How to gracefully raise your freelancing rates + FREE script
Have you ever held back on raising your prices for fear of losing clients? As a boss, you are going to have to face those difficult conversations a number of times throughout your freelancing career—especially if you want to make an impact on your income and your life.
Raising your rates doesn’t have to be awkward or scary.
First, you need to get past those mindset beliefs that don’t serve you. Ditch the assumptions that your clients are going to leave you if you raise your prices. Provided you are still offering awesome value and communicating that value, you’re going to be just fine.
When is the right time to raise your rates?
Here’s a little exercise—cast your mind back and recall what you've achieved in the last 12-months? You’ve completed new client projects, you may have finished a new course, read a new biz book, you may have invested in new systems or tools to enhance your customer experience.
The point is—as a freelancer you have grown.
These experiences and investments have made you a better professional, and your clients are reaping the benefits.
If it helps, write out your achievements in a ‘growth list’. This is not something you need to show clients (they only care what’s in it for them at the end of the day), but it’s a great reminder to YOU of your value, smarts, and worth when it comes to business. It might also give you the confidence boost you need to raise your rates.
6 signs that it’s time to raise your prices
If you’re not even sure if you need to raise your rates, there are a few telltale signs that it’s time to do up. Do any of these apply to you:
Are you getting a ‘yes’ to every proposal?
Are you working long hours but still not hitting your income goals?
Do you have more work than you can handle?
Are your competitors charging way more than you?
Have your business costs increased? E.g. You may have invested in paid tools or tech to enhance your customers lives like reporting or SEO software.
Are you becoming more specialised in a skill or industry niche?
Have your rates been the same for the last year?
If you said yes to one or more of these questions, it’s time to raise your rates friend!
How to increase prices?
There are two main ways to approach prices increases, but you can go for a combo of both in a timeframe that suits you.
Incremental increases
You can technically increase your prices slowly over time with every new client you work with. They won’t know the difference, and it will help you grow your income. Just put your new prices on your proposals and that’s it! If you keep getting a yes, it might be time to increase rates with other clients too.
Annual raise
This approach is particularly useful if you have retainer clients on a fixed rate. Send a letter telling them about your annual increase at the end of each year (financial year or calendar year) with the aim to bring it in line with what you are charging new clients. Give clients at least 4-weeks notice and remember there is a risk that they may want to shop around. You’ll find my letter template to do this at the end of this post.
How much should you increase your rates by?
If you are already charging a decent amount and happy with your clients and workload, a small annual increase of 3-4% will keep you growing above inflation as a minimum.
If your getting yes’s all the time and notice your competition is charging more, and you feel you are comparable in experience and skill level, consider a bigger increase. And always make sure you are covering expenses to keep your business afloat.
How to communicate a price rise to your existing clients?
No need to beat around the bush, get to the point and tell them you’re prices are going up and when this will take effect. Remind them of the value you add to your client’s life e.g. the goals you’ve achieved, the time you’ve saved them, the money you’ve made them. Try to be specific by adding a couple of highlight achievements if you can.
List out the services you currently provide and let them know they will continue. I like to offer a complimentary strategy session as a way to show appreciation and offer something as a bonus to my loyal clients in my annual rate increases.
And don’t be apologetic about a price increase, clients will appreciate a straightforward update. You are entitled to get paid more (self-worth is a whole topic for another time). If your client has questions or concerns, let them know your door is open.
Know how much flexibility you have (if any)
Some clients may not like the increase or may not be able to afford it. Know how much you would be willing to negotiate. If you won’t budge, you may lose a good client (or that could be a blessing in disguise depending on your situation).
You might have clients you love working with and want to explore their hesitations in continuing under the new prices. Get curious, ask them:
What value do they see you providing? (They can self qualify the good things you do and say it back to you).
What more would they like to see from you? (Maybe there is a gap in expectations, explore it).
Are they on a strict budget?
What would they be willing to pay?
Have these prompts ready so if you do need to have the conversation, you’re prepared.
If you really want to keep the client but they are pushing back on your new rates, you could negotiate to make it a smaller increase, but only if the client agrees to a longer-term contract. This will give you security and keep the relationship going. Only you will know what you are willing to settle for.
[FREE SCRIPT] Price increase letter to clients
SUBJECT LINE: Price updates: [Month Year]
Hi [client name],
I’m writing to let you know that [my/our] prices will be increasing [by X%] [effective Date, Month, Year].
Over the last [X years/months]I have helped you achieve some amazing results like [highlight 1] and [highlight 2]. To recap, here are the services I’m offering under the current agreement:
[list agreement/retainer/service inclusions]
[list agreement/retainer/service inclusions]
[list agreement/retainer/service inclusions]
[list agreement/retainer/service inclusions]
I would love to continue delivering these things, and more, going forward.
As a loyal (and fave) client of mine, I’d love to arrange a complimentary [XX-minute planning session (valued at $XXX+ GST)] to explore your goals and aspirations for the coming [year/quarter]. Book it in here [link to calendar].
Please let me know if you have any questions or want to chat about the new prices.
[your name]
Over to you…
Have you raised your prices? How did you do it? We’d love to hear your experiences and tips!