A recession is tough on everyone, no matter what kind of business you run or work with – but it’s especially tough on freelancers who work with a variety of different clients and don’t have the safety net of a steady paycheck to support them. Additionally, freelancers habitually underprice their services to compete with freemium and larger companies, and so by the time a recession hits them, they might be struggling to make ends meet. If you’re a freelancer and you’ve been working with the same rates since before the pandemic, it might be time to raise your rates.
However, knowing that you need to raise your rates and actually doing so are two different things.
It’s easy to get caught in a loop of never upgrading your prices because you’re afraid of the backlash on your clients. It’s also easy to continuously undermine your worth and put off raising your prices until later – but it’s important to keep in mind that, as you grow within your industry, your experience will grow with you, and you’ll be well within your rights to charge more for your services and expertise.
Bear in mind that – as you choose to raise your prices to reflect the rising costs of living – some of your clients can refuse to pay the increased fee.
That said, here’s how to raise your hourly rate in a recession.
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Work out a timeline beforehand
Raising your hourly rate might be something you’ve been angling for for a while, but if you’ve never communicated as such to your clients, it might be a little harder for them to accept that you’ve increased your prices. To mitigate this, make sure that you have a clear timeline in mind for when you’re going to raise your rates, and communicate this to your clients as soon as you decide.
Additionally, if you’ve been working at the same rate for your clients for long enough, you might want to consider raising your rates gradually and in small increments – once every few months or every year, rather than once every month.
Communicate why you are raising your hourly rate
How has the value you give your client changed? It’s fine if you just feel like raising your prices because of the time you’ve been working, however having a tangible reason for why you’re raising your prices can help identify to your clients the value that you bring to their operations.
If you started working for this client at a rate lower than market value, it might be harder to convince your clients that you’re raising your prices appropriately. This is why you should prepare to highlight exactly what service you provide that makes the higher price worth it. Having a written proposal that you can show to clients, both current and prospective, can help make this part easier.
Consider your rate in comparison with other service providers
There’s only so much you can raise your prices before running the risk of putting yourself out of business. If the market rate is significantly lower than what you charge for the same services, it might be worth considering adding new services to your repertoire so that clients don’t go and get the same service from competitors. If this can’t be done, you can also consider just raising your rate with a smaller increment than the amount you were going to.
Reach out to your most valuable clients
As a freelancer, all your clients will be important to you, but you might have clients who are slightly more valuable in terms of time and effort than others. When it comes to increasing your rates for these clients, consider whether you would prefer the rate increase over keeping a long-lasting relationship. There are no wrong answers here! If you do decide to keep the client over gaining that extra little bit, make sure that it’s communicated to those clients that you value them above a price increase. Try and make sure that this is communicated clearly – you don’t want to come across as playing favourites between your clients.
Take on work with higher rates
An important distinction to make early on in your career is what work will you be taking on, and what work will you avoid. If you have a tendency to take on quick assignments that pay less, you might want to consider taking a step back from this kind of work and focusing on higher-paying work that could mitigate having to raise your prices a lot more than your clients are willing to pay.
Raising your rates is never easy, and especially not during a recession – however, it’s necessary to always keep in mind that your value will increase with experience, and it’s only fair to reflect that experience in the price of your services.