Regardless of what services you offer, there’s one thing that all freelancers need to do in order to run a successful business: set their rates.
Money can be an uncomfortable subject for many people, and freelancers are no different. But if you’re going to succeed in this business, you’ll need to start making smart financial decisions for yourself, especially in the middle of COVID-19 — and be prepared to adjust those plans as your business grows. You can’t just set your rates once and forget about it. From cost-of-living increases to expanding business needs, there comes a time when all of us will need to reassess what we charge.
But changing rates can be scary. You don’t want to risk offending your existing customers with low rates, or start overcharging and driving away potential new clients. So how do you know when it’s really time to take the plunge and start sending those rate-change notifications?
Luckily, there are a couple of easy signs to tell when you’re ready.
1) You’re working so many hours that you don’t have time to grow your business
It’s true that, especially in the beginning, you’re going to need to hustle to build up your client list and get yourself to a comfortable income level. But if your rates are super-low and you’ve taken on so many clients that you no longer have time to build and grow your business — if you find yourself kicking and kicking, but just barely keeping above water — then, my friends, it’s time for a change.
The truth is that freelancing is an ever-evolving landscape, and if you’re going to survive long-term, you need to be constantly learning, growing, and adapting to that landscape. Your rates must allow time for your business development — and whenever you find yourself with too many clients to allow for that, it’s time to sit up, take notice, and firmly increase your rates.
2) You want to change your pricing structure
The great thing about freelance life is that you truly have the freedom to set up your business however you want. The annoying thing about freelance, however, is that you might not always make the best decisions at first — especially if you’ve never dealt with elements of a business before. One of those tricky decisions can be determining exactly how you’re going to bill your clients. Do you charge them by the hour? By the word? By the project? Some other metric entirely?
There are pros and cons to each approach, but unfortunately — no matter how much you sit there and plan things out — sometimes you’re just not going to realize what all those pros and cons are until you’re actually out there in the field, doing the work. It may even be the case that your original pricing structure works great for your content writing, but now you’re branching out to take on longer-term ghostwriting jobs. If any of that is the case for you, don’t despair. It may take a while to get your current clients switched over, but if a pricing structure just isn’t working for you, you absolutely can (and should!) revise your system.
3) Your skills have grown beyond your current rates
This one is a little bit harder to quantify, but you should know it when it happens. Maybe you started off cheaper than you’d like to be in order to attract your first clients — perhaps because you didn’t have a lot of experience, and therefore couldn’t justify the same pay scale as someone who’s been doing this 10 times longer than you. But after a while, you’ve gotten a sizable amount of experience under your belt. Your clients are happy with you, and you’re adding extra value to your work with all the new skills you’ve learned.
Sometimes, paradoxically, “unskilled” rates means that you end up getting most (if not all) of the projects you apply for. Which should be great — until you realize that it probably means clients are viewing you as a “bargain” for the quality and amount of services you offer. If the penny-pinchers are willing to hire you without a negotiation, that’s never a good sign! Always keep your skills in perspective and make sure you’re charging clients accordingly.
4) You’d like to shift to a niche market
Niche markets are one of the keys to success in the freelance world. By finding a niche, you’ve taken your small-fish self out of the big pond and found a place where you can grow into your potential. In addition to shrinking your competition size dramatically, you’re also automatically making your skills more valuable. Why? Well, because if everyone was skilled enough to work in this niche, it probably wouldn’t be a niche anymore, now would it?
But a new market also means a new pool of clients and a new set of expectations, so be sure to do your research before you call yourself a specialist. Just like when you were starting out, you’re going to need to determine what the current market rates in your new niche are, in order to figure out exactly what your skills are worth. If you’d like to become a freelance romance editor, for instance, look at other romance editors for an example.
As you can see, there are plenty of times when you’re going to need to adjust your rates throughout your freelance career. But with a little knowledge, you’ll learn to see when your rate change is coming, all with plenty of time to plan your approach to the transition.