Ask Christa! How Do I Raise My Freelance Rates (without chickening out!)? (S1E7)

Hi everyone and welcome to Ask Christa the place where you can ask questions about how to work through business challenges and workplace issues. I'm Christa Dhimo and today's question is, “what advice do you have for starting a conversation about raising my freelance rates and how can I not chicken out from having it?” 

This is a double-barrel question, which means there are two different, even if related, concepts put together into one question, so I'm going to address them in two parts. 

But first, let's agree on how we're framing the questions because both have one thing in common, raising your business rates. That is a business decision, not a personal one. Even if you are a solopreneur and especially if you consider yourself a freelancer, the conversation starts with what you offer and that's about your business. So the first question is how to start the conversation about raising your rates.

And that's a great way to begin thinking about it: starting the conversation. 

Raising your rates is a change and you and your client will need some time to transition. You can learn more from episode four, adapting to change as a superpower, a little plug there. I'm saying you'll need the transition time too because most solopreneurs and freelancers get their work through their relationships and by word of mouth. And any change in how you do business will feel disruptive even when raising your rates, or perhaps especially when raising your rates, because you don't take your clients for granted. 

At the same time, you can't take yourself for granted either. As always, the first step is about your mindset. How do you think about raising your rates? Are you seeing this as a raise, like how you would if you were a full-time employee? Or are you seeing this as raising your rates?

They may have similar outcomes, but they are different. 

As a freelancer, you're not an employee per se, and your client isn't your boss per se. And your business decisions will be based on the totality of what it takes to run a business. Just because you're freelancing as a solopreneur doesn't mean you're not a business. Your rates are based on the impact you make or the value you bring and how you keep up your momentum.

It's also based on how you're growing, how you're expanding to offer more and more, and also what the market rates are. The market shifts and you need fair rates, right? So as I'm talking about you being a business, I want you to change your mindset. You are a business and this is a business decision. Start there. 

You may be asking how to start the discussion about raising your rates, but it might feel more comfortable to start a discussion about adjusting your rates, and the way you frame it can relieve some of the money talk as you shift that mindset into thinking of yourself more as a business. 

Adjusting your rates is a business decision based on different factors so that you can continue providing the products and services you provide to your clients. Increased rates enable development and growth back into your business. It is only you, but that doesn't mean you don't deliver like a full team.

You probably do deliver like a full team, and yet you're a party of one, and that's part of the discomfort. And that leads me to my second point. After changing your mindset and offering a little more comfort in an uncomfortable situation, it's important to know your worth so you can strengthen that mindset and be prepared to have an evidence-based discussion about it first. 

For example, what do you deliver and how do you deliver it? Do you deliver and make your client's life easier too? Are you always slightly ahead of anticipating their needs? Are you that team member who offers value beyond the deliverables? And since you began working with them, what have you learned? How have you grown that has established a better service that you provide to them-- new skills and experiences you're bringing to them? 

If you didn't know them today and they were brand new, what would you charge them now versus what you began charging them before you were thinking about raising your rates. 

All of those points showcase the value you bring to your client and the level from which you work. And this is not to argue or defend your position in preparation for starting the discussion. On the contrary, it's so you can have a positive discussion about what you love to do, how you love to do it, and how much you want to continue providing the service or products to your clients that you do today.

It also prepares you from within to feel more confident and clear on what you're worth; so focus and research on what you're worth and the value you bring and make it evidence-based. 

Speaking of your value, the last piece is doing some homework to learn what others are charging for what you do. So that's the first step about your mindset and the first step about thinking how it's going to be and what you're going to do to start asking for raising your rates. 

Then the hard part or what others might feel is hard part, and that's the courage to start the discussion, which is the second part of the question, “how do I keep myself from chickening out?” And that starts with preparation and that goes into practice, practice, practice. 

But I'm going to focus on the preparation before I get into how you actually talk about it and keep yourself from chickening out. Now, as with all good negotiations, preparation is key.

