7 Simple Ways to Raise Your Rates and Keep Your Clients

Jan 24 2011 by James Clear | 32 Comments

7 Simple Ways to Raise Your Rates and Keep Your Clients

Raising your rates. It’s something that every freelancer wants to do, but most of us are scared to do. Or at the very least, we’re not sure how to do it.

It’s natural to have questions about rate-raising. Is my work worth more? Will my clients flee at the sight of higher prices? Will I be able to recover if they do go somewhere else?

In truth, these self-doubting questions are merely assumptions. What many freelancers have found is that raising your rates rarely drives clients away. However, most of us never realize this fact simply because we never test it.

With that in mind, here are seven simple strategies to help you raise your rates and earn more – without losing your clients.

1. Prove the Value of Your Service

There is no greater tool for selling services than proof. If you can prove the value and the results that you have delivered to previous clients, then your service will sell itself regardless of price.

How can you showcase your previous results in a compelling way? Leverage the power of numbers and testimonials. People love things that are tangible. Can you get a client to tell you how much money they earned through their site last year? Can you ask for a 30-second video testimonial or two?

Prove your worth to clients and they will happily pay a higher price.

2. Develop a Clear Understanding of Who Your Ideal Client Is

If you know who your ideal client is, then you can easily increase your rates while maintaining your clients.

However, if you are reaching for whatever clients you can find, then it will be very hard to earn more. Taking the shotgun approach and spraying your services all over the place is not only inefficient, it also prevents you from solving specific problems for clients. You want clients to feel like your service was made for them.

Figure out who you are well positioned to serve — be very specific. What type of businesses do they run? What features are they looking for? What is their background in technology like? What would they want to see when hiring a designer or a developer? Tailor your offering to their needs.

If you do that, then you will be able to target a specific niche of clients and charge much, much more.

3. Schedule Your Rate Increases

If you’re not sure how to start charging more, then simply set a rate you are comfortable with and plan to increase it after a specific number of clients.

For example, it could look like the following:

  1. First 7 clients – $40/hr
  2. Next 7 clients – $60/hr
  3. Next 7 clients – $80/hr

If you make these incremental increases a part of your business strategy, then rate-raising becomes a natural part of your business. It also makes it easier to explain to clients (if you choose to do so).

4. Offer Products as Upsells

If you’re wondering, an upsell refers to offering a paying customer a more expensive item, an upgrade, or some other add-on in the hopes that they will buy this additional item.

The standard suggestion is to offer a range of services as an upsell. These items often include special offerings like long-term marketing, design, or website upgrades. These suggestions work well, but they also end up being more work for you.

Instead, think about creating a few products as upsells that clients could purchase and easily implement on their own. These products could be videos, audio, an ebook, or even a physical good. The goal of a product upsell is to put extra cash in your wallet without an extra time commitment.

How do you know what type of product to create? It’s simple. Ask your clients what they want and then make it for them. You already have direct access to the people that will buy your upsell, which means you can easily get all the information you need to create a compelling product.

You’ll be surprised how easy this is. Some people will want to know the basics of typography or the grid system or how to take better pictures or how to get started in Photoshop or how to design their own ebooks or a million other things. All of these ideas would make reasonable products.

5. Charge for Larger Blocks of Time

Instead of thinking about what you charge per hour (or even per project), focus on billing for your time in large chunks.

Take a look at your services and begin selling them in blocks of two, three, or even six months. With an hourly service, you have to constantly sell the next hour of service. With 3-month blocks, you simply sell when you need a new client. Think about how much easier it is to sell yourself if you only have to do it a couple times per year.

Additionally, a natural extension of this format is that some clients will develop long-term projects, which simply allows you to renew these large blocks of time. Furthermore, a shift like this makes it easier for you to state a new, higher price for your services.

Let’s say that previously you were charging $30/hour, but because of time spent finding new clients you were only able to bill for 30 hours per week. This means that over 12 weeks you would net $10,800. However, if you shift to selling your services in 3-month blocks, you could easily change your price to $12,000 (or even more). Not only is this a price increase for you, but it also seems totally reasonable to clients because they are viewing your offering in a different time frame.

As an added bonus, you will free up all sorts of time because instead of always searching for new clients, you only need to focus on "selling" every three months or so. Plus, you can reduce the cash flow issues that many freelancers face because you will receive large payments in advance, which allows for better financial planning and increased stability.

