Employees usually get a raise of 3% to 5% every year or two. But as a freelancer or business owner, your income won’t increase unless you start charging more for your products or services. I’ve always dragged my feet when raising my freelance writing rates because I don’t want to lose my clients or hurt their bottom line.
I usually wait far longer than I should to raise my prices, which is a bad habit that’s negatively affected my business. If you’re like me and you haven’t raised your rates in a while, here are some clear signs you need to charge more to remain profitable.
Signs You Need to Raise Your Rates
You Never Get Any Pushback on Your Prices
I recently learned that if potential clients accept your rates and don’t try to negotiate, it may be a sign that you’re undercharging. It’s normal that some of your proposals may get rejected because your rates are outside of the company’s budget. You don’t want to price your services so low that you become the cheapest option every business can afford.
As a freelancer, the goal is to work up to charging premium rates so you can work less and earn more. Unfortunately, that means you’ll lose out on some jobs, so you’ll have to put more work into prospecting and drumming up leads. But when you do land a contract, it will be far more lucrative, making it worth the extra time and marketing effort.
Your Business Costs Have Increased
The price of everything from gas to office equipment like printers and monitors has risen sharply this past year. As a result, your business costs have probably increased. Instead of absorbing these added expenses yourself, it’s better to raise your rates to offset them so you can stay profitable.
You’re Not Charging Market Rates
Another sign you need to raise your prices is that you’re not charging enough for your skill level and experience. It’s essential to stay updated on the going market rate for the type of work you do. Online research can help you figure out the average price for various services like graphic design and writing.
Sometimes professional associations publish guidelines on what to charge to help you set your rates as a freelancer. Talking to other people in your industry about their project rates can also shed some light on what to charge.
You’re Not Meeting Your Financial Goals
The last and most important sign you need to raise your rates is not meeting your financial goals.
If you’re a full-time freelancer with no other sources of income, you need to earn enough to pay your bills and save for your future. If you don’t, you’ll go out of business.
It may feel like you’re inconveniencing your clients by raising your rates. But you’d be hurting them more by keeping your prices the same. Eventually, you’ll need to get a job if you can’t meet your financial needs as a freelancer. Then they’ll need to find a new service provider, which can be a big hassle.
When you don’t charge enough, you have to load up your schedule with work and split your attention among many clients. By raising your rates, you’ll be able to provide better service, which will ultimately make your clients happier even if they have to pay a little more.
You’ll also be more focused and efficient if you’re not constantly worrying about money. So if you get nervous about sending that price increase email, remember that you’re doing both you and your clients a favor by raising your rates.
Vicky Monroe is a freelance personal finance and lifestyle writer. When she’s not busy writing about her favorite money saving hacks or tinkering with her budget spreadsheets, she likes to travel, garden, and cook healthy vegetarian meals.