It's equally important to know that you're willing to walk away from and how urgent the new rates are. That matters a lot because the best changes are transformative and taking the right amount of time to transition is super important too. So I want you to be strategic as you start talking about your rate adjustments because that right amount of time depends on a variety of things. The relationship, your needs, what you're willing to walk away from, what you're working on right now with the clients, what you have ahead of you, and a whole host of other things too. 

I want you to be thinking about your current client portfolio also and compare that to your future client portfolio because as you grow your business and as you develop yourself, your portfolio will change, or at least it should change and evolve. So first, know your clients, especially as a freelancer.

There will be clients you outgrow over time, clients who appreciate your lower rates and the need for work that might come along with lower rates. But perhaps they cannot afford or do not want to pay for your adjusted rates because they feel they do not need the better service or product. You probably know who those clients are already. And those are the ones that make for a difficult discussion because you know they aren't interested in the value. They're interested in the price point. 

And that's good to know. It might feel painful to know it, but it's good information to have and it's not personal. It's business. And we'll get into that a bit later, but this is when the timing or urgency comes in also. 

Rate adjustments shouldn't feel urgent. And if they do, it's time to think longer term about your freelancing and your growth. The resources in the segment are specific to freelancers and will help you. And I'll talk about that in just a moment also. Meanwhile, if you want to have an effective negotiation, you cannot start from a place of urgency. Time will force your hand. You need to start from a place of transition where the negotiations determine how your current state will shift into a future state. And that shifting can often be done in a few ways. 

For example, you can do some preemptive conditioning. You can say, the change is coming, but in a while. And then you repeat that a few times. The change is coming, but in a while. Not now-- later, but the change is coming. We have time to get used to it. We have time to get used to the idea. The change is coming, but not now. Perhaps you start having the discussion about rate adjustments in March, and the rate increase will occur in January. 

Another option is to honor certain rates for current clients, but any new projects will be priced at your new rate, and those are projects outside the scope of what you're currently contracted for. This approach is a way to ease into the transition to new rates without you compromising on the rate increase you deserve as part of your preparation or part of the discussion you have. And again, it also honors what your current rates are for the client and the contracts you have in place. 

Perhaps you keep certain clients at the same rate no matter what, but you let them know that you are raising your rates for all new clients, thus signaling that you have reevaluated your worth and are advancing your work too. Existing clients will remain as is, but at some point in the future or with a renewed contract in the future, you will appreciate a new rate discussion. And then you just leave it at that. 

Then of course, as the last part of your preparation begins, practice for the talk. How you start talking sets a tone and that tone must be what works best for you. And you will be the most comfortable if you practice, practice, practice, and that tone that works best for you has to be for you, not your peers, not your business coach, not your spouse or all other relatives, not the expert down the street, not the person who did this thousands of times and not the person saying, this is how you should do it. 

You should do it with this way and you should do this and this and this. Nope, should be what works best for you. Those who know me know I'm a big believer in scripting and what you will say, how you will say it or what you'll write and how you'll write it.

And when I talk about a script, I'm talking about a way to organize your thoughts and get things down on paper so that you can refine what it is you're going to say in a compelling and concise way. It is not so you can memorize it and it's not so you can read from it. I want you to start your draft messy and big. It's about getting the facts out, getting everything you want to say out of your head. It should not feel polished and perfect. 

That first draft should be, “in a perfect world, this is what I'd say and this is how I'd say it, without having to be anything other than factual or just spit out whatever I want to say.” That should be your first draft. From there, you start the drafting work; from there, you polish your draft so it is concise, it's honest and professional, starting with the value you place on your relationship, your intention to adjust your rates based on the market and growth or the need to work within a sustainable pricing model, the timeframe for your rate adjustment, and that the purpose of talking about it now is to get started with a discussion. 

Then-- again, practice. Just like everything else that is new, practice will reduce the fears of uncertainties and doubts and failure, or perhaps the certainties you do have that you will chicken out, that you'll freeze up halfway through, that you'll decide to compromise down just as you conclude your discussion and you'll be too easily talked out of a rate adjustment or maybe you'll be the one to talk yourself out of a rate adjustment. 

