Signs you are ready to raise your rates

The freelancing industry is skyrocketing rapidly with a size of around 1.219 billion freelancers worldwide. As per a survey, nearly 80% of the workforce might adopt the freelancing model by 2030. Despite being a field offering flexibility, high-income potential, and convenience, not all freelancers are highly-paid.

As an independent consultant, pricing your freelancing services is not just about money-making but also the quality of life you wish to live. If you are not valuing your skillset and charging below the industry standards, it will require you to work overtime, leading to exhaustion. Contrarily, hiking the rates spontaneously might make you lose clients. To balance the situation, it is crucial to identify the suitable phase and way to ask for a raised freelance pay

7 signs which indicate the time for a raised pay

Are you stuck in a dilemma or waiting for the right time to revise your pay? Scroll down the section below to ascertain signs that you can increase rates.

Poor work-life balance and less income

If you find yourself constantly putting in more hours than necessary and still not meeting the income goals, it might be time for a change. You can increase your rates and charge according to what other consultants are charging in the industry. It is vital to ensure that you are making enough money at the end of the day to meet your needs without working tirelessly. Besides preventing burnout, it will also aid you in achieving a healthy work-life balance. A crucial thing to remember is that while contemplating fair remuneration for your hard work, the anticipated payout should also be reasonable for your client.

Hefty operations costs of the business

A quick hike in the business operational costs can be challenging to cope with, especially if your niche requires an expensive technological set-up. Consider that you are a software developer consultant, a highly specialised field requiring both skills and equipment. It necessitates having a well-organised workstation comprising a laptop and computer with a good processor, RAM, and storage space. Besides, you might have to invest in an external monitor, ergonomic keyboard, mouse, headset, microphones, high-speed internet connection/WiFi, AI-based software, and external hard drive or cloud storage space.

Freelance software development consultants must capitalise on technologies and equipment to boost productivity and create high-quality deliverables

Therefore, it becomes necessary to fuel the increased operational costs by raising your revenue. Ultimately, it will take the financial load off your shoulders, enabling you to make ends meet.

Charging lower than average market rate

If you are charging lesser than the current industry pricing standards, you may get an array of clients and projects in your kitty. Yet, it is equally necessary to charge for the value you bring to the table for your clients. Assess the industry rates and charge the clients accordingly. For instance, a communications consultant earns an average of around £40,405 annually. If you belong to the same field, position your pricing slab somewhat near the average market rate for that particular role. Always research market rates and connect with people in similar roles to get an accurate picture.

You have become the master of your field

When you are a newbie in the world of freelancing, it is justifiable to work at nominal rates. But once you have sizable work experience, you can increase rates as a freelancer. While working in a specific niche, you can enhance your expertise and gain immense industry exposure.

For example, a product manager initially identifies the target audience, analyses market trends, works with the development team for product creation and sets pricing strategies. Then they gradually move to sales forecasting, curating marketing strategies, user engagement, communication with stakeholders, detecting potential risks, and defining requirements for future products. This steady progression of skills enhances your expertise, giving you a competitive edge over your other counterparts in the industry. When you attain such a level in your career, then hiking your prices is a prudent move.

Your clients are contented with your deliverables’ quality

If you have been consistently delivering quality output, it increases the likelihood of your clients paying a higher price for it

This is because they can see your growth and professionalism progressing over time. For this, you have to meet the deadlines and deliver result-oriented outputs.

Suppose you are a marketing consultant, and your online ad campaigning has helped the client’s brand gain visibility on digital platforms. It is high time to ask for a price hike. The golden rule to remember is that first, you have to provide the value, then expect the client to raise the rates for your services. 

Impressive Client Retention Rate

Client retention is an indicator of the quality of a freelancer’s work.

It is a critical metric representing clients’ trust in the freelancer and the value of their services

Generally, the client prefers to preserve the services of those consultants who excel at what they preach. If you have been working with a client long-term, take a step ahead and ask for a pay raise.

Having a Credible Presence on Social Platforms

If your social media is loaded with resourceful content relevant to your client’s business sector, it will help you appear as a connoisseur of that niche. When you have a noticeable presence on prominent social media platforms, you can charge higher for your reputation in the market and service value from the client.

The ideal way to raise rates 

You cannot expect your client to increase the rates overnight. Inform them beforehand so they can also be prepared for the payout hike you expect. Here are the two critical things that you must keep in mind:

  • Give your clients a notice period before hiking rates: Avoid raising your rates suddenly, as it is unprofessional. Your foremost responsibility is to give a notice period of at least a month or two before increasing your pricing structure. By doing so, your clients will also have sufficient time to amend their financial budget to accommodate your revised price slab.
  • Providing a formal intimation through mail: Have a word with your client, state a viable reason for the price hike, and draft a formal mail. Remember to mention precisely how much % increase you desire in your current pay. Moreover, stating a price hike should be presented as a natural advancement of your business. You can also bundle up your revised prices with an added benefit, such as the one mentioned below in this freelance rate negotiation email 

Sample:

Subject: Update regarding the increase in the pricing structure 

Respected [Client’s Name]

Hope everything is well on your end. This is to notify you regarding my updated pricing structure. As we have been associated for a long-term now, I would like to seek an increase of ____% in my current pay. However, this change would not be implemented instantaneously. Owing to the loyalty and promising professional relationship that we share, the revised prices will be effective from __________ [Date]. Therefore, you can avail the services at existing pricing for an extended duration of _________ months [specific period until the effective date]. 

Also, I want to reassure you that the revised prices will remain unchanged for the next complete year. Therefore, you can stay assured that there will not be any unsolicited surprises, and your financial budgetary investments will be foreseeable and safe.

If you have any questions, feel free to reach out. I look forward to hearing from you soon!

Thanks and regards,

Going this way, you are bringing optimistic news to the table instead of unwelcoming one. By drafting an email like this, one can create a perceived advantage in the client’s mind that they will get to avail of your services at existing rates for longer, which often counts as a discounted rate.

Determining a price hike that is fair for clients 

While increasing your rates, you must also think from a client’s perspective. For instance, if you decide to hike your pricing structure by 50%, it is impractical and unfair to the client. Instead, you can revise the rates by 10 to 20% at a time to keep your client’s convenience in the loop. Be flexible and discuss things with your client so both of you can stay on the same page, especially for long-term clients. Below mentioned are two great ways through which you can earn a lucrative income from your clients:

  • Charge premium: Rather than elevating your pricing slab, charge a premium for your services. However, you must create a unique value proposition for your clients and provide them with value-added services. Suppose you are a tax consultant. Your task list will comprise extensive tax legislation research, accounting, auditing, concocting and filing tax returns, treasury services, handling disputes, and whatnot.

You will ensure that your client’s business is not penalised by law for any mistakes or oversights. When you provide top-notch services and add substantial value, start charging a premium within 5-20% of total project fees.

  • Charge higher than M.A.R.: It refers to the Minimum Acceptable Rate for a freelancer. To remain on the profitable side, charge slightly above your M.A.R. To calculate the same, apply the given formula:

M.A.R.= Living Expenses + Overhead Business Expenditure + Salary/ Annual Working Hours + Income Tax

Summary

As time passes, our personalities and skill sets evolve, and the same applies to our careers. As an independent consultant, you can initially work at a nominal rate, but as your work experience and expertise broaden, charge for the value you are providing. The ways mentioned above will help you identify the right time to revise rates while making the monetary transition smoother for your clients.