When to Raise Freelance Rates and Tackle Bigger Clients
But when do you know you’re ready to promote yourself?
The double-edged sword of freelancing is while it grants us autonomy, it also means we can’t rely on an authoritative figure to give us a promotion. Without a clear “go-ahead,” many freelancers stay stagnant.
If you go online, wishy-washy advice encourages us to “get paid what we’re worth.” But this opaque guidance isn’t persuasive – especially since giving ourselves a promotion can feel daunting.
This article dissects the logic behind the why and when of upgrading your business.
It uncovers the three layers: healthy signs, understanding of business, and mindset.
The Traditional (and Healthy) Signs
If you’ve been freelancing for a chunk of time, you might not have noticed these subtle signs nudging you to level-up.
- You haven’t heard a “Yikes, you’re expensive” in a while. If all your clients are working with you without batting an eye, it’s time to change your rates. As seasoned freelancer Emma Siemasko says, “If all your proposals are being accepted, your prices are too low. You need to be charging high enough so you have resistance. If you’re not, it’s a red flag.”
- You do what you say you’re going to do. If you tell a client an outline will be done on Friday, it’s done by Friday. If you schedule a call at 2:00 PM, you’re there at 2:00 PM sharp. Clients are willing to pay a premium for reliability and peace of mind, as mentioned in The Freelance Manifesto.
- You just passed another year around the sun with your freelancing business. Woohoo! You have another year of experience under your belt. If that doesn’t sway you to go after bigger clients and raise your freelance rates, inflation should.
Understanding of Business
Womp womp. Yes, I know you pursued freelancing because you’re a creative, but it’s important to understand the economics of a business at play.
- Hiring a freelancer is considerably cheaper for a company. Clients aren’t required to cover your PTO, Social Security, Medicare, or other health benefits. As Michael Ardelean, author of Art For Money explains: “Assuming you are great at what you do…you can set your price 50% higher than the market standard salary, because paying you more is still cheaper than hiring a true employee in your place, and your boss has the added benefit of zero commitment (as do you).”
- Understand the value your deliverable generates. When value exceeds price, people pay up. Consider this example from Wudan Yan mentioned in The Writer’s Co-Op podcast: “One of my clients is a biotech company who makes chain sequences. I write blog posts for them that showcase what the research these machines enable. I get paid $1,000 to write one 500-word story. One sequencer can cost over $100,000. If a prospective purchaser reads the article, and decides to purchase, the ROI is incredibly high.”
With each project, try to understand how the client is measuring success. If your work leads to more money, more clients, etc, high rates command themselves.
- What might be a lot of money for you, isn’t for your client. According to Deloitte’s Annual CMO Survey, marketing budgets make up approximately 11.7 percent of the company’s total revenue.
For example, if you’re working with a company that’s accruing $500,000 in ARR, they have roughly $59,000 dedicated to content marketing. Your $800 blog post might seem extravagant to you, but to them, it’s a drop in the budget.
Wait, I thought this article was about logical reasons to give yourself a promotion?
Yes, changing your mindset might feel like some “hippy-dippy” practice, but your thoughts create your reality. Establishing premium rates and pursuing high-ticket clients, ultimately, boils down to you giving yourself permission to go for it.
Consider these two factual realities to help you make a mindset shift:
- Money is perceived value. People view “expensive” products as higher-quality. But is a case study written for $5,000 really five times better than the one for $500? We rate pricey things as superior, even if they are the same quality as the less expensive option.
The first mindset shift to make is higher rates and bigger clients lead to higher perceived value. In other words, by pricing yourself competitively and pitching big-league clients, you gain a notch in legitimacy.
- We’re accustomed to gatekeepers giving us the go-ahead. Our entire lives, cultural forces instill and encourage gatekeeping. We’ll get diplomas from graduating middle school, be pre-vetted by a job recruiter, or wait for a boss to give us a raise or a bigger client (which is why you’re reading this article).
The second mindset shift to make is to realize you don’t actually need to wait for an authority figure to give you the go-ahead. Or as freelancer Matt Hall puts it, “Don’t outsource your bravery to someone else or a certificate.”
Because if you’re a freelancer, it’s proof you have an entrepreneurial spark within you. You’re more of a self-starter than you might realize – and have the ability to create, evaluate, and maintain a thriving freelance business that grows alongside you and your goals.
Tags: how to pay freelancers, how to set freelance rates, when to raise rates