I Raised My Rates and This is What Happened

I recently discovered a site called PeoplePerHour. It is a site where you can buy and sell freelance work similar to UpWork or Guru. I posted a few ads and had a little luck here and there, mostly through referrals. On the site, you have the option to “feature” your profile. I was thinking about giving it a try because the site claims you’ll get three times more work if you do it. I was a little skeptical, but I decided to go for it.

 

I did a little thinking beforehand and I decided if I was going to pay to feature my profile, I might as well capitalize on the situation so I doubled my rates on all the jobs I was offering. For about a day, nothing happened and I was beginning to think I had wasted my money. Then, I got an offer. It wasn’t just any offer either. The client wanted me to write a 15k word e-book for him and was more than willing to pay my higher rates. I was only offering to write a 5k word e-book, so he’d not only be paying the higher rate, he’d be buying my service 3 times.

 

For some reason, this really surprised me even though I’d heard it time and again that you should be charging what you are actually worth, not what you think people want to pay. It turns out that statement is very true. I started getting more and more people inquiring about my jobs. I now have more customers than I had at the lower rates.

 

I suppose the takeaway is that people are willing to pay for value or at least perceived value. If you are grossly undervaluing your services, others will believe that they aren’t worth paying for.

Lesson learned.

 

So what should you do before you price your services?

  • Check out what others are charging. Even if it seems like they are charging something outrageous, they are the ones getting business and you are getting the culls. I’m not suggesting you price yourself out of the market, just stay competitive.

 

  • Evaluate the cost of doing business and the cost of living. This needs to be factored into your hourly rate as well. Say your co-working space costs $500 a month, your website costs $50 and the rest of your work-related expenses run you about $200. Add those things up: 500+50+200= $750. Now divide that by how many days you plan to work a month let’s say you work 4 days a week every week of the month so 16 days. 750/16= 46.875 let’s round it up to $47. That is how much money you need to make each day to break even on your business expenses. Which means you aren’t even turning a profit at this point. In order to figure out how much that is an hour divide 47 by how many hours a day you’ll be working, how about 6? So, 47/6= 7.83. Now you know that it costs you $7.83 an hour to do business, you’ll need to factor that into your hourly rate.I know it seems like a lot of work, but you really need to know upfront how much you need to make a day to turn a profit. This isn’t even factoring in how much you need to make to actually pay all your bills! It is just one of the things you need to consider. The same thing applies to the cost of living. Add up the total amount of all your bills. Then do the rest of the math. For the sake of the example, we’ll say the cost of living and doing business are the same. So, in order to just survive you’ll need to make $15.66 an hour.

 

  • Don’t forget to consider your savings, retirement and the monthly cost of your healthcare when you add up the cost of living. If you want to find out more about your options for healthcare or retirement check out The Freelancer’s Union. I highly suggest you become a member as well(don’t worry, it’s free!).

 

  • Obviously, if you’ve been freelancing for a while, you’ll already have clients paying the lower rates. The “I’m raising my rates” conversation isn’t always easy, but if you are consistently providing them excellent service, they will more than likely be willing to pay the higher rates. You could say “I’m going to be raising my rates from XXX to XXX effective [date], but I’ll extend the lower rate for you until [date] because I value our excellent working relationship.” If they aren’t willing to pay the higher rate then it is best you fill that spot with someone who will. Especially if you are already struggling to pay your bills at your current rate.

 

I hope you’ve found this information useful. I know asking for more money can seem like a daunting task, but don’t let it keep you from making what you’re worth! Remember that there are a lot of factors at play, and just because you’ve always charged one amount doesn’t mean it has to stay that amount forever. Just like in any other business, when you gain more experience, you make more money(but you have to ask for it!). The cost of living and the cost of doing business generally don’t get cheaper, they only get higher, so you need to adjust accordingly. There is one other thing I want you to remember, be confident in your decision! Don’t let hagglers try to talk you down. You don’t owe anybody an explanation as to why you’re raising your rates. If they ask, just remind them that you’ve consistently provided them with excellent service and just like any other employee, you deserve a raise. The only difference is, you get to give it to yourself!

 

Had a similar experience? Tell me about it below!

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