What if you could increase your income as a freelancer by 10% or 20%, or even more in less than an hour? If you are new to freelancing or running your own business, that level of income growth might seem hard to believe. Achieving a high income in freelancing requires multiple skills, including knowing how and when to negotiate higher rates.
Use this guide to increase your rates faster. This guide to freelance rate negotiation has the power to deliver results. Additionally, you will look at some great samples of freelance rate negotiation emails that you can use to negotiate your freelance rates.
Income Growth: Traditional Employment Vs Freelancing
Income Growth In Traditional Employment – Slow Growth Is Common.
As a freelancer, you have a unique advantage over your friends and family in traditional jobs. In a salaried job, your income growth tends to be limited. You might get a 5% raise in a good year. The only predictable way that salaried employees raise their salary by a significant percentage is by changing jobs, and you can only change jobs so many times in your career.
Given those limitations, why do people like traditional 9-5 salaried jobs? Some people like to belong to a big organization, and others like the stability promised by large corporations. The stability is an illusion, though. Every year, companies lay off employees, restructure their operations and give out unexciting pay raises. Therefore, if you are serious about lifting your income, it’s best to focus your efforts on building a business.
Income Growth As A Freelancer: It’s Negotiable.
When you run your own freelance business, you make all the decisions. That includes choosing which services to offer, which clients to work with, and your pricing. When you create a proposal for a new potential client, you can decide on a new price. The prices you charge need to take into account several factors.
The 6 Levers To Pull To Raise Your Freelance Rates
The following factors are the primary drivers that determine whether or not you can increase your freelance rates. When possible, use multiple factors to support your price increase.
- Increase and measure the value you deliver to clients
- Choose to work with higher-paying clients
- Increase your skills through training and coaching
- Change the way you package your services
- Raise your level of client service
- Update your freelance rates to keep up with the economic environment
1. Increase and Measure The Value You Deliver To Clients
When you solve an expensive problem for a client, they are willing to pay a high price. For example, imagine you are a cybersecurity consultant, and you help a company recover from a ransomware attack in one day instead of taking weeks. Even better, your freelance work might bring in more leads and customers for a business.
Fundamentally, your freelance service offering should save time or money, reduce risk or make the client more money.
2. Choose To Work With Higher Paying Clients
Simply selecting the right client category greatly affects how much you can charge. For example, you might be working with smaller local businesses that earn about $2 million per year in revenue.
What if you switched to companies that earn at least $50 million in revenue instead? Sure, a larger company will have greater service delivery and results expectations. However, those larger companies will also be willing to pay larger fees for your services.
To see this principle in action, look at the earnings of corporate lawyers. A few years ago, the New York Times reported that one partner at a major law firm earned $10 million a year leading mergers and acquisitions work for major companies.
In contrast, the median US lawyer salary in the US is around $126,000, according to US News. There are multiple reasons for the difference in income. The size and complexity of the lawyer’s clients are key needs. Consider pursuing larger clients if your freelance earnings are low and you have difficulty earning more.
3. Increase Your Skills Through Training and Coaching
As a freelancer, your skills represent a large part of your success. You can charge more by regularly reinvesting time and money into skill development. In some industries, certifications can help.
For example, you might decide to become a technology consultant specializing in Microsoft or Salesforce products. Both companies provide certifications that almost anybody can study for and learn if they are determined.
Other fields may not have formal certifications – in those cases, you can learn more by reading books and working with coaches to get feedback on your skills. Paying a coach a fee to review the quality of your work is often helpful because they can find blindspots and unexpected ways you can improve your work and justify higher fees.
Every ambitious freelance business owner should set aside time and money each year for professional development. If you are just getting started, read the books in your field as a starting point or get a certification. Once you have some success, continue upgrading your skills by working with coaches and consultants. When you translate these new skills into better client results, raising your rates is far easier.
