How to Give Yourself a Raise Without Losing Business
14:30 - 9.03.2010
This post is an excerpt from my eBook, The Blog Business Funnel. It teaches freelancers how to run a profitable freelance business, fed entirely by a healthy and thriving blog. This excerpt is from Chapter 7: Scaling Up. FreelanceSwitch readers can claim a special discount at the end of this post.
One of the nicest things about freelancing is that you decide when to give yourself a raise. If you feel like you’re doing a great job, developing experience and becoming hotter property, you don’t need to wait for your boss to notice. You can give yourself a raise, and if your clients agree with your assessment, you’ll get it.
As a freelancer, you can give yourself a raise by increasing your hourly or per-project rates. This part is simple, but setting up the right preconditions for the change is a trickier process. How can you raise your rates while making sure you still get plenty of work?
Throughout this post, there are a few things I want you to remember:
- There is zero agreement amongst both freelancers and clients about how much their work is worth. I’ve received quotes varying between $250 and $2,000 in response to exactly the same job ad, posted on the FreelanceSwitch Jobs Board. It’s clear that across the dozens of applicants, no two freelancers
agreed on what their service was worth!
- For any given service, one prospective client could have a budget of $500, and another a budget of $5,000, and everything in between. In many ways, it’s useful to think of your hourly rate as the price of a product. Some people will never pay more than $100 for a pair of shoes, while others regularly spend $500. The cheaper pair of shoes may be just as good quality as the more expensive pair, but in the eyes of the customer, the perceived value is different.
- Raising your rates is fair practice. When a prospect accepts your pricing and becomes your client, they are accepting that the value you will outweighs your rates, allowing them to turn a profit on your work. If they didn’t believe this, they would have sought out a cheaper freelancer.
- The market should set your rates. Your perception of your own value to clients is a guesstimate unless you test it. If you’ve never experimented with different rates, how do you know that your clients don’t feel like you’re undervaluing your services? They certainly won’t be the ones to tell you!
When to Give Yourself a Raise
One situation where you should always try raising your rates is when you are unable to meet the demand for your services. If you have enough clients to keep you busy 50 hours of the week – and you only want to work 35 – it’s time to incrementally raise your rates until supply and demand equalize again.
Another sign that you might be charging too little is if nobody ever mentions your rates as a sticking point. At the very least, you should occasionally have clients try to negotiate you down in price, but still choose to work with you even if you don’t budge. The saying “You can’t please everybody” is true—and if you’re pleasing everyone, something is probably wrong with your rates.
If you’re doing lots of work each week, are being paid for it, and still struggle to make ends meet, you may find you are charging too little. In the developed world it would be considered very unusual for a skilled freelancer to charge less than $25 an hour. After all, you’re not flipping burgers, or doing a job the average person could be trained to do in a week. You are a skilled worker and deserve to be compensated as such.
Another time to think about a rate rise is if you’re simply better than you were at the time you first set your rates. If you’ve been working 30+ hours a week in your freelance field for a year, you can’t help but have become more skilled than you were when you began. For better results, clients should expect to pay more, and you should expect to charge more.
There are also some situations where raising your rates might be a good idea even when your roster of clients isn’t full. While some freelance services—like HTML & CSS markup/coding—are in widespread demand, others—like programming in Ruby on Rails—are more specialized. There may not be a large enough pool of prospective clients to keep your hands full for 35 hours a week, but as a specialist, trying to attract more clients may not be the best way to increase your income. Instead, remember that your services are rare, and as such, can command higher rates.
Opposite to the situations described above, there are circumstances where you probably shouldn’t meddle with your rates:
In these situations you should stick with what’s working until you have a more solid base from which to experiment.
An Approach to Testing
My philosophy for finding your current ideal price-point is to raise your rates in small increments on a per-client basis until you find your sweet spot. The second half of the strategy is to make sure you receive feedback on your rates. This is so you can clearly observe how your rates are affecting your business.
