Can Freelancers Capitalize on the ‘Great Resignation’ and Raise Their Rates?By Allie Gray Freeland January 6th, 2022
Pricing yourself is one of the trickiest parts of the freelance dance. Do you go with a flat fee? A dollar per word? How about an hourly rate? Add imposter syndrome into the mix, and it’s no wonder that so many freelancers keep their fees the same for years on end.
But the times they are a-changin’—and it might be high time for freelance creatives to reassess what they charge. The pandemic has upended the global economy, with supply chain issues and increased consumer demand driving up the cost of goods, services, and even talent. Between November 2020 and November 2021, the inflation rate in the U.S. rose 6.8 percent, the largest jump in a 12-month period since 1982, according to an analysis of the “all items index” by the Bureau of Labor Statistics.
At the same time, the Great Resignation (“Big Quit”), a massive shake-up of the traditional workforce driven by a multitude of pandemic-related factors, has led more workers to pursue freelance gigs to buttress their incomes. In fact, a study conducted by Upwork reported that over the course of 2020, the number of freelancers in the U.S. grew by 12 percent. More freelancers on the market might mean more competition, but it may also be a sign of larger workplace shifts—including greater demand for freelance talent.
So, to raise or not to raise? With costs of living on the rise and W-2 wages set to increase by nearly 4 percent in 2022, is now the time to up your fees? We talked to a few experts to find out.
Is 2022 the Year to Up Your Freelancer Rates?
Dragos Badea, CEO of YAROOMS, a hybrid work management software, affirmed that freelancers should consider a rate increase in the wake of the Great Resignation.
Freelancers have more bargaining power when companies that rely upon full-time employees are in the throughs of rapid turnover, Badea explained. This really comes down to basic economics. “Supply for skilled individuals is far below demand as people quit and reorganize their careers. As a freelancer, you’ve got to price yourself accordingly until the market corrects itself,” he said.
Contently freelancer Sharon Geltner cited the same “supply and demand” issue but argued the flip side of the coin: With more freelancers on the market, there is more potential labor than there are paying media outlets, she said. “More potential writers pursuing assignments will often depress fees, not boost them,” she noted.
As Badea and Geltner’s opinions suggest, when it comes to freelancer sentiment, the jury is split. A PeoplePerHour study found that 40 percent felt the climate was a suitable time to raise rates, while others were unsure.
Nikki Attkisson, a journalist at the South Carolina news outlet Powdersville Post, proposed a middle ground: “Freelancers can ride on the job seekers’ market and raise their rates, but only to a certain extent,” she said. “Overdoing it will not serve you well—one of the main things that differentiate freelancers from full-time employees is that in many cases, companies can save by hiring the former rather than the latter.”
When pondering a rate hike, a few final considerations include the strength of your client relationships, the types of companies you tend to work for, and when you last raised your fees.
If, for instance, you have an anchor client who provides a good chunk of your income, you’ll likely want to approach the conversation differently (and more delicately) than you would with a client you work for only occasionally. If most of your clients are small businesses who are struggling during the pandemic, now might not be the best time to propose a rate hike. At the same time, if you’ve been freelancing for five years and charging the same amount, a rate increase may be long overdue.
How to Raise Rates With Grace
If this is the year you choose to introduce a rate increase, there are a few best practices for doing so effectively. Daniela Sawyer, the founder of FindPeopleFast, offers some guidance:
- Provide advance notice. No one likes surprise rate hikes. It’s essential to inform your clients as early as possible. While specific time frames will vary on a case-by-case basis, two to three months is a good baseline.
- Increase in regular increments. Much as full-time employees expect an annual raise—usually around 3-5 percent—to keep pace with inflation, freelancers should take economic trends into account. If you plan to raise rates regularly, choose a specific time of year for that incremental increase.
- Don’t rush a rate hike with new clients. Reconsider raising rates on brand new clients or those you’ve only worked with once or twice. Give these clients some time to understand your value.
If you’re stumped about how much to ask for, there are resources at your fingertips to gauge going rates. The Editorial Freelancer Association offers median rate ranges. Contently also has a helpful database that aggregates rates from hundreds of sources, as well as a pricing menu that provides insights into what they pay freelancers.
As for standing out in a crowded market, Geltner suggested a time-tested strategy: Prove your value with consistent, high-quality work. “Freelancers with desirable specialties and strong track records—as demonstrated by online portfolios—are in a much better position to negotiate higher fees,” she said.Image by pch.vector