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With the end of 2018 looming, this is a good time to consider whether you are going to raise your freelance rates in 2019.
If your answer to this question is a resounding yes, then you need to decide how to communicate this rate increase to clients. Delivering the news smartly will help you avoid antagonizing (and even potentially losing) clients.
I once read an article in Entrepreneur magazine in which someone has asked their advice columnist how to communicate a rate hike. He planned to raise his rates beginning in January and wanted to know if he could just include the higher rates on the January invoices without giving his clients prior notice. Well, yeah, he could do that if his greatest desire was to seriously annoy his clients!
By and large, clients don’t like unpleasant surprises like this. Here’s how to communicate a rate hike the right way.
How to communicate a fee raise
When communicating fee hikes, the best route is to be as formal as possible. I’ve generally implemented rate hikes at the start of a new year by sending out letters in late November. Note that I said letters, not e-mails (and certainly not texts). For me, emails are not for sharing major news with clients. And besides, emails by their very nature invite immediate knee-jerk comments, whereas letters don’t. Also, it’s very easy for an email or text to get overlooked, especially in the hustle and bustle of year-end business. If that happens and your next invoice shows up with your new rate without the client having noticed your advance warning, you’ll potentially be getting a call from an unhappy client.
It’s not that you don’t want client feedback on this news, because, of course, in your letter you definitely should ask them to call you if they have concerns about the increase. It’s just that you want them to not give you their first knee-jerk response, which is likely to be an unhappy one.
Related: 4 Great Reasons to Raise Your Freelance Rates Today
Yes, you’ll be nervous
The first time I sent out these letters, I was nervous, thinking I’d probably get a lot of pushback. But I’ve done it a number of times now and don’t recall ever having anyone react negatively. At most, some clients have acknowledged at our next meeting that they received the notice. I’ve never had anyone really try to argue me out of the rate hike.
Of course, I haven’t raised my rates with existing clients by leaps and bounds. Usually it’s only been about $10 to $15 an hour, and I usually only do so every two to three years. Most people accept the need for their vendors to keep up with the cost of living. And if they’re really pleased with your service, they’ll want to help make sure you’re able to stay in business.
What if you need to raise your rate significantly?
Now, if you’re thinking you need to raise your rate significantly with a particular client, it probably means you didn’t set a reasonable rate to begin with and have been paying for this mistake ever since. Recognize that once you’ve set a rate with a client, it is something you’re going to have to live with for a while. Yes, you can go up a bit each year or every two years, but if you really lowballed the rate to begin with to land the business—say, for example, charging 30 percent less than you should be charging to stay afloat—it will take years before you can get up to the rate you really need to survive. The fact is that no matter how well you communicate it or try to justify it, a giant rate hike is likely to produce disgruntled clients who may go in search of someone else who is willing to give them the kind of bargain rate you have been charging them.
More: “How Much Should I Charge for My Services?”
It’s not as scary as you think
If you’re one of the many freelancers who are uncomfortable discussing rates with clients, you might hesitate to consider hiking your hourly rate. But based on my 30 years of freelance experience, if you handle the communications appropriately and aren’t looking for a dramatic increase, you have less to worry about than you probably think.
And here’s the bottom line: if you have a client who wants to haggle over your rate and who begrudges you a fair price for your skills and experience, that probably isn’t a client you want to keep over the long haul, is it?
Jeanne explains more about setting your rates in her book: The Self-Employment Survival Guide: Proven Strategies to Succeed as Your Own Boss.