How to increase rates? How much can rates be raised? How often can one raise rates? Can the referred client be paying higher than the referring client?
The process that most of the freelancer believe in is – grab new clients by lowering the price and with experience raise rates.
This may sound correct but is wrongly executed by most of the new freelancer.
The way it is executed is freelancers starting point of rate is the lowest rate possible. The focus is on the price clients pay in absolute terms than the value a freelancer brings to the table.
Instead of starting at such low rates, start showing expertise in the area you can work and how it can add value.
Show Expertise To Demand Higher Price?
Let me share an example for one of the most competitive niche for freelancing on Upwork – WordPress designs.
Search for WordPress theme designer on Upwork and you will find new freelancers quote an hourly rate as low as $3 per hour. It is $3 per hour not because they value their services at that rate but because that’s the lowest hourly rate allowed in Upwork.
Instead of starting so low, try to create few sample themes and submit it to WordPress templates directory. Once approved you can use those as sample in your portfolio. Themes approved on the official WordPress site under your name can demand an hourly rate much better than the lowest possible price.
Once you have your base price not very low, it becomes a lot easier to increase your rates with experience and expertise.
As a new freelancer, make your presence felt by providing value and not making services cheaper.
Increase Rates Without Clients Going Mad at You?
I increase my rates to new clients and once I have enough new clients at the higher price point, I push the new rates to my old clients.
When I have too much work coming my way, I increase my hourly rates for new clients. When the new price becomes normal, I let my existing clients know about my increase in rate.
Some clients do not agree with an increased rate right at the moment and I offer them staged increase over next few weeks or from the next project onwards.
Make yourself an asset and value for clients that they feel they can’t do things without you and this is when it becomes so much easy to increase rates.
Some clients will refuse to accept it and it is part and parcel of being a freelancer. One of my old client a few years back reduced workload when my hourly rate was increased from $20 to $25 back then. A few days back we had a discussion about his new requirement where he is more than happy to work with me at my current hourly rate which is a lot higher than $25.
How much can you Raise the Rates?
If you want to be a developer at $100 per hour, you can have a tough time finding a lot of work but if you present your services for a complete project management and handle all technical aspect of a project, $100 per hour may not sound that high.
So it all depends on how you value your expertise and how you present your services to clients – An asset and value or a liability and an expense.
Still, if we want to quantify how much you can raise your rates, it should not be too high in percentage terms. An increase from $10 to $15 is only $5 per hour but in percentage terms, it is an increase in 50% which can be a shocker for clients. This is the reason why you should never start with the lowest possible price point and then try to increase from there.
I make sure an increase is never more than 25% for existing clients even if it means a lower hourly rate for existing clients even after the increase.
How often one should Raise Rates?
Not very often. It is better to be increasing rates once than to be doing small increase in amount every month.
If you are increasing rates once and if the client did not prefer to be paying an increased rate, you can offer them to increase in parts on a monthly basis but let your client know of your increased rate in one go is much better than doing it in small tranches.
Can the referred client be paying higher than the referring client?
Yes, and it completely fine.
If your hourly rates have increased and if you are asking clients for reference, you don’t need to work for the new client at the hourly rate you work for your existing one. There is no harm in having more than one hourly rate.
Once you have a higher rate for the new client, your existing client will be more than happy to work with you at lower rates.
It’s quite normal to raise rates. Most clients won’t find it unreasonable but there will be few who will refuse a raise in rates. If you have ample clients at the new rate, you can dictate the decision whether you want to continue working with them at lower rates or not.
Further Reading …