naming a price too high, but generally people expect consultants to charge a lot due to lack of benefits and all the self marketing costs. I went from $50/hr to $100/hr (though usually charge clients between $60 and $80/hr.) It feels good to through the $100/hr rate out because #1 I think that’s how much I’m worth and #2 I feel comfortable negotiating down to a rate that both myself and my client can be happy… Read more »
Amir Anzur
5 years 10 months ago

This is great. People should get what they deserve. Many talented people hold back by not asking for more for their job protection. Tips are great.
Thanks.

Morgan
5 years 10 months ago

I really like the ‘offering different options’ idea! I’m definitely going to implement that. Thanks for the article!

Bruce
Bruce
5 years 10 months ago

Thanks for this post – it was certainly inspiring to read. There is one aspect of this case study that seems just a bit too easy. In my experience (albeit limited), raising rates (from $35/hr CAD to higher) was a total failure. At that point, I didn’t have the ability to walk away from the contract unfortunately.

Perhaps another post could explore how to deal with clients that fight back against an increase in rates?

debt managemenmt uk
5 years 10 months ago

This is nice post for earning money in right manner.The point is fight against the rates of client is very worth full .Thanks for this post.

Rhonda Chapman
1 year 11 days ago

Thanks for the ideas. I’ve been reluctant to increase rates for several long-term clients in fear they would drop me. But the tips and ideas from this post have given me confidence. As you mentioned in a comment above, if they don’t stay, they’re not the right clients for me.

Off I go… eeeek!

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