How to Succeed in Freelancing: Say No to Low Pay
This is the third post in a special five-part series on using the magic of yes and no to earn more money, better clients and work you really love to do. Click here to read the first post, how to say no to clients, or click here to read yesterday’s post, why you should say yes to less work.
Then sit back and enjoy today’s post on how to earn better freelancing rates. You’ll be all set with a freelance business that pays you what you deserve to be paid.
There’s a problem that’s common in the freelancing world: getting stuck at low rates and not seeming to be able to earn more.
You see, new freelancers don’t really know the value of their skills, or feel they can’t charge more because they don’t have experience, or they can’t figure out what the current industry rate for what they do might be. It seems to go from zero to zillions and there’s no typical average. (Hint: the current industry rate is anything you want it to be. The internet’s crazy that way.)
So they pick a rate they think is the right one… and after working a while at that rate, they realize that they’re unhappy, they’re not making enough, and they can’t seem to figure out a way to get out of the rut. Someone mentions they should raise their rates, and these freelancers think, “How?”
It’s very easy: You just do it.
Decide your new rate, pick an approaching date (a date occurring in a couple of weeks is good) and send a letter to your current clients. Inform them politely of the upcoming change in your rates, and keep the letter short, sweet and to the point: “I just wanted to let you know that effective February 1, my rates will be X.”
No explanations, no excuses, no apologies. If anyone has any questions, they can contact you.
Generally, most people won’t complain. We live in a world of rising costs, and almost everyone expects prices to go up a little each year. This isn’t anything new or surprising. Rising costs happen with taxes, with utilities, with groceries, with gasoline, with books, with everything, so most people aren’t going to be particularly surprised that your rates increase as well.
If you don’t feel comfortable telling customers you’re raising your rates, you have an option: don’t say a word. Keep current clients at their usual rate, and only quote your new rate to potential customers that want to work with you.
This lets you test different pricing to see whether your new rates are easily accepted or meet too much resistance without affecting current client accounts. Once you’ve found the rate that seems to work best, then you can start to eliminate low-paying work from your schedule or raise rates across the board.
Now, if you raise your rates for all clients, current and new, you may have a few that ask you to hold their rate at the lower one they were paying or let you know they can’t afford the new wage increase. That’s when you need to consider whether you really want to keep this client.
Think about whether this client offers long-term job potential that makes a lower rate worth it. Repeat customers are typically more profitable than one-shot clients. Also, consider the type of work you do for this customer. Do you enjoy it a great deal, or would you be relieved that it’s finally gone?
How do you feel about the client himself? Is he nice to work with? If he pays on time, is friendly and appreciates what you do, you may want to cut him a break. If he’s a client who makes you chase after him for payment or he’s a client that sucks to work with, you probably want to drop that guy even if he’s been worth a lot of money to you in the past.
After thinking about this client and the work he offers you, you’ll probably come up with your decision. You might choose to stick to your old rates for just this client, you might end up offering a rate in between the old rate and the new one, or you might need to take a deep breath and let that client go. It’s okay; this is business.
If you decide to let the client go, be polite and kind about it. Make sure to leave a good impression with the person. Tell him that you’re sorry that you’ll no longer be working together (even if you’re not), thank him for the support he’s shown over the years, and let him know that if he ever needs your services again, the door is always open.
Keep in mind that goodbyes aren’t always forever. Many people underestimate the value of good skills and great service. They aren’t aware that they may not be able to find someone who does what you do, as well as you do, for the rates they want to pay. They might try working with a few other freelancers and realize that you were the right person for them, even if you cost a little more.
Sometimes people don’t know what they value most until it’s gone.
These past customers might come back to you after having learned your true value to them. They’ll have a new perspective and appreciate you a lot more. So be gracious, welcome them back and accept to work with them at your new rates. Avoid rubbing salt in the wound; these customers just learned a hard lesson. They don’t need to hear anything that sounds like, “I told you so.”
When you begin saying no to cheap rates and yes to the rates your skills deserve, you’ll notice a shift happening within your business. You’ll become more discerning about who you work with and what you’re paid for your work. Excellent – that’s a really good place to be. Look at those successful people you admire – they don’t work with just anyone for any rate, do they?
Neither do you.
15 Responses to “How to Succeed in Freelancing: Say No to Low Pay”
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Love this. Do you think people should raise their rates on a regular basis? Yearly? Every couple years? Curious about your thoughts on that.
Also, it’s worth saying that your rates should be a reflection of the value your target market perceives, and NOT a reflection of how you feel about yourself. Nobody else knows if you feel a bit lacking in confidence, nor should they.
Michael Martine´s last blog ..Never Face Writers Block Again (and have Fresh Ideas Every Day)
I used to do a ton of freelance SEO and copywriting work, but eventually you just get pushed out by the masses willing to work for pennies. Enjoying the series..
Kyle Healey´s last blog ..AOL Sells Buy.at
It’s a hard thing to imagine when you work for yourself. Most people have left employment where their salary and value was dictated to them, and probably raised on an incremental basis just for being there.
Going from being told your worth to defining it yourself is tricky but raising rates also improves your perceived value. I don’t mean perceived as in illusionary, but as in your true worth.
If you start believing you are worth more, current and future clients are going to start believing it as well.
Amy Harrison´s last blog ..Freelancers: Do Your Customers Secretly Wish You’d Shut Up?
This should be required reading for music teachers, not just writers. I know more than a few excellent ones that consistently undervalue their services because they’re afraid of alienating their current students and they’re afraid they won’t get any new business.
Part of the problem is that it’s very hard for them to discuss money at all. They think of themselves as artists and it can be very hard for them to accept that they must be business people as well.
@Annabel – I think it’s worthy reading for any creative artist at all.
