8 Reasons Why You Should Raise Your Rates Before January EndsBy Karen Martinez January 23rd, 2015
Raise your hand if you’ve avoided talking to your clients about increasing your rates. I know I have.
Last year I was too apprehensive to increase my rates after a new client approached me with work. I knew what others in my field were charging, but I was afraid to risk losing a job by asking for more money.
Around that time, I read a post by Tom Ewer about how he tripled his blogging rate, and that gave me the inspiration to start asking for more money. While I didn’t land that new client, I at least lost my fear of negotiating higher rates—which, in the end, was probably the more valuable outcome anyway.
Two weeks later, I received an email from the co-founder of a company I had reached out to with a cold email. He was excited to hire me to write for his website’s blog and wanted to discuss details over the phone. After our call, I sent him a proposal, and he agreed to pay my newly increased rate.
In theory, you could raise your rates any time you want, but it’s easier to set that goal into motion when the new year arrives. New Year’s resolutions not only make for a convenient motivation, but there are some very practical considerations to think about.
Here are eight reasons why you should think about charging a higher rate early on this year.
1. You learned new skills
If you spent the last year consistently writing, you probably learned some useful skills. You can transform this newly found knowledge into value for your clients.
Now, let’s say you’re a freelancer covering personal finance who earns an accounting certification. Now you can bring a certain level of credibility and in-depth knowledge that makes you a valuable commodity. Because of that expertise, you can now stand out from the crowd of finance bloggers and charge higher rates.
If you invested in your business, you should see something in return. When you take a course to learn a new skill, you’re ultimately helping your client’s bottom line. Your prices should reflect that added value.
2. You improved your personal brand
Chances are you didn’t have much of an online presence when you start freelancing. But as you grow your social media presence, editors have a reason to believe you can bring an established group of readers to a site who can give more retweets, likes, and shares on every article.
Publishers often say they pay more based on “experience,” but this is one type of expertise that often goes overlooked. At the end of the day, every client wants a sizable audience reading their content.
If you spent some time during 2014 building your brand—perhaps you quadrupled your Twitter followers and noticed your articles garner more shares than an average piece for a particularly site—you should raise your rates accordingly.
3. You worked more than you thought
It’s always a good idea to look back on the last year and analyze your productivity. You might notice you spent more time on each project than you initially estimated. Sometimes we don’t consider the effort that goes into emails, phone calls, traveling, and other non-billable tasks freelancers have to take on but aren’t always reflected in the final creative project.
Since those tasks aren’t directly billed to your clients, you might need to increase your rates to compensate for that extra time you’re working. This is particularly important when you charge flat rates. You might think you’re getting paid fairly, but it’s easy to fall into a time-sink when you’re not charging by the hour or the word.
4. Your clients established new budgets
Companies have to set new budgets for the new year, so if you think the last year has been good for business, it’s also a good time to inform your clients about any rate increase. Even if budgets don’t have room for the exact bump you want, you’ll probably be able to negotiate. But if you wait too long, the client may lose financial flexibility and won’t able to accommodate your request.
One note to the wise: This point can work both ways. If you bring up budgeting to a company that plans to spend less money in the coming year, you risk having to take on lower rates.
5. Other employees receive raises and bonuses
You don’t have a boss who pays you an extra check for your output, which means it’s your job to reward yourself and value your abilities. If you think you consistently produced quality work and your clients were pleased with your services, it shouldn’t be too difficult to justify greater compensation (within reason) every year.
The cost of living generally goes up about three percent annually, so it’s more than reasonable to think about making more money just to maintain your quality of life.
Startups, Fortune 500 companies, and your local convenience store are all going to keep increasing their prices. Therefore, it’s smart for you to raise your rates instead of getting stuck with stagnant wages.
7. You start thinking big
The start of the new year is the perfect time to imagine your ideal clients and game-plan for how to reach them. Researching some dream clients can help you gain a better understanding of the type of publications and businesses that will pay the most for your services. For example, if you’re a personal finance blogger, maybe you find a topic that connects to corporate finance (an area that can be more lucrative for some freelancers).
Even if negotiations stall with existing clients, you can always take the leap with new clients without the fear of losing steady work.
8. You want to test yourself
It’s naive to believe all—or even half—your clients will pay you more. If they don’t want to pay more, that’s okay. It could have something to do with the quality of the services you provided or the budget they allotted for freelancers. Talk to your clients, get some feedback, and reevaluate your working relationships.
Regardless of the short-term result, this will be a helpful exercise—you can always improve your skills and try to raise your rates at a later date.
I received a few rejections, but I also found out I have some great clients who are willing to pay more for my services. I know I add value to their businesses and that they’re happy with my work. I can still improve, of course, but it’s always easier to find the energy to work on my business when I’m satisfied with the compensation from the get-go.
We all want to earn more, and the biggest obstacle in our way is often just getting over our fear of talking about rates. It can be an intimidating experience, but the start of the year is the ideal time to ask for more money.