6. Offer Price Tiers

Instead of trying to figure all of this out in your head, let your clients decide for you. I suggest using price tiers to test what the market is willing to pay or to build your confidence in charging more.

Price Tier Example:

Let’s say that right now you charge $80/hour regardless of the job.

Instead, you could offer a basic service for $80/hour, the basic package plus a small addition for $100/hour, and all of the bells and whistles for $120/hour.

You will be shocked by how often clients go for the higher priced services.

The beauty of having different price tiers is that it shifts the client’s mindset from, "Should I pay you at all?" to "What price should I pay you?"

Obviously, you don’t have to charge hourly to make this work. Setting price tiers for projects or long-term work is just as useful.

7. Change Your Philosophy

Your rate is determined by the value you provide and the results that you bring, not by how you feel about it. Abandon your emotional attachment to the price that you charge. Raising rates is a natural part of business.

You’re more experienced today than you were yesterday, right? Well, then you have the right to charge more because you are bringing more value to your clients. The price of goods and services all over the world continue to increase as time goes on. It’s the way business works, and your business should be no different.

Even if you put just one of these ideas into practice you can start earning more tomorrow. Change your philosophy and begin taking steps towards earning more.

What have been your most successful rate raising strategies? I would love to hear from you in the comments.

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About the Author

James Clear is the founder of Passive Panda, a site about earning more money, more time, and more freedom. Join Passive Panda’s Free Newsletter on Earning More to receive the 7-part Freelancing 101 Course and proven tips for earning more. Connect with Passive Panda on Facebook.

32 Comments

Marios

January 24th, 2011

Its much easier to increase your rates if you have many projects and are confident about your work. Most clients will not leave because of the price hike. Don’t sell yourself short.

Shannon

January 24th, 2011

Tiered pricing seems like an odd choice… basically it means you’re undercutting yourself when you accept work at the “basic” service rate. Plus, that extra service requires more time, so the client would be charged both for better service and the longer time it takes. But if you charge by the project, then yes, tired pricing is the way to go.

Stephan

January 24th, 2011

great article! I’ve begun to use the approaches you outlined and have to say it’s much easier to charge more money for projects than it used to be. The different price tiers for various services helps, and you can use it for discounts too (“normally we charge $50/hr for this type of higher-end project, but since you’re a non-profit we’ll bill this at our regular rate of $40/hr”).

I’ve found, as I develop a ‘suite’ of scripts and products that I can install on clients’ websites, charging them for the script itself instead of an hourly rate is easier for them to process: it becomes an issue of whether the amount of money it costs to install that feature is worth the benefit they are getting out of it.

Another tip is to get as accurate as possible with your scope of work and proposals…the extra work on the front-side will make you much more profitable when you’re actually doing the work.

Nicole

January 24th, 2011

I recently increased my rates and the hardest part is explaining to non-technical people that my work is of the “best practices” of web development and the best SEO I can muster. I’ve definitely improved which is why I raised my rates a bit, but not many people understand the real value of what they would be getting from me.

Akhil

January 24th, 2011

I like the article, for sure it brings new ideas to the table to accomplish what we all wanna do (raising the rates :)).

This is what i do.
Whether you`re already working on a longterm project or about to start a new one.
Its always good to tell your client about the increments.
you can ask for a particular percent of raise after a significant amount of working hours. i.e. 10% raise after a 100 hours or so.

But if your current project is short tmer, dont risk your client by raising the charges instead complete the project on the same amount you agreed before and for any new client you can charge higher.

If any of your old clients comes along in the future, you can ask him to hire you on the raised charges with a brief explanation about why you have raised.

Scheduling your rate increases could go hand in hand.

Thanks for sharing the great article.

Hannah Hurst

January 24th, 2011

This is a great article to read. I think increasing your prices is a good idea but you are only able to do that when you have the proof behind you that you are capable of doing the job and doing it well. I think the best way to do this is to encourage your clients to write testimonials and maybe send out a questionnaire to your clients to see what you can improve about your business.

I think keeping in touch with old clients will also build a good relationship and they would be more than happy to recommend you to others which in turn will increase your custom and allow you to raise your business prices.

James Clear

January 24th, 2011

Shannon – Excellent points. If you are already comfortable with charging higher prices, then setting different price tiers may not be necessary. For someone that is apprehensive about charging more, however, it could make the jump easier to handle.

