The secret of how to charge more as a freelancer
Charging low hurts not only you but also the economy.
Here's what I mean. Setting low prices for your services creates a race to the bottom where prices keep lowering.
Lowering prices will eventually turn in the poor quality of the services, which negatively impacts the economy.
Besides creating a situation where you are barely making ends meet, you also have no resources to invest in developing your business, skills, and tools, which leads to lowering your prices even more.
Now, you're stuck in the loop — you can't charge more because you don't have skills; you can't build skills because you don't charge enough to invest in them. Eventually, to make more, you'll have to take on more work, leading to burnout.
I've met dozens of freelance designers who have plenty of reasons to charge low:
"No one in my space, geographic location, or sector will pay that..."
"I can't charge more since everyone else does."
"No one has ever heard of me or my company."
"If I charge more than I already do, I won't get any business."
"They don't understand why I think I'm worth what I think I'm worth."
If you struggle with pricing and your explanation is on this list, chances are you haven't made a serious or consistent effort to raise your price long enough to discover if it is possible. Or you instantly start negotiating against yourself soon you suspect the client is interested. Or maybe you attempted it but they said no due of your new higher price.
If any excuses apply to you — you're not in control of your freelance business — you're just a passenger. Instead of sitting in traffic with everyone, I encourage you to take the driver's seat and take the next exit, which can take you to the wider road.
You might be afraid to take the wheel because increasing your prices will take work, figuring out the unknown, and getting rejected. But this step is a crucial change. It will help you understand what you're truly made of and how much you believe in yourself.
Accept any excuses, take the driver's seat (even if it's scary), and change the situation if you don't like it.
You believe no one has heard of you or your company, which is why you can't charge more? Start marketing yourself so that people are aware of your existence.
Nobody in your neighborhood has any money? Consider taking your business online or learning how to travel.
You know you're worth more, so why don't others recognize it? Create your brand so that others can see it.
Others are taking these steps and succeeding, so why aren't you? Except for your refusal to step up, there is no reason others are successful and you are not.
Sounds easy, so why isn't everyone doing it? Because taking these steps takes serious effort. These moves are easy to discuss but hard to do because they require action and work.
It's easier to blame your inability to charge more on the environment or your current financial situation than to think that it's your unwillingness to try. And when you do try, it takes even more effort to deal with the inevitable results of stepping up and putting yourself out there.
It doesn't work immediately, and you'll have to keep trying.
It means that you'll have to say no to the next exciting project or client and turn down potential money when you need them.
It means that you might pass on the project when the budget is below your new high price to reinforce your actual value in the market (and your mind) and show that your worth is not for negotiation.
It means that you might need to get into debt and see it as an investment to charge higher prices in the future.
It means that you'll have to be mentally prepared for a temporary pause in client work when you focus all your energy on doing what's necessary to justify your new price by investing in increasing your perceived (and actual) value.
It means that you'll possibly look at yourself and your business and ask hard questions about how you represent yourself and how others perceive it.
All this has to do with asking yourself:
Do I have the courage to bet on myself?
I started betting on myself in 2017 when I 4x-ed my rates and waited for projects to fall on me from the sky. But after a few months of no client work, I understood that things wouldn't happen independently. I have to act on them.
I didn't have much saved, so I financed my endeavor by living extremely cheap (I already had a family to feed) and moved into my wife's parents' house.
Fast forward 12 months, and I was able to buy an apartment after completing a few large projects.
Here's my 4-step approach to raising your freelance rates
Update your pricing structure
Do you know how product brands cleverly raise their profit margins? They keep the exact pricing but reduce the size of the product.
Downsizing a product while maintaining the same price is known as "shrinkflation," and it is how many businesses compensate for inflation without offending customers.
As a freelancer, you can use this strategy to increase your earnings without instantly raising your customer rates.
For some clients, you can preserve a starter price while reducing the number of deliverables or service items included. This way, you spend less time working and earn more money.
You can also do the opposite and justify a rate increase by including additional services in your pricing.
New client — new price
Increasing your prices for each new client is a not-so-secret technique to boost your freelance income.
It's also an excellent way to see if you're charging sufficiently. If there are no complaints about your rate, you still have growth potential.
You gradually increase your revenue by quoting higher rates to prospective clients and stepping away from lower-paying jobs. You don't have to be concerned about a trusted client leaving when you surprise them with a pricing hike. You can postpone the news until you are ready to accept a loss.
Diversify your client pool
Let's face it: not every company can afford to pay top bucks. A local mom-and-pop grocery store will not pay the same as an international food conglomerate.
Simply put, freelancers have fewer restrictions on who we can work with. You can quickly transition to serving a different type of client to bring "diversity" to your compensation levels.
To earn more, you can target new:
Industries
Locations
Company sizes
While researching possible clients or evaluating incoming leads, consider the company's finances - funding and revenue.
Seed-stage startups, for example, rarely have significant budgets. Those after Series A or B, on the other hand, typically embark on a hiring binge and have the (investor) money to spend on highly competent people. You can use Crunchbase to learn about company funding rounds and projected revenue.
Next, strive to comprehend the client's "design maturity." You don't need to justify your fees as much when the organization knows the value of your services. Furthermore, because the client knows how to handle freelancing teams best, there will be less score creep.
Be strategic with your timing
When you surprise your client with an email that says, "Hey, these are my new charges," you're more likely to encounter pushback.
Some people may agree with your request. Others may find it challenging to implement the rate rise because their budgets have already been authorized.
Hence, if you want your rate increase approved, follow the money path.
Most companies fund initiatives on a monthly, quarterly, or annual basis. The financial flows are determined by the size of the organization and the sort of activity performed. When you have a good idea of when and how they will fund things (which is generally accessible in continuing work), send your "rate adjustment" email right before that.
If you are dealing with unacceptable scope creep, you can (and should) consider increasing your rates at any moment. You should raise the client's attention to this fact if they slip in too many more requests into the task without bringing up the extra price.
The unfortunate truth is this: You're not worth more than you're getting paid right now. But you can change that by identifying why you aren't charging more and taking steps to do something about it.
The question is, do you have the courage to do it?