The practice is to help with that and the scripting adds just enough structure to help you with your practice. 

And maybe you know exactly how some clients will react. They'll say no or they will respond as though they're questioning whether your service is of higher value now than before or any other possibility of making this feel more personal. But remember, it's not personal. It's a business decision. Just because you're a party of one doesn't mean you aren't a business. Here are some things you can say. 

And I'm offering these just as examples. You have to make it your own. And they're not going to go this smoothly. Obviously, when you're having a discussion, it's not like a monologue. But this should offer some framing for you. 

So for starters, you could say something like this, “I appreciate the work we've been able to do together and the way in which I have made an impact through the initiative that enabled your growth by 20%. That felt amazing to be able to contribute to that. I also love the ways I've led your new branding work that created an improved clarity for you. It's such a pleasure to support my clients like you and grow the scope of your client base and your revenues. As part of my routine business review and in light of the increased value I bring as well as evolving market conditions, I'm in the process of reviewing my pricing such that it reflects the value I provide and supports sustainability for my services so I can continue to provide the services I provide. And so I will be adjusting my rates over the next few months.”

So that's one example of what you could say. You could say over the next contracting cycle. You could say starting next year, whatever feels best for you. 

But notice how I frame that:. I started with what I love about the client and what I love about the work I've done for the client, which not only forms and reiterates the importance of the relationship, but starts to talk about the value that you've added and the direct impact you've made on your client's business.

I then moved into some of what I do as a business and that's a routine business review and I can highlight some of the homework that I've done. Here's what the rate of inflation looks like. Here's what others in my field look like. Here's what the rates are for those doing the same work that I'm doing. Whatever it is that you'd like to put in front of your client. And then you finish with talking about how you'll be adjusting your rates over a certain amount of time.

You could talk about a percentage increase: “I'll be adjusting my rates by 5 % to keep up with inflation,” “I will be adjusting my rates by 2 % to keep up with additional fees I have been absorbing as a business owner for some of the work that I need to do from an administrative perspective.” 

However you want to share and whatever you want to share, these are the ways that you can frame it. It's very appropriate for your client. And if it feels more comfortable, start with an introductory email first, a draft that says something like, “I would love the opportunity to set up a meeting in the next two to three weeks to talk about a price adjustment I'm in the process of phasing in.” And then you highlight some of the points I just talked about in your email, and this is especially important if you have a lot of clients. 

For a freelancer, I'd say maybe more than four or five clients is a lot of clients. It's just going to be more efficient if you introduce the discussion through an email and then based on responses and based on timeframes, you can slot your different clients in when it's best for you and when you're at your best, and you'll need to feel at your best if this is something that's going to stress you out, as with everything that stresses us out. 

Now, if you own a subscription service, then email will absolutely be key, but you may want to consider a more personal touch also. Maybe include a video embedded in that email or embedded in your newsletter.

There's a lot of information and resources about this. So it's important for you to take a look at what's out there to help you and frame it and style it to a way that's going to be the most empowering for you. And now I have a few additional tips as you prepare. Beyond the preparation and practice, practice, practice, there are a couple of rules. 

So the first rule is make it a rule that you will not apologize for adjusting your rates. Just don't. You are not creating or causing a difficult situation for your clients and you're not being offensive simply because you're raising your rates. Remember, this is about starting the discussion and letting your clients know you're raising your rates. 

After that, another rule, get used to space and silence. Meaning it's not up to you to fill in any empty air between you and your client. If you start the discussion and your client does not respond or react immediately.

If you feel there's an awkward pause…. or if you're sending it by email and there's a few days’ delay, you can address that easily by saying or responding with something like, “I appreciate you listening / I appreciate you reading this. How about we connect next week to continue talking about this? I'm starting these conversations with my clients now so that we have enough time to review what works best for both of us as I adjust my rates.” In that way, you are helping yourself deal with the silence in the space, but you're still driving toward an understanding and hearing an acknowledgement from your client that you are in fact adjusting your rates. You are going to be raising your rates. 