4. Change The Way You Package Your Services
How you present your services to clients and influencers determines how much you can charge. For example, you might charge an hourly rate of $100 per hour. You may be able to keep increasing your hourly rate, but you will hit the ceiling at a certain point. Once you are charging $150 to $200 per hour, raising your hourly rate will likely become challenging.
In those cases, it is crucial to package your services differently. For example, consider creating monthly service packages or productized services.
5. Raise Your Level Of Client Service
Next, the quality of your service to clients influences your pricing. This is mainly a negative factor. If you have been providing a poor level of service, asking clients to pay more will be very difficult. Instead, focus your effort on improving timeliness (i.e., hitting your project deadlines) and quality (e.g., reducing the number of errors). By improving the quality of your service delivery, clients are far more likely to agree with higher prices.
6. Update Your Freelance Rates To Keep Up With The Economic Environment
Finally, the overall economic environment may make it possible to increase your prices.
In 2022, inflation rates have been far above the historical average. In the UK, inflation rates have been over 8%. In the US, inflation has also been above 8% for a prolonged period. Many companies are successfully increasing their prices to keep pace with inflation. That said, don’t rely on inflation exclusively to increase your freelance rates.
Eventually, inflation and supply chain problems are likely to be solved. Therefore, relying on the economic environment is a secondary factor to consider when raising your rates.
Mention one or more of the above factors when you discuss a rate increase with a current or past client. With new clients, state your new pricing – there is no need to reference prices you charged in the past.
Bonus: Learn how you can Increase your freelance rates.
Freelance Rate Negotiation Email Samples: How To Use Them
In the following section, you will find multiple email templates you can adapt to propose price increases in your business. View these templates as a starting point only. If your price increase is significant – more than a 15% increase – sending an email may not be enough. Instead, ask to meet with your client to explain your rate increase in detail and address their questions.
Freelance Rate Negotiation Email Sample 1: Negotiating rates in your first project
Determining your rate in your first project with a client depends on a few factors. For this example, we assume you have planned a three-month project with your client. During that period, make every effort to deliver high-quality work, answer the client’s questions and meet their expectations. At the end of that project, there is a good chance that the client will be open to discussing additional services.
Before using the following template to propose a rate increase, make sure you periodically touch base with the client. If highly satisfied with your performance, they are more likely to be open to your increase.
Dear CLIENT,
I’m excited that we have completed our first three months of working together. When we started the project, your website was generating 10 email signups per day. After developing new copy and other optimization levels, the website is now generating 20 signups per day. Todd Brown, the sales manager, also mentioned last week that the new email leads are high quality.
In light of the great results we have achieved, I am increasing the price by 10%. That means that your next three month package will be $3300 instead of $3000. The new price takes effect in one month.
Freelance Rate Negotiation Email Sample 2: Negotiating rates with your recurring project
Increasing your freelance rate with a recurring project is a more challenging task. When you have a fixed monthly price and scope of work, your client and you know what to expect. Therefore, it is best to have a few reasons in mind to propose this rate increase and give your client plenty of notice.
Dear CLIENT,
Thank you for being a client for my monthly web development support package. We started working together in 2019 and we’ve achieved a lot in that time:
- Run daily website backups and tested data backups
- Increased website speed by 15% since 2019
- Supported your website to the Shopify Plus platform in 2020
Since we started working together, we have maintained your website to a high standard. In that time, our prices and costs have increased significantly. To continue serving your account, the price of the monthly package will increase by $1000 to a total of $4000 effective on December 1. If you have any questions about your package, please feel free to contact me to discuss your concerns.
Freelance Rate Negotiation Email Sample 3: Increasing prices with a risen scope of work
This situation – an increased or significantly changed the scope of work – is one of the most common situations freelancers face. For instance, you might have started by managing 1 website, and 1 social media account for your client. Over time, the client asked you to start and grow their TikTok account and support several product launches. To maintain client satisfaction, you have not increased your rates yet.
