How To Raise Your Freelance Rates So Clients Happily Say Yes To A Fee Increase

Learn to recognize signals that you're undercharging and overdelivering and discover how to structure and communicate rate increases with existing clients.

Woman Holding Fan Of Cash For Raise Your Freelance Rates

There comes a time, or several times, in a freelancer’s career where it becomes painfully obvious that the rates charged are too low for the amount, quality, and level of value delivered. It’s not purposeful but a situation reached over time. As skillsets improve and knowledge bases grow, naturally, the work provided to clients evolves and expands, often without properly realigning the baseline package and project pricing.

Three signals your freelance business is undercharging for projects are:

  1. Everyone says yes and you have nearly a 100% close rate
  2. You are too busy and have too much work
  3. Your hourly rate per project is decreasing

You’ll also notice that certain high-maintenance clients feel less worth the hassle because of their low-profit margin and your own daydreams of working with fewer clients that have larger budgets show up more often.

One point of clarification:

I’m talking about situations where you must raise your rates because it makes sense and it will work for your business. It doesn’t make sense to raise your rates for the same services if no value has been added or you simply want to make more money or make as much as someone else. There needs to be a legitimate reason to increase fees—one that benefits your clients.

Simple Ways To Structure A Price Increase

If you are ready to raise your rates, the first thing you need to do is outline what your new rates will be and what the structure of the rate increase will be.

If you’re overdelivering and undercharging, but aren’t sure how much to raise your rates:

  • Review your timesheets and add up exactly how much time you are spending on each project.
  • Compare the hours worked on a project with the price of the project to see how much you’re actually making per hour.
  • If the total is less than your target hourly rate, the amount you need to raise your rates is the amount it will take to get you to your target hourly rate.

If you’re clear on what your new fees must be, but aren’t sure how to justify them to existing clients, consider these options:

  • Add value to your current service offerings with bonuses, checklists, templates, tools, and resources that don’t negatively affect your bottom line or create extra work for you or your team.
  • Reevaluate your hourly billing. When doing hourly work, you can’t only charge for your time to do the work. You must also build administrative time, project management, client management, overhead, and profit margin into your rate.
  • Charge by the project, not by the hour. Charging only by the hour punishes experts who are experienced and efficient. You shouldn’t get paid less just because you’re fast. Charging by the project rewards you for your efficiency by keeping the price focused on the overall value delivered.

It’s also a great idea to talk to your clients ahead of time.

Reach out and ask the client how things are going, what can be improved, and where you could provide more support. When clients tell you what they want or how you can improve, work those things into your new packages. This way when you raise your rates, you can also deliver the added services your clients asked for and have said they want.

How To Communicate Your Price Increase

Once you are set on what services will receive rate increases, how much you are going to raise your rates, and what is changing to justify those new higher rates, it’s time you communicate the changes in pricing. With new clients, this is easy because in most cases, they are unaware of your previous pricing. But telling existing clients that your rates are increasing can be stressful because you are going to lose some clients — and that’s okay.

Losing clients as your freelance business grows is normal and to be expected.

The clients who were a perfect fit when you were just getting started are most likely not going to be perfect clients for the entirety of your business, especially when you uplevel your services and the value you include. Losing clients who are no longer a fit simply makes space for new clients in your niche who need what you have to offer.

With that said, let’s be real… The goal should be to raise your rates with as many current clients as possible saying, “No problem!” Here are four steps to take when communicating your freelance rate increase to your existing clients to do just that:

1. Communicate Your Price Increase

The very first step is reaching out to your clients to let them know about your rate increase and the important details that matter, like how much the rate increase will be, why the rate is increasing, what is included with the increase, and when it goes into effect.

The biggest thing to remember when speaking to your clients about your new rates is that you need to justify the new rates and make them worth it. You can’t just sell them the exact same thing at a higher price and expect them to be happy about it!

