How to increase your hourly rate

This entire article can be summed up in one word: gradually.

That’s it. I’m done here. Thank you for reading.

Ok, ok, let’s get a little more detailed into a topic that every freelancer finds interesting (because who doesn’t want to make more money?).

The starting point

Generally, there are two ways to go about pricing your services when starting out as a freelancer:

1. Price them low and build up the rate as you gain more experience and build up your portfolio.
2. Price them high — the “fake it ‘till you make it approach” — and let the more serious clients pay the high rate while letting go of the bargain hunters.

The benefit of the first approach is that it will be easier to get gigs and earn a reputation that justifies the higher rate. The drawback is that every little increase will come as a mini-battle with current customers (I had to let go of my favorite customer because I was charging her at most ⅓ of what the newer ones were paying and had to bring the price up to that level for the sake of my own mental health; working at a fraction of your market rate takes its toll — remember the worth of your time). Also, and this is not usually thought about much, you will battle yourself over every little rate increase, feeling uncomfortable and smack in the middle of impostor syndrome.

The benefit of the second approach is that you get paid more right away — awesome! Plus, you don’t have to fight to increase your pricing since it’s already high. You’ll probably feel a lot better about your work too, and that shows in work quality. The downside is the very real possibility that no one will hire you at that rate and that your landlord doesn’t take pics of your professional qualifications/degree as payment.

Pricing the increases

Let’s assume you started low, worked hard to build up your portfolio, and are ready to increase your rate. But by how much? As I mentioned in the very beginning, you should increase it gradually, in increments. If you start at $10, go up to $15, then $20, $30, etc. See how current and potential clients respond. For obvious reasons, people respond better to small increases than large ones. No one wants to suddenly pay double.

The second question is when to stop. At some price point, you’ll notice a lot fewer takers for your services. That’s your sign. See where the resistance is and price yourself lower, at a price point that will still generate enough business for you. And don’t be afraid to try raising your price, because:

1. You don’t know how much people are willing to pay until they tell you.
2. It’s so much better making more money from less work than the all-too-common “I’ll pay you way below market rate but give you a ton of work (to distract you from actual well-paying work from others).” Thanks, but no, thanks.

How do I justify the price increase?

Don’t. That’s the answer. You don’t need to justify your pricing to anyone. You are worth what you charge, and the right client will see and accept it. With that being said, it certainly doesn’t hurt (ok, it actually helps a lot) to give your clients reasons to pay you more. If nothing else, it works with human psychology by giving the client an excuse/justification for paying you more without feeling tricked.

There is also a lot to be said about having a clear Unique Value Proposition (UVP). “I charge $50/hour because I can” is not as strong as “I charge $50/hour because of these 5 things I do for you that really help you solve this specific problem.” Keep in mind that showing is better than telling. With current clients, overdeliver on your work so you can charge more for all the extra value you have been creating for the client. For leads, give them such amazing free value and attention immediately that they will beg to work with you at any price point.

What if my rate is too high for my country?

That’s wonderful — you can buy more with that income, congrats! Yes, with this global gig economy clients will look for cheaper rates from freelancers in certain countries. But remember — you are competing on your skill, not your price. If you can show that you solve the client’s problem better than anyone else, the price is negotiable. Yes, you will have a harder time than someone from a “rich” country. But the price gap gets smaller and smaller as you move higher up in the talent pyramid, so wishing you good climbing!

The takeaway

Anyone can and should increase their hourly rate over time — just make sure to do it gradually and feel out the level of resistance. There is no need to justify it, but providing extra value to clients certainly helps.

And… action!

Let’s put this into action. Answer these questions as best you can by actually writing the answers down:

1. Take a coin. Head: Price yourself high. Tails: Price yourself low. Toss the coin up, catch it but don’t look at the result. Now, when the coin was in the air, did you wish it came up head or tails? That’s your answer!
2. What hourly rate would you be comfortable with? Now write down double that. That’s your goal.
3. On a piece of paper, at the bottom, write your current rate on the left side and clients paying you that on the right side. When you raise your rate, write the new rate above the old one and do the same with the clients. Keep it rising!
4. Think of and write down 5 ways you can provide more value to current clients.
5. Now 5 ways you can provide value to new leads.
6. This one may feel a bit annoying but do it anyway. Write down all the negative work-related stereotypes about the people in your country. Then come up with and write down ways you can fight each one with your work and attitude. The fact that the stereotypes exist is not your fault or responsibility. But accepting them and letting them get in your way is.