When you first start freelancing and you’re trying to get your name out there, you’re more likely to take smaller retainers, subcontracting assignments and short-term projects. As you steadily win higher paying retainer clients, and more RFPs come your way, you can increase your billing rate. Yet knowing how and when to do it can be challenging.
Signs You’ve Earned a Raise
- You have consistent revenue from retainer clients for more than six months and can accurately forecast the next four to six months.
- You regularly attract well qualified and lucrative inbound opportunities.
- You’re ready to bring on subcontractors to manage the increasing workload and grow your business.
- Several clients tell you, subtly or overtly, that they’re getting a great deal.
- You discover a sizeable gap in your billing rate compared to three or more freelancers with similar backgrounds.
Building the Rate into Your Business Model
Obviously, it’s easier to do this when you bring on new clients. For existing retainer clients, increasing rates can get tricky unless you’re asked to present a new scope of work with additional responsibilities. Many freelancers grandfather early clients under a lower billing rate as way to thank them for investing in them when they first started.
However, this doesn’t mean existing clients aren’t profitable. The longer you work on an account, the more intellectual knowledge you gain about the client’s business, therefore allowing you to accomplish tasks and achieve KPIs faster. This, in essence, allows you to increase revenue by freeing you up to work on more clients.
Instead of raising your rates with existing clients, you simply increase your overall profitability. Keep in mind that this model only works when you’re on retainer. If you’re billing at an hourly rate, your ability to achieve KPIs faster actually decreases your profitability on the account.
Two More Ways to Grow the Account
Expand your services by learning new marketing and communications skills and certifications through HubSpot and Moz, for example.
If you’re playing a more strategic role for the client, similar to a director or VP of communications, along with tactical execution, consider offering a blended rate. This allows you to incrementally increase your overall rate within a retainer without having to present a tiered pricing structure for each activity, which quickly gets confusing and frustrating.
The key to increasing your rate is to consistently offer value and deliver top shelf results. When you present a proposal, position your services based on your expertise and how it relates to the client’s specific business, as well as your ability to achieve the client’s business goals.
Your scope should include a flat retainer rate with the incremental increase built into it. Be sure your increase isn’t so high that you price yourself out of good opportunities. If the client wants to negotiate and you want to win the business, continue the conversation. As a rule, don’t lower your rate to the point where you’re not on par with other freelancers offering similar services and experience.