Advanced Freelancing - Freelancers Guide to Raising Your Rates-EP091

Freelancers Guide to Raising Your Rates-EP091

12/09/19 • 22 min

Welcome back to another episode of the advanced freelancing podcast. This episode is being recorded towards the end of 2019 with this particular topic because it tends to come up halfway through the year and at the end of year mark. But it's a hot button topic all year round. And it's all about raising your rates.

Freelancers often, and I'm just going to put it bluntly, overthink the concept of setting their rates or raising their rate. And that idea of overthinking puts you in an almost paralyzed mode, where it's really difficult to communicate to your prospective clients, and your current clients about what it really means with you raising your rates.

My strategies and the psychology behind raising your rates.

So many people get stuck with the concept of rates because they know that in raising their rates, there's always the possibility that you could lose clients. This is something that's important to acknowledge. Because going into it knowing that means you need to run the numbers behind the scenes. And make sure that this is really a good fit for you to raise your rates, especially if it's going to impact multiple clients. And there's a possibility that one or more of those clients is going to say, “No.” Now, if your clients are thrilled with your work and your rate increase is moderate, it shouldn't be that big of an issue. Especially if you have not raised your rates in a long time, or ever.

A couple of years ago, I was in the midst of a rate negotiation, where it was actually a sad story. I was partnered with a gentleman who ran a company. He was the one who hired me. We worked together for 18 months, and he passed away. So the business passed on to another employee in the company. And for the longest time, I didn't raise my rates.

For one, they were decent rates to begin with. The work was easy and very consistent. I wanted to be sensitive to the fact that this business was going through a tremendous amount of transition. And I didn't want to hit them out of nowhere.

Well, honestly two entire years went by, where I didn't raise my rate. Then I proposed a very modest rate increase to this client. Of course, this wasn't the person I'd started working with. And this wasn't an employee I had too much of a relationship with. So it was definitely a harder point to negotiate from. And their immediate response was to try to push my rate increase down. So not down to where it was, but like a compromise almost like we were negotiating a salary. So we're going to arrive at somewhere in the middle.

So I chose not to stay at that negotiated point in the middle. I informed them about the situation. So I explained that I had started working with them, when I first began my freelance business. And that I'm very grateful for the work and I love doing it. I then explained that as a result of getting more experience and learning more about search engine optimization and blogging, my pieces are now more effective than ever, and I've never actually raised my rates with them. So, that was one of these many great examples of something I talk about all the time.

Everything is negotiable.

Do not assume that if a client pushes back, you don't have any wiggle room unless they come back at you with something and say, “This is a hard line. There's no room to negotiate here.” But I knew, even in my client writing me back and hinting that they’d like to push this down a little bit because they felt like it's a little bit high of a rate increase, I knew I had already made that decision in my head that I might lose the client.

So I knew that and I decided that at that point in time, it was more important for me to hold to my new rates. It was more than reasonable that I had let two years go by, and don't make that mistake. And ultimately, the client decided to stick with me and with the new rates as well. It was also very important, not just for that one time, but for training them about what they can expect with regard to me requesting rate increases in the future. So I was almost training them to prepare them for the possibility that just because we've locked in at one rate doesn't mean we're going to stick with that forever.

So the second concept that comes up a lot with regard to rates is how often you should raise your raise.

Now, this is one of those famous answers. It depends. There's a lot of factors to take into consideration here about when you should raise your rates. I believe that all other things held equal. So nothing else is changing in your business, except for the fact that you've been doing something longer. Every six months, you should be taking a look at your rates. You should be seeing your quarterly numbers for tax purposes and business planning purposes.

So a really good metric to tell if it's time to raise your rates is one at least six months has passed and you've been fully booked or close to fully booked. That means that you a...

My strategies and the psychology behind raising your rates.

Everything is negotiable.

So the second concept that comes up a lot with regard to rates is how often you should raise your raise.

So a really good metric to tell if it's time to raise your rates is one at least six months has passed and you've been fully booked or close to fully booked. That means that you a...

Previous Episode

Get Out of Your Home Office and to the Freelance Conference in 2020 with Emily Leach!-EP090

Welcome back to another episode of the advanced freelancing Podcast. I am very excited about my guest today. I wish I had discovered her and everything that she's doing much sooner. And that's part of the reason I wanted to have her on the show! I wanted to introduce her to all of you.

Meet Emily Leach, Founder of Freelance Conference

Emily has been in the freelance space since 1992, which is kind of a long time in this particular business style. It has given her a really amazing life. She was a single mom. She shared that it's tough to go to work all day and then get home and be able to spend time with your child. In her case it was hard to feel like she was really there and present because she was tired.

Emily said she stumbled across freelancing. She thinks that’s what a lot of people have done unless you've been freelancing only for the last few years or so. But if you've been freelancing for 10 years or more, you most likely stumbled into it. And that's what happened with her.

After a couple of years, she realized that it was great. She can be at home. When her son needs something at school, she can go and do it. She can be here when he gets home. And she can be here when he leaves for school. She also got to travel and do some volunteer work. It just allowed her the flexibility to still have a life.

What kind of freelance projects were you working on back when you first started?

She first started in the engineering space. So she did Computer Aided drafting. She was an engineering designer as well. So it was actually quite easy. And in that particular space, the hardest part was that computers are really, really expensive. The software was really expensive. But it didn't take too long before you could afford that. It did allow her a lot of flexibility. So being in that civil environmental space, she got to do what she loved. And she gets to migrate into other careers.