Sharing the value of your new package or offer should be easy:

  • If you did your homework and spoke to your clients in advance to find out what they want most, make sure their wishlist items are included with the rate increase. They’ll be thrilled you listened to them and made changes to better serve them.
  • If you added value to your service offering, you simply need to share the extra benefits they will enjoy as a result of the new pricing and service offering.

2. Reward Long-Term Client Loyalty

Loyalty programs are proven to generate more sales and keep customers coming back because special perks and rewards make customers feel valued and appreciated. The same strategy works in client services too. Rewarding existing clients for their loyalty generates positive, warm feelings about your relationship, services, and fees.

As a freelancer, you too can reward clients for their loyalty:

  • Use a special rate.
    Consider lowering the price increase for existing clients — a special lower rate is a great way to thank them for their continued business.
  • Provide a grace period.
    Often, clients are working with planned budgets established far before you decided to increase rates. Make it easier for existing clients to transition to new rates by giving them extra time.
  • Create a new package.
    Some of your favorite existing clients may not be ready or able to continue working with you at your new rates. Do you have to kick them to the curb? No! Consider creating a new package with fewer features or more automation that allows them to stay at the same investment level.

3. Understand Their Obstacles

When communicating a rate increase, the biggest fear is that clients will get mad or be angry about being forced to pay a higher fee.

The reality is that if you’re honest and upfront, you give them time to prepare and adjust, and the increase reflects the added value and better service, most clients will understand and support you. That doesn’t mean, however, that every client will say yes.

Think of it this way: The clients you lose represent your past and where you have been and the clients you gain represent where you are going and the vision you carry for your business.

One of three things will happen when you share higher rates:

  • Clients happily say yes.
    These clients see your value clearly and are happy to pay your new rates. Some may even respond with, “It’s about time,” because they know you have been undercharging for the value you deliver.
  • Clients struggle to make a decision.
    These clients are unsure of whether to say yes or no because they lack clarity. In their head, they’re wrestling with logic because they don’t clearly see the ROI. In their heart, they’re wrestling with emotion, because the rate increase feels unfair or frustrating. In most cases, you can help them make a decision that feels right for their business.
  • Clients say no and move on.
    When clients refuse your new pricing, they either can’t afford it or don’t think it is worth the higher investment. You could work to convince these clients of your value, but what you really need to ask yourself is whether these are the clients that will help your business grow and help you reach your goals.

4. Provide Alternate Options

If clients decide to no longer work with you after your rate increase, support them in their decision. They trusted you enough to hire you and give you their business, now it’s your turn to pay it forward and help them transition to another provider.

Don’t leave clients hanging who aren’t sticking with you, instead:

  • Offer to provide referrals, and even personal introductions, to other services providers who would be a great fit.
  • Help with the transition to the new service provider and be available for a short period of time to answer questions.

The Truth About Your Rates

If you’re not getting pushback and losing potential projects because of your prices, then your prices are too low.

If you have a 90-100% close rate on new projects, you are undercharging for the value you deliver and your prospects know it — savvy clients recognize a steal when they see it, and that “fast yes” signals pricing below what it should be.

Your pricing should:

  • Make perfect-fit clients who see your value and recognize your worth say yes
  • Make potential great clients think about it, stretch a little, and spend more
  • Make clients who aren’t a great fit say no

A no doesn’t mean they don’t like you or think you’re not very good. It simply means they are a better fit for another service provider and they are granting you the space to accept a new client who is a better fit.

Aim for a 50-60% close rate to ensure you’re operating at the highest level of profitability. Working with fewer clients at higher rates means you will have the margin needed to work with less distraction and provide remarkable client service that turns clients into fans who refer more business your way.

Still nervous about raising your rates? Don’t be!

Your clients aren’t going to get mad at you for doing well, improving your skills, delivering more value, and growing your business. Those who stop being a fit for your services may feel frustrated or bummed out for a bit, but they won’t be mad at you. There’s a higher likelihood that they’ll be happy for you, excited for you, and grateful for your support to help them transition to another provider with ease.

Raising rates is not as scary as it seems, I promise. The first conversation is the hardest… after that, it gets easier.

You’ve totally got this.