The last rule is prepare for redirects on how you get your work done. So there will be instances where maybe a client can't afford your rate adjustment in a monetary amount. And you can, of course, say to that client, “No problem. I understand that I'll be raising my rates for other clients or let's talk about this in another six months or let's talk about this when your next series raise comes in.” You can say that, but you can also change the way you work with your client. 

If you have the sense of the just not good with change or if there's something else going on, you can always raise your rates and say, okay, I'll be adjusting my rates. So one of the ways we can stay within your budget is to cut back on hours.

Or one of the ways we can stay within your budget is to reframe the scope of work going forward. The idea is to give yourself what it is you deserve at the worth you're at that you've done the homework on and you've been able to provide evidence for, but also allow you to take on another client at your adjusted rate. You're still realigning to your value. In a lot of ways, you're still raising your rate, but you're not going beyond the budget of that particular client. 

The last piece and the last flexible way you can go about this is to offer what's called a transition rate where you let your client know that you're raising by, let's say you're going to raise rates by 5%, but for the next six months, the rate is going to be raised by two and a half percent. And then the final raise of rate will kick in at the end of that six month transition time. Just make sure you don't give it too much time because you'll get used to the adjusted 2.5 % and so will your client. It might be harder to get up to that 5 % raise. 

Now typically you'd have this in a contract so I can understand that in that way it won't be as difficult for you to get out of the transition rate but keep the transition rate short if that's which way you feel like going.

As previously mentioned, it's important to know how you respond to silence. So a couple of minutes ago, I gave a big pause. And if you were sitting there rolling your eyes or looking back and forth or wondering what might have happened to your technology, you are probably one of those people who is not comfortable with silence. 

Jumping in for the sake of filling up space isn't the best way to respond when you're opening discussions for negotiations. So just know that about yourself. Understand that they may need space to absorb and consider their response. You may need some of that space too. So try to temper down some of that urgency for a response. 

Last note in the preparation, resist the urge to continue explaining your rate adjustment unless they ask questions. And here's the rule when practice comes in: you must assure you are not defending or justifying your rate adjustment. You've already provided the information. You've let them know why this adjustment is coming into play.

Now, if you're offering a service and as your service grows and develops and improves and gets better, it's important to remember that you are providing better everything for your client to get better also. And I'm putting in this little extra about service because those of us who provide a service, oftentimes we are providing parts of ourselves and that's really hard to think about in monetized amounts. But you will need to adjust your rates. So the better you get, the better your clients get. And that means an adjustment is appropriate.

So when it comes to chickening out, remember preparation is the first part of it, but after that is practice, practice, practice. And after that are my rules. And it's important to know you're not alone in that. And for those listening who are not in the United States, when you chicken out, it's when you're just too afraid to follow through and at very last minute you decide not to do it at all. But remember, it's intimidating to be in a position where you are a source of revenue for your client and your client is a source of revenue for you too. It feels like a good match if that's the setup you have. 

Typically for freelancers, that's the setup. The freelancer is paid for a very specific amount of work that advances the goals and the vitality of their client. And in turn, the client is a source of revenue for the freelancers. But again, this is a business decision. And if they're saying no to your rate adjustment, then they're saying no to your continued product or service and you just have to be okay with that. 

It's also when the timing of your preparation will help the most, especially when it comes to certain demographics who, based on studies and research, tend to undersell themselves from the beginning. Women, people of color, different minorities, early stage career people, late stage career people, or if you're new to freelancing, you usually undersell in the first one to two years. 

And again, all of that is backed by evidence. So be aware of it. Prepare, prepare, prepare, practice, practice, practice. Practice will take the chill out of the air, which is typically why people chicken out. It's just so uncomfortable. But it will feel less confrontational with practice. Or get yourself an accountability buddy. Ask them to take on different personas and work through responses that you're most afraid of or most intimidated by. 

