When and How to Raise Your Rates
How to Make the Decision and Ask Your Clients for What You’re Worth
When first going out on their own, many solo professionals like personal trainers, house cleaners and hair stylists charge below market rates because they aren’t sure how much to charge or worry that clients won’t pay high rates.
Low starting prices can help build a client base and fill your schedule, but it’s not a sustainable business practice over the long term. In fact, it can even signal to some clients that you don’t take your work seriously or that your work might be lower quality than a higher-priced option.
As your reputation and your expertise grow, you’ll eventually need to raise your rates. Here’s a look at five stumbling blocks to raising your rates, along with solutions you can use to overcome them.
Pricing Challenge #1: Lack of confidence
Imposter syndrome — where you feel like a fraud and attribute success to luck rather than talent or hard work — can keep you from charging what you’re worth. Surprisingly, this confidence issue is most common amongst high-achievers who may set even higher expectations for themselves. If you feel this way, you’re in good company.
Solution: Create a “humblebrag file,” suggests Melody Wilding in this article for The Muse. Your file might include notes or testimonials from satisfied clients, industry awards and other reminders of your awesomeness. Anytime you’re tempted to accept a low rate or you’re struggling to quote the rate you want, refer back to that file for a jolt of confidence. Also remember that clients hire you because you bring skills and expertise they likely don’t have, whether that’s closet organizing, pastry baking, personal training or something else entirely.
Pricing Challenge #2: Lack of context
If you’re unsure what others in your industry charge, it’s hard to know what you should charge and you may be underpricing yourself. Don’t price in a vacuum!
Solution: Join industry associations and do your homework on what other service providers get paid. The Educational Freelancers Association provides pricing ranges on its website, PetaPixel lists rates for photographers and Time to Organize offers information for aspiring home organizers. Search around to find standards for your industry, and let them inform how you set your prices. National averages can be a great place to start, and remember to adjust your rates based on your region, specific niche, and experience level.
Pricing Challenge #3: Low starting price
It’s a common soloist conundrum: You set low prices initially and now your clients are used to paying peanuts, but you know you should be charging more. You also may not have factored in all of the costs of going solo (insurance, self-employment taxes and so on) into your initial rates. Plus, you’re more in demand, so continuing to serve clients at your original rates could be stretching you too thin.
Solution: When you on-board new clients, start them at a higher price so they’ll never know you used to charge much less. For legacy clients that you want to keep, you can raise prices gradually when you hit a service anniversary or at another point in the relationship.
Give your loyal clients advance notice about the rate increase and express your appreciation for their business. For instance, “I greatly appreciate the clients like you who’ve been with me since the beginning! Now that I’ve gained more skills over the past year in business and with rising expenses, my rates will be increasing to $XX as of January 1. All appointments before then will be charged at the current price. I look forward to continuing to serve you!”
Pricing Challenge #4: Fear of scaring away clients
Some service providers worry that if they charge too much, new clients won’t want to work with them and existing clients might jump ship.
Solution: Not every client is a good fit for your business. If a few people balk over your prices but you still have enough customers to stay business, then you’ve likely hit a pricing sweet spot.
As for losing current clients, you can continue serving them at a lower rate if you choose. But recognize that there comes a time for many service providers when low-paying clients no longer fit their business model. It’s OK to outgrow a client and move on, even if you like them as a person. That frees you up for new opportunities and better paying clients. You can always refer lower-paying clients to someone who’s earlier in their business life cycle.
Pricing Challenge #5: Discomfort around discussing $
In general, many American families don’t speak openly around money. We’re taught that it’s impolite to how much money someone makes or what their house cost, and that childhood taboo can follow us into adulthood. But in order to raise your rates and charge what you’re worth, you’ll need to push through that discomfort and initiate conversations around money.
Solution: Some service providers only discuss money over email so that their in-person interactions can be more friendly and free from money discussions. If someone asks about your rates in person or over the phone, you can say you’ll get back to them once you know more about their needs. Setting up a rate sheet and an invoicing system can also help to set your official prices so that clients know exactly what they’re getting for their money.
If that’s not feasible in your line of work, you can practice negotiating in smaller, low-stakes situations to build up your confidence for more important situations. This Lynda.com course suggests practicing negotiation at yard sales. You can make a low-ball offer or ask for a discount if you’re buying multiple items, and the worst thing that can happen is that they decline and you walk away. If they accept, then you’ll more confidence for negotiating in your business.
Raising your rates can be scary, but it’s an important part of growing your business and flourishing as a soloist.
Want to dig in deeper?
Try these additional resources on pricing.
- U.S. Small Business Administration — How to Price Your Small Business’ Products and Services
- Inc. Magazine — How to Price Business Services
- Entrepreneur Magazine — Pricing a Service
- The Money Book for Freelancers, Part-Timers, and the Self-Employed