Nicole – What you’re describing is a typical problem for “technical” freelancers, entrepreneurs, etc. My suggestion would be to tell the story of what your improved services can do. For example, rather than focusing on the idea that your provide the “best practices of SEO”, tell a story of how your work impacted the client. It’s easier for non-technical types to relate to tangible stories and results, than it is to educate them about the technical aspects of your work. Oh, and the more specific you can be with the results you provide, the better.

chris

January 24th, 2011

Great article. I generally raise rates every year or so (to adjust with inflation.) and have not had any repercussions. Most of my new clients are based on word of mouth. To me it’s all about taking care of the customer and it goes back to the old ‘You get what you pay for.’ My rates may be slightly higher but my clients needs will be addressed, pre and post project. I break down projects in phases (Since most people want it all…now) and show itemized costs for each phase. That way they can still get a great offering with the ability to add the bells and whistles.

Vivek Parmar

January 24th, 2011

Great article, its really too tough to increase rates. For beginners like me i have no pertfolio but have enough knowledge of WordPress at advance level but didn’t find clients to whom i offer my services as i have no portfolio.

Second thing i like to add it becomes easy for you if you 20 or 20+ portfolio or testimonals and you can charge simply any amount of money because you have enough work behind you which shows excellence of what you are master of

Daquan Wright

January 24th, 2011

Great article, just what the doctor ordered! :D

Pricing is something I think about, since my blog and portfolio will be established soon enough. I’m already developing an application for somebody and that will be my first project. I like the idea of tier pricing per project and raising rates based on your progression of projects.

I’m really interested in content management theming and development and believe I want that to be my “niche.” Joomla/Drupal/Wordpress/possibly Express Engine, etc. Though I also like developing applications from scratch, maybe I could have different pricing based on which project a client wants.

Anyway, I got lots of thinking to do. Keep posting great articles.

Patrick

January 25th, 2011

I’d like to learn more about the philosophy of billing in blocks of time. Who’s successfully using this method?

Thanks, great article!

Tri

January 25th, 2011

In the past I have had a schedule rate of increase from client to client, but these other ideas are very useful especially up selling other products. Great article!

Kerry Richardson

January 25th, 2011

I agree with Chris wholey. We charge a premium rate, but you get absolute value because we can pack a huge amount into an hour. What we do is very good quality and we have been doing this for a long time so we can be very quick. Our clients love us because we deliver very quickly and always within spec. Also, our customer service is second to non, changes are often made the same day where possible. These USP’s will make you stand out in a croud and mean that you can charge a little more.

John McDuffie

January 25th, 2011

Your methods makes more sense than my current model. Now to teach an old dog new tricks.

Cat Lady

January 25th, 2011

This is definitely an interesting article…I freelance here and there to update my portfolio, and I’ve often wondered how in the world would I raise my rates if my situation were to change and I had to freelance full time. I charge by project versus hourly because it allows my clients to easily pay for a project over time – they have to sign off on the next phase by prepaying. This method has actually worked the best for me since I’ve tried hourly and giving clients 30 days to pay…does anyone have any tips that worked for them raising flat rates?

Barry

January 25th, 2011

When I first started, I was timid about charging what I thought the work was worth. I find most freelancers undercharge initially. As my client base built up, I upped my fees and not a word in negative fashion by my clients. I’m fair and I’m worth what I charge. This article was very good at teaching how to do it. Thanks.

Zeeshan Rasool

January 26th, 2011

We found this type of articles very rarely. thanks for sharing such information :)

Okyere Adu-Gyamfi

January 26th, 2011

great article, I believe it is better to plan rate increase well in advance with an accompanying reason for the hike.

Stephen Tiano

January 26th, 2011

I’m not a fan of tiered rates for work. As a book designer, for instance, would I say, “Okay, this is the minimal rate. For that you get an unimaginative layout with knock-off fonts and no thought to whether they fit the material”? I don’t think so. Would I do that without saying, couching it some other b.s.?

I see my job, the health of my professional reputation, and the growth of my book design practice based on doing the best work I can for fair but professional prices.

One of the pitfalls when bloggers follow marketing gurus’ advice to use buzzwords like “___ Ways to [Whatever]” is that we get how-tos from, essentially, marketers of marketing, instead of folks making honest-to-God livings from what they’re offering advice about.