Emily shared that she also sees this in a lot of freelance business owners, were after about five or 10 years of doing a specific task skill, they kind of want to move on. Not everybody, but a lot. She thinks it's a nature of who we are as humans. And she thinks that when you work for somebody, you get that opportunity. Usually after about three to five years, you get an opportunity to advance into or move to a different group within a company. And that's sort of a missing piece and freelancing unless you make it yourself.

That's such a great point. I can't tell you how many times this comes up with the freelancers that I coach one on one.

A lot of them are writers, but it happens across the board. As Emily mentioned, you do something and you learn everything there is to know about it. Then, you take it about as far as it can go as a freelancer. And then you kind of go, “Okay, what next? Maybe I don't want to write all day. And maybe I don't want to work for this particular group of clients anymore.” So people are wondering what the next real challenge? Because it's not necessarily that you're moving on from something because it's unsuccessful. In a lot of cases, it's actually that it's been very successful. But there's that other missing piece component to it.

How did Emily evolve from freelancer doing projects for clients into the different things that she’s been doing since then bring awareness to freelancing and to really build a community around it?

Emily shared that this also happened by accident. After a couple years, after she moved to Austin, she was approached by a friend/colleague to create a group on Facebook called Austin Freelance Gigs. And that's what they ended up calling it. She really enjoyed the concept of helping other fellow freelance peers connect to work.

You can't do everything that comes to comes to you either. Because you don't have the skill or the time, or the clients not a good match. There's tons of reasons why work continually gets passed off to someone else, or passed up. So if you had a network of people that you trusted, knew well, and you knew that when you pass them off the client was going to be treated well, then you may even work out a deal where you know you charge a finder's fee for making the introduction. That happens a lot. Then it's so much easier for all of us to get the work that we really love to do.

Emily shared that this is a little off topic, but that's still where everything started. When they started that group, it grew really fast. So to Emily, she was expecting to start the group and in about three or four months, she’d have 25 people. And she had 25 people by lunch. By the end of that week, they had 300 people. And in a few months, they had almost 1000 people. And what she loved about the group was not only that she got to really play in that space that felt like it was going to be wonderful, and sure enough was by helping freelance business owners find work and connect to each other, but they started to ask each...

Next Episode

Is Honesty the Best Policy in Firing Freelance Clients?-EP092

Should you really be honest when firing freelance clients? Does it make sense to tell someone up front that their management style is terrible or that you've really hated working on the project? You're going to learn more in this episode of the Advanced Freelancing podcast. And you’re going to learn all about when it makes sense to be upfront and honest with someone and when it's really better to just cut ties professionally.

Anytime you butt up against a problem with a potential or current freelance client, it's always good to make at least one effort to try to fix the issue before you elevate things to the level of firing them.

Occasionally, you can correct a client who has terrible habits or just doesn't know any better. I always assume at the outset of working with a new freelance client that they might not have a lot of experience working with freelancers, or with working with somebody like me. So I'm going to give them the benefit of the doubt and try to train them the correct way to interact with me.

A great example would be the client who emails you way too much. Before simply outright firing them because they're sending you so many emails, I'm going to bring up the fact that receiving so many emails in a day is really challenging for me. And it's hard for me to stay on top of that and keep everything in one place. I might even wait several hours or over a day to answer all of their emails and respond and only one message. I will simply copy and paste each question that they asked or concern that they shared into one email.

The purpose of that is to show them that it's really inefficient to send me so many messages. And that since I often check my email a few times a day, it becomes very overwhelming. I might miss a message that was sent an hour before. I've also done this with clients by replying to them the following day and saying I didn't see your message because I was already out of office, if they sent it at eight o'clock at night. My purpose here is to clarify what my boundaries are and to let them know this is something they probably shouldn't do in the future unless they want a similar result.

Same thing with team members of my own freelance subcontractors. Maybe send me multiple emails about the same thing. I'll try to explain to them, “Hey, this actually confuses me. If you send an invoice and then an invoice reminder two days later, when you know that the payment only comes every other Friday, that just creates confusion for me and for the bookkeeper. So please don't do that because it could actually lead to your invoice not being paid, because we think that we've received multiple duplicates.” So always make the effort to try to fix things first before firing a client.

But knowing when it's really time to fire your freelance clients, you know it in your gut.

You feel it. You've already imagined life without having to be on the phone with them, working on their projects, and talking to them over email. And you've already imagined how blissful life would be without it. You found yourself procrastinating on their projects or taking it really personally when you get feedback. This is a clear sign that if you've made the effort to try to fix things, or if there's a rigid personality here that isn't going to change that it's time to let them go.

I started working with a client early in 2019 that had a lot of projects for me. But the personality of the person that I was interacting with on their team was really abrasive. Now the first piece of advice that I got actually from my husband was to consider where this person was from. He said, “You know, this is someone who's working as a corporate executive in New York. They talk quickly and they're more aggressive. It's part of the New York personality. So let's give this person a chance and see if they're going to change.”

And so we had a couple of difficult conversations with the way that they were providing feedback and trying to get me to do things at all hours of the day. And eventually, I called this person out on the phone and said, “I'm very uncomfortable with the way you're speaking to me. I've never had a client talk to me like this. I'd really prefer if we never have a conversation like this again. These are my boundaries and my expectations.” That was my effort to try to fix things and make sure that I wasn't misinterpreted. And when the behavior continued after that, it was a great opportunity to cut ties. So sometimes it really is better to fire freelance clients.

You heard in the past episode, if you've listened to that, that it's one of the two things that I think is very important when you're scaling your freelance business.

Knowing who to fire and who not to take on to begin with, in addition with some other components of running your freelance business is so important. So that idea of knowing who not to work with is key. It's very important for scaling your freelanc...