If you display your rates publicly, in the Services area of your website or blog, clients have the opportunity to evaluate them in private. Ten people may consider your services and reject them on the basis of price without you ever knowing. This can be a great time-saver when you’ve settled on your rates and are confident in them — these are all people who may have otherwise requested a quote, only to reject it after they saw the bottom line. But the situation changes when you are trying to re-evaluate your rates. You want your client’s decision-making process to be open to you. This is why you should consider removing public pricing from your site during this phase, and discussing prices only after prospects contact you.
If you’ve put effort into an email exchange, or into preparing a quote, most prospects will take the time to write a response, even if they decide your service isn’t right for them. And most of the time, they will state a reason for deciding not to hire you. Keeping track of these reasons will be invaluable when trying to determine your current
‘sweet spot’ rates.
Giving Yourself a Raise
If you’ve decided to re-evaluate your rates and have made sure you’re in a good position to do so, here’s how to begin: the next time a new prospect inquires about your services, add $5 to your previously quoted hourly rate. If you are someone who charges by the project, increase your project rate by 10%. Try the same thing for the next prospect, and the next prospect, and the next.
Do you notice a change?
If you find that more people are knocking you back on the basis of price, to the point where you aren’t able to work as many hours as you like, you may need to return to your earlier, more successful rates, and work on building up the value of your services before trying again. However, if you find that you are converting at the same rate, and being hired just as much, this suggests that the market has accepted your new rate.
Because this process is based on small incremental increases, you can continue to repeat the process until you finally feel the market pushing back, telling you that you’ve gone a little too far. At that point, pull back one notch to your last successful price-point. For now, this is your current sweet spot. In future, when you feel you’ve once again increased the value of what you provide, you can attempt to advance further if you feel confident doing so.
Value-adding Can Take it Further
Earlier, I talked about how clients will measure your rates against their perception of the value you will provide them. By increasing this perception of value, you may be able to raise your rates further. Here are some ways you can add more value to your services:
Increase your skill. The most obvious method to start: simply get better at what you do. Learn new techniques, develop unique methods of working, and refine your style. More impressive work justifies more impressive rates.
Become better at expressing the benefits. This relates to the way you talk about and describe your service. If you can become better at the way you communicate the benefits of what you do, clients will see it as more valuable. Compare:
I write highly polished blog articles using impeccable spelling and grammar.
to…
My articles are highly optimized for StumbleUpon traffic, and have the potential to attract tens of thousands of visitors to your blog.
Both are important and desirable qualities, but the latter seems more unique and valuable.
By describing the benefits differently you might find clients are all of a sudden willing to pay more for your work, even though the final product is the same. The perceived value is different.
Create a perception of scarcity. People often associate scarcity and exclusivity with quality. Even something as simple as adding the following sentence to your service page can create a perception of scarcity:
Please be aware that, due to high levels of demand, there may be a waiting list for this service.
If you ever find yourself swamped with work and need to stop accepting new clients for a while, avoid taking your Service page down. Instead, add a notice letting prospects know how busy you are:
Due to overwhelming demand, this service is temporarily unavailable. Please contact me if you’d like to be notified when it re-opens.
Earn more prestige. Become well known enough for what you do and people will value you on much more than the apparent face-value of your work. People know that experts are always pricey, but usually worth it. If you can be truly perceived as an industry leader, you can probably charge your dream rates — and then some!
Tap into hot trends. A few years ago, a relatively new freelance skill emerged — SEO copywriting, in other words, the ability to write persuasive sales copy that would also rank in the search engines. Though any person with copywriting skill and a basic knowledge of SEO fundamentals can perform SEO copywriting, for a while it had a much higher price tag than ordinary SEO, because many small business owners were desperate to tap into the benefits. By being flexible enough to tweak their service to tap into a hot trend, copywriters were able to significantly raise their rates.
A Final Word
Adjusting your pricing is a vital strategy to increase your profits over time, but it shouldn’t be your only strategy. Otherwise, you’ll reach a point where it’s not working
as effectively anymore. For example:
- There may come a point where, to raise your rates any higher, you may need to start working with a different kind of client — say, big businesses with big budgets. However, these kinds of organizations often prefer to work with trusted firms rather than individual freelancers. Eventually you may reach a point where your rates can’t increase any higher without fundamentally changing the structure of your business.
