Why it’s definitely time to raise your prices

When did you last put your prices up? If you haven’t done this in the last few weeks, keep reading, because I’m here to explain to you exactly why you need to raise your rates. No exceptions!

Costs are increasing all around us. Some food items have doubled in price, UK fuel bills have tripled in some cases, and as interest rates go up and up, anyone with a variable-rate mortgage might be starting to feel the pinch.

Yet when I ask freelancers when they last put their prices up, they usually talk in years, not months. Sometimes many years. This has to stop.

If you can barely remember the last time you increased your prices, this is your sign. Put them up!

Of course, there are plenty of reasons why you might be reluctant to increase your prices. Let’s start with the mindset side of things first, as I believe that’s the biggest thing holding freelancers and consultants back from charging their worth.

Getting into the right headspace for a price rise

There’s no denying that raising your prices can feel daunting. What if you price your work too high and lose clients? What if you raise your rates and people stop signing on the dotted line? What if (horror of horrors!) people think you’re greedy?

Here’s what you need to do to improve your mindset and get comfortable with charging higher rates:

  1. Create a “wins” document. Every time a client praises you and your work in an email, cut and paste it into your doc. Every time you get an amazing testimonial – add it in. If your work helps your client win more customers, make a note of the figures. Keep gathering evidence that you’re good at what you do. When you’re clear on how great your work is, it’s easier to charge more.
  2. Take time to reflect. At the end of every day, week, month and quarter, take time to reflect on what’s gone well, and what you could improve upon. Add any major positives to your “wins” document and make a note of improvements you want to make. Then schedule the time to start making at least one improvement. If you’re aware of where you shine, and you know what you need to work on – and then you work on it – you’ll feel more justified in raising your rates.
  3. Set goals. How do you really want to be spending your time? Really? Right now are you working more hours than you’d like to? Are you being fairly rewarded for your time and effort? If you factor in everything you do, what’s your current hourly rate? Are you happy with that? Many of us trundle along without asking these questions. And then we discover that once you factor in the crazy hours we’re working, we really aren’t being fairly compensated. Set a goal for what you’d like to earn, and then start on the path towards that.

How to raise your prices inline with inflation

Once you go more than 12 months without raising your rates, you’re essentially doing the same work for less money. Especially in the current climate, where inflation for the 12 months to February 2023 was 9.2% (The Consumer Prices Index including owner occupiers’ housing costs (CPIH)). The Consumer Prices Index alone – i.e. the cost of products only with no housing costs – shows inflation at 10.4% for the same period.

So, in this climate, simply to stay exactly where you are, I’d recommend you increase your prices by 11% each year, as a minimum. More, if any of your expenses have gone up dramatically.

How to raise your prices based on your skills

If you’ve taken professional courses, got incredible results for clients, won industry recognition or awards, or otherwise upgraded the service you can provide, then you’re entitled to raise your prices.

This one can be tricky, as sometimes when you become better at what you do, there are certain clients you might need to leave behind. Your previous clients may not have the budget to keep working with you.

One way to tackle this is to raise the prices you quote for new clients, and to gradually broach your price increase with existing clients. Once you’re confidently winning work at your new rate, you’ll feel more comfortable in letting older clients know what’s what.

And don’t make assumptions about what your clients can afford. Some may already think you’re undercharging them, and be absolutely fine with paying the increase.

How to raise your prices based on your expenses

When you first start out as a freelancer, you often have the bare minimum in expenses. But this can change as you work hard to become more professional and put in place systems and processes to support your business.

Your clients benefit from this professionalism, and you definitely shouldn’t be making less money as a result of investing in your business. So your rates need to go up. Again, you can be upfront with your clients and explain the reason for the increase.

Big price increases aren’t impossible

If you’re reading this and thinking, “Um, it’s been so long since I raised my rates that this is going to be a HUGE increase” and you’re worried you’ll annoy your clients, let’s pause for a moment.

There are measures you can take to make this feel more doable. In a service business, you don’t have to raise your prices for everyone across the board. Test out the new prices on new customers. And test out a modest increase on one of your retainer customers – say 10-20%.

Tell them why you’re doing it – inflation, skills or expenses, or all three – and ask them if they have any questions or anything they’d like to discuss. Give them at least a month’s notice, and then see what happens.

If there’s no pushback, you can send your price increase to another customer – no sweat!

Nudge yourself outside of your comfort zone

So much of freelancing and business-building is about confidence. There’s no shame in gently pushing yourself out of your comfort zone with those initial price increases.

But please, please commit to working on this and make sure there’s a reminder in your calendar to increase your prices at least once a year. Otherwise, you’re missing out on cash that should be yours. Clients may not always like price increases, but they definitely expect them.

One freelancer I know always increases her rates in January, by 10% or the rate of inflation – whichever is higher. She states this on her website, so everyone who works with her knows what to expect. In my opinion, that’s an ultra-professional way to operate. Feel free to borrow her approach!

Sales boost for packaged services

Final word on price increases: you can also use them to boost sales. If you have any fixed-price services or packages that you regularly sell, you can take advantage of an upcoming price increase to sell more.

Simply tell people when the price will increase, and encourage them to buy at the old price before it goes up. Give them a deadline, and email them a couple of reminders before the offer closes.

This can be a great way to boost the business coffers, but only do this if you can afford to deliver at the old price. If you haven’t increased your prices in years, this one might not be a good idea for you!

Go forth and raise your prices

Once you’ve thought through the best approach, and you have your new prices outlined, it’s time to start telling customers and prospects.

If you’re struggling to take action, I recommend buddying up with another freelancer who needs to raise their rates so you can hold each other accountable. Or you could hire a coach who specialises in this area. Don’t put it off for another year. Your clients are expecting price increases – show how professional you are and raise those rates.

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