The more you experience, the more prepared you'll feel and the more desensitized you'll become over what could feel daunting and scary, which are the reasons why people chicken out in the first place. You may be surprised how easy it is to do all of this, especially if you feel you have a mutually respectful relationship with your client. So it's also important to keep in mind that some clients will probably say, finally, you know your worth, I'm happy. I'm happy to pay you more than what you do. I'm happy to give you this raise. But remember, you've done your homework. So that's not the time to wonder or doubt your own homework thinking, “Oh, maybe I should have charged more. Maybe I should have asked more. That was much easier than I thought it would be.” This is when you say, “Thank you. I appreciate that. And I appreciate this relationship that we have together.” 

No matter the response, the last piece related to your courage, not chickening out, is to do the reframing and it's about the objective. Remember, this isn't to get them to agree to your rate increase. It's about what this question asked, starting the conversation. It's about opening up the discussion and it's about adjusting your rates so your goal isn't to immediately win them over to a rate increase. Your goal is to start the discussion, reiterate and establish your worth, communicate that worth in the context of your market and competition-- why you do it better than anyone else and explain what a rate adjustment will do for them too, such as enable you to continue working with them in a way that ensures you can sustain the work you do for them. 

Now have a lot of resources for you and some really good ones. I know this is a long segment and that's because of the value of the question. I hope you have found this to be enriching. I found this great resource for freelancers called Moxie. If that's new word for you, or if you think of a soda when you think of moxie, the meaning is courageous, a courageous, zippy, determined personality trait. “Christa has a lot of moxie!” This site is for freelancers and I've listed for you an article that talks about increasing your rates and it's excellent. 

The other is the WP Minute, where you'll hear directly from a freelancer who will reinforce some of what I've said here about rate adjustments, not being personal about being business rooted, the importance of a plan and how you prepare. Consider this as a resource to hear directly from a freelancer, not just me. It's on YouTube, but it's a listening segment. 

The last resource is watching and listening a YouTube video from the future where you can learn about that resist to urge and defend and justify I talked about earlier. Needing to resist that urge to continue talking about why this rate is important. The host, Chris Do, walks through two strategies to avoid justifying your prices. It's a broader view about talking about prices overall, but one I think that is very important for freelancers to learn about. Again, you'll hear a lot of what I've mentioned here today too. By the way, I learned this because of years of study in this arena, oscillating between having full-time employment for different companies and my own employment as a consultant and as an advisor.

You're going to find it's not about what you do. It's more about how you do it and how you feel on the inside about doing it. Now, since this segment's question is more about how-to's of business challenges and workplace issues, I'm offering the how to resources. But if you're looking for more evidence-based studies and papers, I've listed a Google search in the show notes also. My search is evidence-based negotiation skills.

You will see a listing of various resources from a master class to essential negotiation skills across the web to different classes you can take, papers you can read and other resources. I wish we all learned about negotiation skills when we were really young. It's the basis of being more collaborative and cooperative, but also the basis of feeling more comfortable when you feel like you have to confront something or while creating boundaries and establishing your worth, which is a lot of what raising your rates is about when you're a freelancer.

So there it is. It's a long one, but you got a two for this time. Two questions in one, two answers in one. I hope this resonates with a lot of you and not just from a freelancing perspective, but from instances with a business challenge or workplace issue, anytime you have to talk about the value you bring and feeling you're paid fairly. That in and of itself is a topic for an Ask Christa! segment.

As always, keep sending in your questions and I will keep up. I will also post more frequently soon. Head over to my website, AskChrista.com. That's Christa with a CH to submit your question. And while you're there, sign up for the weekly newsletter too. You'll receive a free issue of the Survivor's Guide to Business Challenges and Workplace Issues. Then the weekly newsletter, of course, which I issue on Sundays. So you have a few tips boosters, and some comic relief to prep you for the work week. Feel free to comment, like, and subscribe, and thank you for your support. And remember, if you have a business challenge or workplace issue, Ask Christa!