My guitar coach, for example, was discussing his private rates last week. And my jaw dropped. When he noticed my surprise, he immediately became uncomfortable. “Do you think that’s too much?” The look on his face was, “Uh oh…”
“No. I think that’s way too little. No wonder you have a bunch of problem students like you do. Raise your rates.”
And as you say, even the thought of that became difficult for him – he feels uncomfortable charging money for something he loves to do and that’s in his nature.
@Amy – There’s also the fact that those coming from employment to freelancing try to find the “going rate”. So they look around the ‘net, see $5 an hour and think, “Oh. Well. That must be what it pays…” Then they see $150 an hour and think, “Oh. Well. THAT must be what it pays…”
And neither rate is comfortable to them, so they start floundering somewhere in the middle trying to figure out what the hell to charge. Then they pick a number and stay there for YEARS. No no no no no. UP! Go UP, people!
(Unless you’re an arrogant SOB arTEESTe, in which case you should go DOWN!)
@Michael – Agreed on the rates/self-value thing. I posted a comment in yesterday’s post comment section saying much the same – people tend to price tag themselves, not their skills, but it’s two highly different things.
As for regular raises, that’s a good question. Personally, ME, I tend to examine rates every three to six months just to make sure they’re still profitable. The reason being that three months online is equal to three years or something like that. Once a year, nearing January, I look over all rates again and decide if they need to move up.
I don’t raise automatically every year. This January, I only raised some rates to adjust them properly – others stayed where they are, a number I’m comfortable with.
On the other hand… a friend of mine gets an automatic raise of 2.5% on the payments he makes to the government for his son’s child support. Like clockwork. Whether cost of living in Canada has gone up or down.
So, I suppose there’s no hard fast rule. (Wow. That’s a vague answer, eh? More coffee, James!)
This is so timely. Lots of money talk at my place right now. When you work at a “job” there’s no hesitation about wanting better pay, but when you’re the one hanging out the shingle, it’s freakout time.
Until you start pissing yourself off because you’re not paying you enough.
When you’re self-employed, you have to remember to be your best boss. Pay your people what they’re worth–by people, I mean you.
Remind me I said that sometime…
Stacey Cornelius´s last blog ..How do you feel about making money?
This is true even in the art and craft world. I’ve raised my rates annually and have filtered customers effectively that way. Especially when I realize the client and the type of work do not fit with my passion and vision.
One thing that is also true is that as you improve in your field, your rates should go up to reflect the value you bring with better skills and talents.
Just sayin’
Great series!
Adam King´s last blog ..What Happens When You Tell it All Yourself?
James, what are your thoughts about figuring out what you want to make overall, then dividing that by the typical amount of jobs you can do within that period and charge that rate? I’ve heard of people doing this.
This has even bigger implications in that it helps set industry standards. Freelancing is unregulated and we are all alone as solo operators. The only way to ensure the publishers pay appropriate prices is if they come to expect that that is the industry standard. If they know they can get someone else to do the work for half the price, they will.
pamela wilson´s last blog ..Going for the kill on fees
@Pamela – I believe there’ll always be varying rates and a wide range between different freelancers/skill levels/locations. I’ll never “grrr” about someone in Russia charging much less than I do, if that person is charging what he feels is a fair wage for his location and it does well for him. Who am I to say that my Canadian rates are better/more important/should be followed?
So, I do think it’s more up to us to get used to the fact that there *are* no industry standards until the world shares one single economy and dollar value across the board.
@Shane – I’d personally be against doing that, because it essentially doesn’t justify the rate you charge to clients based on skill level, abilities and results you can get them. It only justifies a rate as far as your financial need. Make sense?
I do sit down and say, “I’d like X a month to live comfortably.” Then I say, “What do I need to do to make that happen?” And I go after it
@Adam – Hoy! You came! That’s so cool
I agree. The more experience you have, the more skills you have, the more results you can get, the more reputation for quality you have, the more you should charge in accordance.
@Stacy – Duly noted, and I shall indeed remind you
Fair point James. My comment was aimed more at the situation of comparing apples with apples. Naturally, there will always be variances in rates depending on country, experience, skill, etc. But, if we isolate it to just our own local jurisdiction (i.e. Australia for me) and we consider that if we are skilled and experienced enough to be dictating reasonable rates, then at this point I feel that it is important not only for ourselves as individuals to charge the appropriate fee, but important to send a message to industry publishers that that is what we – as individuals and a collective group – are worth.
pamela wilson´s last blog ..Going for the kill on fees
Some great points here. I think when you freelance it is so easy to fall into the trap of taking low rates because you think you’re “just getting started” – even if you might have YEARS of in-house experience; or because low rates seem to be the norm. That point that your actual skills have value is something everyone should remember. But I think it is very important to know your market as well.
In my industry, in my country, everyone knows the rates are low. There is a push to get those rates sorted and part of that involves freelancers, including me, not accepting low rates. While I do have a mental cut-off point, rate-wise, I need to know when to pick my battles. If I went to certain parts of my industry and declared I was worth $x, however true it may be, they wouldn’t laugh, they might even agree, but they wouldn’t hire me. Such rates aren’t figured into their budgets.
I happen to LOVE working in that sector and them’s the breaks (for now) so I’ll take it. Over time, though, I have worked out which sectors DO allow me to charge what I am worth so I can balance out my income that way.
If someone has a strong profile he can easily get the amount he asks for .But for a newbie like me who is going to offer me work if don’t lower down the price initially.Isn’t it wise to keep the price low initially and then raise it gradually with more experience.Thanks
Charge more: people only value what they pay for.
Simon Townley´s last blog ..Scribe – the SEO tool for writers
Overseas tricksters are hurting every market, including this one. I am sometimes amazed at how people will sacrifice quality for low prices, even when the quality is so low it hurts their business.
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