One of the scariest things about freelancing is raising your rates. If freelancing is how you earn your living, you may believe that raising your rates will cause you to lose clients (and that can be scary).
The truth is that having lower rates doesn’t always mean having more clients, and when it does the clients that you are likely to attract are not the clients that you really want to keep.
But, how do you know whether your rates really are too low? Of course, you can rely on surveys and other similar methods to determine what a fair rate is.
However, if you honestly examine your situation, you can probably also tell whether you’re charging enough for your services. In this post, I list 17 signs that indicate that your freelancing rates are too low.
Are Your Rates Too Low?
If you recognize yourself in any of the statements below, you probably aren’t charging enough for your services. If most of these statements seem to fit you, a rate increase is almost certainly long overdue.
- Your projects ALWAYS last twice as long as you expect them to. Even if you think your rates are fair, if projects always take longer than you think they will that means that you are actually earning less than you planned to earn. Try basing your project quotes on more estimated hours.
- Every client tells you that you are the cheapest freelancer that they can find in your field. Believe me, it’s NOT a good thing to be the cheapest. This means that most (if not all) of your clients will be bargain hunters who care more about getting a deal than about getting quality.
- You live modestly and you still don’t have enough money to make ends meet. If freelancing is your livelihood, you should be able to earn enough to live on. While it’s not unusual for new freelancers to struggle to make ends meet, experienced freelancers should be able to live comfortably.
- You’ve actually lost prospective clients because they don’t believe that you will do a professional job at “that” price. Believe it or not, having rates that are too low can cause you to lose some clients who know what a realistic rate is. Even worse, the clients that you lose are likely to be the ones you’d rather keep.
- Whenever you compare your rates to those of others in your field, yours are lower every time. Aim for the higher end of your field’s fair rates. If you examine the web pages of other freelancers in your field and notice that they all charge more for the same work you are probably undercharging.
- When they hear your rates people assume that you live in a developing nation (and you don’t). Many people assume that low rates come from developing countries, where the standard of living is lower. If people think this about your rates, then it is time to raise them.
- When you divide the number of hours you worked for the last week by the amount you actually earned it comes to less than the minimum wage in your part of the world. A freelancer’s hourly income should not dip below minimum wage. In fact, it should be comparable (after expenses) to the income of a salaried professional.
- You have to work more than 60 hours a week just to get by. It’s one thing to work long hours because you like what you’re doing. It’s another to work those long hours because you can’t be by any other way. Make sure that your rate is high enough to give you sufficient time off.
- You can’t afford to upgrade the tools you really need to do your job. We freelancers depend on our tools like our computers, phone systems, and software. However, all of these things cost money and need to be upgraded from time to time. The upgrades are part of your regular freelancing business expenses.
- Your rate hasn’t changed in [a lot of] years. Are you still charging what you charged a year ago? How about two years ago? Or, gasp, are you still charging what you charged five years ago? It’s not uncommon to hear about freelancers who never raise their rates. Re examine yours at least once a year.
- You can’t manage to put aside enough money to pay your taxes. A lot of freelancers forget to set money aside for income and self employment taxes. However, if you’re not saving for these taxes because you can’t afford to set any money aside, your rates are too low.
- You always feel desperate when submitting a new proposal because you feel your business is one payment away from shutting down. Bidding from desperation is not a good position to be in. This is one reason why I always recommend that freelancers maintain a few months of expenses in savings.
- You work when you’re sick because you can’t afford to take any downtime. Working when sick can become a vicious cycle. The more you work, the sicker you get, the harder it is to work, the smaller the amount of money you earn. Be sure to set your rates high enough to cover illnesses and other emergencies.
- You always let the client set your rate. You should be setting your rate, not your client. Do your homework and find out what a fair price is for the services that you offer. Don’t be embarrassed to quote the client a price based on what you are really worth as a professional.
- You’re miserable about your pay. Let’s face it, if you’re miserable about the amount of money you’re bringing in you’re probably not charging enough. Besides, stress and worry over money issues can spill over into your work and negatively affect the quality of the service that you offer to your client.
- You know that most other freelancers would turn down the projects that you accept. While it’s okay to take a few projects that other freelancers turn down if you are interested in them, don’t routinely accept work from clients that have a reputation for paying too little.
- Your client tells you they would be willing to pay more. If your client has to tell you to charge more, then you know it’s time for a rate increase. After all, normally a client would be the least likely person to tell you to raise your rates.
More Resources on Rates
At Freelance Folder, we have a lot of great resources for freelancers who are trying to determine what to charge. Here are just a few of them:
- How to Set Your Freelance Rates (An Overview)
- 3 Reasons Your Rates Are Still Low (And How To Start Raising Them)
- Get Your Clients to Stop Comparing Rates
- Why You Must Quote a Ballpark Figure
- Why You Should Never Charge Hourly
What About You?
Have you raised your freelancing rates lately? How did you go about it?
Share your experiences in the comments.
Image by quaziefoto