That’s not to say that higher rather than bargain basement rates aren’t wiser over the long haul. It’s just that generic advice isn’t going to help someone become a productive freelancer.

Freelancing is work. A solid 50% of it is promoting yourself and your skills. It’s a long-term endeavor. No numbered list of methods will short-cut the process.

Rishi

January 26th, 2011

That’s a great approach. Personally, my rates started out pretty high because of my experience as an in-house marketer/designer, but this has all the right ways to subtly increase rates.

Pracas Upreti

January 26th, 2011

James ! Im mostly agreed with the 2nd view , as per as my very own personal thinking, the price increases due to more experienced and also pending projects, it also depends upon the client and quality.

Bob

January 27th, 2011

Well it’s alright for you to be Clear about this ;)

Thanks for the article, now to find that client

Josh Bedo

January 28th, 2011

Very informative was a great article to read, though I think tier pricing would scare more customers away then attract it basically is like saying for cheaper I can do crappy work that may be buggy and not work in certain browsers or resolutions.

James Clear

January 28th, 2011

@Stephen – Excellent points. You bring up a very important issue and that is that freelancing is real work and it requires real action. There is, of course, no shortcut.

In response to your comments on using tiered rates, I was suggesting it as a way to build confidence in charging more. Your point on offering a client an “unimaginative layout” for a minimal rate is well taken and an excellent addition to the conversation.

Please, let me know how I can make my next article more helpful for you.

@Rishi, @Pracas, @Bob – Thanks! I’m glad you enjoyed the article. Let me know what else you would like to hear about in the future.

Cheers!
James

cliff

January 29th, 2011

Great Article. Gave me some confidence on what to charge when I break out into freelancing as a 100% full time job.

Delia

January 30th, 2011

My rates increases are nearly all for my newest customers and that rate has almost doubled in the past year due to a new business model. My old customers have been getting tiny rate increases here and there but I’m now aiming at a different class of client. I’m not getting rid of my old clients – many of whom are now my friends and depend on me. I have just instituted a “support” program with a fixed monthly rate to make it more possible to service those clients who are only needing me for small bits of time anyway. I’ve never liked the maintenance concept before but it now seems to be the answer to a dilemma for me.

Quevin

January 30th, 2011

Along with rate increases, improve your business systems to reflect your growth as well.

Instead of untracked email correspondence with clients, perhaps it’s time to use a system to manage all requests. Basecamp is a start. Plus, a project management system becomes crucial for projects that take more than a few days. When multiple projects are in the queue, it becomes more difficult to manage tasks and priorities without PM software. And hiring someone dedicated to managing projects lets you focus more time on billable tasks. This helps show each client that their project is a priority, and it’s being managed professionally. There are more reasons to justify the rates this way, aside from the fact that you’re a professional with legitimate experience doing whatever it is you do.

Nick

January 30th, 2011

Great post, and some new insights for me to use. Particularly liked the rising scale as new clients come on board. A couple of extras for you all:

- don’t make your chargeout rate an ‘easy’ number like $80 or $95, it’s hard to shift from these ‘landings’. Make it $82, and shifting to $86 or $91 will be a lot easier as it seems that such a ‘random’ shift must have a reason, not ust be an arbitrary price rise.

- in conjunction with the above, I let all clients know that my prices will rise by 5% every year to cover inflation, rising costs, etc. If nothing else, it stops you getting five years down the track and working for less, and I’ve never had a client complain when I’m just trying to keep up with the cost of living.

Cheers.

Maddy — Wonderful Media

January 30th, 2011

@Stephen: I find that tiered rates work well for both my clients and myself. Not tiered rates in hourly pricing, as described in this article. I’m referring to tiered rates in project pricing.

For example:
Book Design (1 concept): $X. Additional $W/hour for revisions.
Book Design (1 concept) with up to 3 rounds of revisions: $Y
Book Design (3 initial concepts) with up to 3 rounds of revisions for chosen concept: $Z

Juan ulloa

January 30th, 2011

Great article. I wanted to add my $.02 on the tiered pricing. One common example of tiered pricing is charging a different rate for designing/developing a site than making content updates (that the client can do a you probably would prefer to be designing) and emergency work (like dealing with a website going down or something the client thinks is really important).

Red

January 31st, 2011

as always quality advice from SR. I have to say guys you should start running seminars :D

Susan Elcox

February 4th, 2011

That information is extremely useful. Thanks for the post.

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