Increasing rates is something that most freelancers and small business owners put a great deal of planning and thought into. Not only do you need to evaluate your current situation, but you also need to look at the market, the overall industry, and the impact a rate increase may have on your clients and potential clients.
While some business owners raise their rates every year, others do it more sporadically for a variety of reasons. If you’re in the second group and are wondering if now is the time for a rate increase, here are some signs that it may be time to raise your rates.
You do things very few people can do.
It makes sense that those who provide a specialized, sought-after product or service can charge a premium fee for their unique work. If you fall into this category and repeatedly have clients seeking you out because of a special product or service you provide that they can’t find elsewhere, and you haven’t raised your rates in a while, now may be a good time.
You resent your clients because you feel like you’re being underpaid.
When starting out, some freelancers are tempted to become the lowest-cost provider in order to grab up the low-hanging fruit and quickly get business going. This may work for a short period of time, but freelancers with long-term staying power quickly realize that going after the bottom feeders may get business but it’s probably not the right work and clients that will lead to satisfaction and growth. And it could be a quick way to burning out. One of the first signs that you’re undercharging and getting taken advantage of is an ongoing and growing resentment of your clients.
You haven’t raised your rates in a long time.
Many times, we set a rate, it seems to work and we leave it because we don’t want to mess with something that works. But the more you work, the more experience you gain, the quicker you become and the more knowledgeable you are about the subject matter. In order to boost the value of your products and services, and ensure you’re targeting the right kind of clients for your level of work, a rate increase might be a smart move.
You have a long list of more-than-happy clients.
When your business has repeat clients who never cease to sing your praises and regularly refer you to others, it’s a sign that you are providing an exceptional value for your clients. If you are considering raising your rates, it might be a good time. And you don’t have to start with a sweeping change, potentially hurting the relationships you have with your valued long-term clients. Start with an incremental increase, quoting your new rate just to new prospects to see the reaction. If your business continues to grow, you can implement the new rate for your entire client base over time.
You have more work than you can handle.
If you never experience any rate objections and every potential client who you communicate with is ready to sign on the dotted line without any hesitation, you may be in the right place for a rate increase. Does it seem counter-intuitive to raise your rates when so many fish are biting? It’s not, if you want to continue to grow your business. Consider the 80/20 Rule. If you can position yourself to sell your services at a higher rate to only 20% of your current prospect pool, you have the potential to match (or surpass) your current income with less work.
Of course all of these signs hinge on other aspects in your business, and won’t always mean a rate increase is warranted. But each of these situations call for a rate review, at a minimum. Once you’re ready to raise your rates, read through these rate increasing tips before you implement your plan.
What factors have led you to consider raising your rates? How did you know it was the right time?
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