- In the future, you may wish to work fewer hours to focus on other areas of your life that need attention. Perhaps you’ll have a child—or another child—or decide to go back to school, or write a novel, or go surfing six months out of the year. Who knows? Either way, regardless of what your rates are, cutting your hours by 10 or 20 a week will result in a significant pay cut. If you want to maintain your current standard of living, you’ll need to get creative.
In the rest of the chapter, I teach you how to create low-maintenance partnerships you can profit from, while doing very little extra work. You’ll also learn how to add new products and services to your business that eventually remove you from the equation — except when it’s time to collect your earnings!
Discount Code
FreelanceSwitch readers can use the discount code ‘RAISE’ to get $5.00 off The Blog Business Funnel.


New one slot web design leads and email alerts
14:46 - 26.11.2009
Today a DesignQuote designer submitted the following question. I realized that many of our designers may have been wondering the same thing, so I decided to post the QandA here.
Question:
I have noticed something strange happening for the last couple of weeks. I get an email alert for a job and underneath the original email is a list of "More recently approved projects:" and there is a list of RFQ's. They are all in numerical order and usually they are all for the same price range and in each case, they are only looking for a single bid. I never get an individual email reporting those RFQ's. I've been with DQ for several years and I've never seen anybody ever ask for a single quote. So here are my questions.
1. Why am I not receiving emails for those single bid requests?
2. Are those jobs real, or are you just getting spammed with fake jobs?
They seem fake because of their similarity to each other and the fact that I don't receive email alerts for them. Please advise.
Response:
The single slot leads are from a new web-design-lead-provider we have partnered with. We are testing routing some of their lead inventory through DesignQuote. They limit leads to 5 designers. They are giving four slots to their existing customers (designers) and then giving one slot to DesignQuote.
- The reason you do not usually receive an email alert about those leads (and probably many other leads in your price range) is because of the way our email alerts work. When a lead is approved, the alert system sends alert emails in groups of 200 emails every 5 minutes. The order we send emails is based on how many credits are in your account - whoever has the most credits gets the first email, the next highest gets the second, etc. ( as described on the alerts page http://www.designquote.net/provider/set_services.cfm )
You currently have 14 credit(s). This puts you at number 232 on the email notification list. Which means that 231 designers have 14 or more credits in their account and receive emails before you. There are currently about 2500 designers who have specified instant alerts for projects over $1000 - so when we post a $1k+ project the system queues up about 2500 emails to be sent. We send the first 250 emails immediately then wait 5 minutes (to give the mail processor time to process those 250 emails) and then we check the RFP slots. If the project has not sold out, we send the next 250 emails, wait 5 minutes and check again until the project sells out or everyone has been emailed.
Once a design project sells out all the remaining emails are cleared from the queue and those designers are never notified about the project. So the reason your not receiving alerts for these projects is because the project sells out before it gets to you name in the alert queue.
The clients are actually getting 5 bids, 1 from DQ and the other four from non-DQ designers that get leads from our partner. In order to make our alert emails more informative, we add in a list of other projects with similar budgets under "More recently approved projects:" - The partner RFP numbers are in numerical order because we process them in batches as they come in, one after another and they get sequential RFP IDs.
The partner prequalifies the leads checking their phone and email so they get approved and posted as soon as we receive them. So if several partner leads get approved they are queued and might appear under "More recently approved projects:" before the alerts are even actually sent for those specific projects. The mail-bot checks all open projects every time it sends a batch of emails.
We are currently beta testing this partnership it will change in the future. We just started the partnership 3 weeks ago (the first week of November) which is why you just started seeing the one slot leads. We are collecting data and feedback from our designers to make sure the quality of the leads we get from our new partner meet the quality standards of our regular leads.
We don't have enough data to determine that yet but we should know in a few weeks. If the quality of the leads is good enough, we will expand our partnership and increase the number of slots per lead for DesignQuote designers. The leads would still be limited to 5, but we may divide them up so DQ gets 3 slots and the partners designers get the remaining 2, as opposed to the one single slot we get now.
- Wesley Warren
CEO - Vexcom, Inc.
Parent Company of DesignQuote.net
This blog is for Design Quote News.
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