That said, there is no free lunch in business. If the client has steadily increased what they expect from you, it is time to increase your prices accordingly. Choosing the amount of your price increase will depend on the situation’s specifics. If the scope of work has doubled, increasing your prices by 50% or more may be appealing.
Dear CLIENT,
I’m writing today to let you know that your monthly service price is increasing by $2,000 effective on December 1. Since we started working together, the scope of work has increased significantly to include growing your TikTok account and supporting two new product launches.
As a result of these increased activities over the past year, it is necessary to charge a higher price in order to maintain my high levels of service.
I’m available to discuss the updated pricing and your needs at our next weekly meeting.
Freelance Rate Negotiation Email Sample 4: Increasing prices after a set period (e.g. annually)
Increasing your prices on a set interval, such as annually, can work effectively if you prepare for it effectively. When you start with this category of price increases, start with an annual price schedule. For example, let your clients know in October or November that new pricing will take effect in January. Alternatively, you can tie price increases to each specific client (i.e. after working with a client for 12 months, you plan a price increase).
From a client’s perspective, paying a higher price simply because time has passed may not feel reasonable. To address this concern, your price increase messaging should reference one or more of the 6 levers of price increases mentioned above. For example, you may have recently earned a certification that improves your value, your client service levels may be exceptional, and inflation may be high. Based on these considerations, proposing a 5-15% price increase may be more acceptable.
Dear CLIENT,
I can’t believe we’ve already been working together for a year as of DATE. In that time, we’ve accomplished a great deal in our work together.
- [Give 1 example of the value you provided to your client]
- [Give another example of the value you provided to your client – like fulfilling an unusual request]
- [Give a 3rd example of value you have delivered to the client]
Several months ago, I raised prices for all of my other clients. As a past client, you’ve had the lower rate of $100 per hour longer than everyone else I’ve worked with. As of October 1, the new hourly rate of $110 will take effect.
Please get in touch with me if you have any questions or concerns.
Frequently Asked Questions About Freelance Rate Negotiation
1. My client refuses to pay a higher rate. What should I do?
In this case, you have to make a hard decision. No client relationship lasts forever. If you have been delivering exceptional service and make a case for a reasonable price increase and the client refuses to work with you, you may need to bring that relationship to an end. While painful in the short term, this decision frees up more of your time to work on clients willing to pay your current rate.
2. What is the easiest way to charge higher prices as a freelancer?
To make life easy, increase your prices with new clients first. Assuming you regularly dedicate time to acquiring new clients, you should have a steady stream of new opportunities. Aim to increase your prices by 5-10% with each new client.
3. How do I know what value the client sees in my freelance work?
Raising your freelance rates is easy when determining how your contributions help the client. For example, a sales coach might help a salesperson increase their sales close rate from 20% to 30%. In that case, the coach is probably helping the salesperson increase their income by thousands of dollars!
If you are unclear on the value of your services to the client, ask to meet with your client. During the meeting, ask them what aspect of your freelance work they value the most. If possible, ask them to identify specific metrics (e.g. dollars saved, dollars gained, time saved etc.). When you receive this information, you will have a far better understanding of your value.
4. Are there any other resources you recommend for price increases?
Before consulting additional resources, pause for a moment. Ask yourself if you have used the strategies outlined in this guide. If you have not already applied what you learned here, consulting additional resources may not help.
If you are looking for additional resources on pricing, freelance rate negotiation emails and price increases, take a look at the following books:
- Selling the Price Increase: The Ultimate B2B Field Guide for Raising Prices Without Losing Customers by Jeb Blount
- No B.S. Price Strategy by Dan S. Kennedy
What To Do After You Implement Your Price Increase
Winning your client’s agreement to higher prices is a major success! Follow up that success by implementing your new pricing strategy into your invoices. Using CheckYa for your invoices is smart because you can send invoices and get paid all using one solution. When you save time and effort on invoicing, you have more time to improve your skills and client results. By becoming more valuable, you can keep increasing your prices.
