Charging more isn’t as simple as sending an email off to your client and saying, “Hey, you need to give me more money now. Thx, dude!”
It takes a nuanced approach to avoid alienating your clients and damaging your reputation.
It’s something ALL freelancers go through at some point — and to address it, I’ll share the techniques I’ve used to help thousands of students. We’ll look at:
- When to (logically) raise your hourly rate
- How to increase your rate for new clients
- The best way to increase your rate for current clients
When to (logically) raise your hourly rate
The question of when to raise your rates is as important — if not MORE important — as how much you should raise.
After all, you don’t want to throw a huge rate increase on your client after you just signed onto your first project with them. YOU HAVEN’T PROVEN YOURSELF TO THEM YET!!
Why should they pay you more money when you haven’t given them anything worth paying more for?
Instead, you’re going to increase your rate only after you deliver a high-value product.
I’ll say that again:
- Just finish a landing page that generated a ton of qualified leads?
- Create an email campaign with a record-high open rate?
- Have a blog post go viral and increase traffic by 200%?
That’s why I LOVE increasing rates. It encourages you — the freelancer — to do great work and deliver fantastic products while letting the client know that you should be valued.
And when the client knows that your work is great, they’re more likely to refer you to others — which brings us to our FIRST technique to increase your rates…
Referrals: How to increase your rate for new clients
I used to help this friend of mine earn more money on the side. She had a full-time job, but did some freelance project management on the side for a small consulting firm where she earned $25/hour.
After a while, she realized that $25/hour didn’t really add up to much, and she was getting frustrated with the owner’s poor management skills — very disorganized, non-responsive, took days to get back, etc.
She got discouraged — and even came on the brink of quitting entirely because she wasn’t being paid enough to deal with a low-value client.
So I encouraged her to do two things:
- Ask successful clients for referrals
- Raise her rates in her proposals to those referrals
Her old client loved the work she had been doing, so he was happy to refer her to a colleague at a different company.
And then one day, my phone rang — it was her.
“You wouldn’t believe it,” she told me. “I quoted him $50/hour and he didn’t even blink. Shit! I should have asked for more!”
I LOVE IT.
In a few weeks, she doubled her rate with just two conversations.
- When you get referred to someone, don’t drop your rate — raise it. Many people mistakenly drop their rate, thinking the referrer will divulge the rate they currently pay (they won’t) or that they should discount for their client’s friend (you shouldn’t). In fact, you should raise your rate since your client has already ADDED value to your work by vouching for you.
- There are many other options besides quitting. If someone’s paying you — even if it’s under your desired wage — don’t just quit. There are many other clever ways to help your client and yourself — like asking for referrals that will pay a higher rate.
- By charging more, you get higher-quality clients. 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 or their money. Someone is less likely to ask you to do busywork if your time is expensive. It’s a win-win situation.
- This can double your income overnight. $25 an hour is about $52,000 per year (before taxes and benefits) if you are working 40-hour weeks. Going to $50 an hour is $104,000 per year. This is a big win.
Referrals are a simple yet powerful way to start charging more. Not only does it allow you to increase your rates, but you’re also able to gain more clients.
But what about the clients you already have? Maybe you have a great working relationship with a client but don’t want to lose them due to a rate increase.
The best way to increase your rate for current clients
I remember when I used to do freelance consulting work, I only charged $20/hour.
I know. I know. It was a STUPIDLY low price to be charging for my work — but I was young and just getting started.
One day, I decided, “You know what? I’m going to start charging my clients more.” So I told one of my clients that my rate was increasing from $20/hour to $30/hour.
When I told him about the rate increase, all he did was ask me, “Why?”
Why was I charging him more?
So I started to stammer back a completely BS answer, “Well, you know, I’ve been here a while, and I just think that this is definitely what I’m worth, and it would be tough for you to find someone else who had the same knowledge as me and blah blah blah.”
The guy just kind of looked at me and said, “I don’t think so.”
And he was totally in the RIGHT.
I hadn’t even spent enough time thinking about how I was going to articulate the raise — how could I expect him to agree to it?
Which brings us to an important point:
Only when you showcase the value of your work and how you can benefit the client, can you properly increase your rate?
Which is why whenever you increase your rates, you need to make sure you reinforce the value you are providing before charging more for that time.
Steps to raising rates for existing clients
- Let clients know what you’ve done for them already
- Let them know how you’re going to be adding MORE value
- Explain why the rate is going up
Knowing this, here’s what I SHOULD have said when raising my rates with that client:
Hey, I think you’ll agree that since we’ve been working together, I’ve helped you increase profits by X% while simultaneously cutting costs by X% and generating $XXX,XXX in revenue.
I value you as a client and enjoy working for you — but in order for this to make sense for me, I’ll be increasing my rate to $30 an hour moving forward. With more money, I’ll be able to do X and add even more value to the company.
Can we discuss this next week?
The client would have probably thought, “Damn! I don’t really want to have to pay him more — BUT he’s definitely worth it. I’ll talk about it with him.”
A few takeaways from this:
- I explained why my rate was going up
- I succinctly showcased the value that I have added to the client’s business — giving them plenty of reasons to want to pay me the rate I desire
- I showed how I’m going to offer even more value to my client — and how it’s completely worth it
- You can use this same script and adapt it to your own business when raising your rates
Here’s a video where I go into even more detail on strategies you can use to charge more.
By implementing these techniques, you can change your earning power forever.
That’s right. I went from charging $20/hour to $3,000/hour by using the very same techniques I’ve just outlined.