The Word Wrangler

It’s a fact of life that prices go up. Whether you’re talking about gas, milk or doctor’s fees things get more expensive as time goes on. Your freelancing business is no exception. As things go up in price, you have to get the money from somewhere, and like most businesses, it comes from your customers.

But like all businesses, there’s plenty of competition out there. Some of your clients - while not being excited about the increase - will still do business with you because they rely on your service and expertise. Others will say, “thanks, but no thanks,” and search for another, cheaper provider.

Losing customers is always a risk when you raise your rates.

When to raise your rates

A freelance writing business is unlike other companies in that we normally don’t have to deal with outside vendors. A toy company has to deal with outside costs like the price of plastic, labor and shipping. Many of us operate by ourselves, and to some, our prices can seem arbitrary. The toy company can point to higher manufacturing costs to justify an increase, but it’s not so easy for us.

Anytime you add another service to the ones you currently offer is good justification for a pay raise. After all, you’re providing more value to your clients. Additional education also calls for an increase. Being able to point out concrete reasons to your clients as to why you’re charging them more money makes it easier to swallow. You might want more money simply to buy a new car, but please don’t tell them that.

There’s nothing wrong with wanting to improve your state of living, but if you’re going to charge your clients more money, at least give them a good reason for doing so.

Most people do a yearly increase and that’s a fair way to go about it. It’s not a good idea to set a fee and then raise it five months later because you’re having trouble paying your bills. Customers will see through this and won’t tolerate that kind of fluctuation. They’re just like us: They like things to remain as constant as possible.

How to raise your rates

I worked for a company that decided to raise their rates, and instead of telling their clients that an increase was on the way, they simply sent out their monthly invoices as usual. Needless to say there were a lot of angry people - some of whom decided not to do business with us again.

Don’t make that mistake. If you’re going to give yourself a pay raise give your clients fair warning. Make sure you tell them how much you enjoy working for them and that you want the relationship to continue. If it’s a particularly large increase, you might consider softening the blow by offering two free revisions, half off the next consulting job or some other token. This shows that you value them as customers and want to keep them.

What to do when customers balk?

Not everyone is going to embrace your higher fees. Some clients will simply drop you right then and there. At that point you have two options. If they’re a customer you really want to keep, you can bargain with them or just let them go. That’s a choice that only you can make, but I’d advise against bargaining.

There’s always the chance that your clients will cross paths, and if they find out you’re charging different fees for the same type of work, the guy getting the higher rate is probably going to give you a phone call - and not a very nice one at that. You don’t want to risk losing a higher paying customer just to keep a lower paying one.

The second reason for not doing it is that it puts you at their mercy. They know that you need them more than they need you, which gives them the upper hand in any future negotiations.

The last reason is based on the principle that money attracts money. It’s uncanny, but you’ll start attracting higher paying clients as your fees move up the ladder.

Whatever you do, just be smart about raising your rates. Be professional, continue to give great service and increase your value. You really can’t go wrong with that formula.