If you take a job as a regular employee, there are a few guarantees that you are going to enjoy as a side effect of this work.
For example, you know that you are going to get paid on time. You can be pretty sure that there is always going to be coffee in the breakroom.
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Finally, you also know that you were going to get an annual assessment. At this annual assessment, there is a chance that you will get a raise.
I remember that when I worked a W-2 job, I could count on an annual raise as long as I was doing a good job.
Unfortunately, if you work as a freelancer, you are in control of setting your own rates. You might be worried that your clients are going to run away if you decide to raise your raise, even if you believe this is fair.
Therefore, it is important for you to use a freelance rate calculator to ensure that you are charging a fair rate for your work.
When should you decide to raise your rates and how much should you raise them?
Always know your worth when bidding your rate. With all these deductions, like taxes, make sure that it will not compromise your salary.
During tax season, some freelancers would use tax software so they could manage the deductions.
There are a few key points that you should keep in mind.
Use a Freelance Rate Calculator To Help You Develop Your Freelance Rates
Before you decide if it is time to raise your freelance rate, it is important for you to understand how your rate should be calculated. You may not know exactly how you should calculate your hourly rate.
In some cases, you might actually get paid per project instead of per time. The good news is that there are tools available that can help you if you are wondering, “how to calculate my freelance rate?”
Using a freelance hourly rate calculator, such as the hourly rate calculator provided here, you can make sure that you are charging a fair price for the services that you provide.
Make sure that you use this calculator to calculate your hourly rate.
It is only natural for people to be worried that they are overcharging their clients.
At the same time, you want to make sure that you are being paid a fair price for the professional services that you provide.
Using a freelance hourly rate calculator can help you do that. Now, it is important to take a look at some of the reasons why you may need to raise your freelance rates.
See Related: How to Register as a Freelancer?
Inflation Will Eat Away At Your Salary
The most common reason why you should consider raising your hourly rate is that inflation is going to eat away at your salary.
As time goes on, the cost of goods and services is going to go up. For example, 20 years ago, it was not unusual to see the price of a gallon of gas to be under $1.00.
Now, it can be a challenge to find a gallon of gas that is priced at less than $2.00! The same is true for goods at the grocery store. Even though it can be frustrating, the reality is that the price of goods and services is going to go up over time.
Therefore, in order for you to maintain your standard of living, let alone increase it, you are going to have to increase your freelance rates from time to time.
In general, inflation is going to fall somewhere between 1 and 2 percent every year.
Even though you do not necessarily have to raise your freelance rates for all of your clients annually, it is a good idea to evaluate your freelance rates at least once per year.
You may want to consider keeping your freelance rates the same for existing clients, in some situations, while increasing what you charge for new clients.
In other situations, it might be a good idea to increase your hourly rate for everyone. If you haven’t raised your rates in a while, it might be time to do so. Otherwise, inflation is going to eat away at your pay.
See Related: How Much Should a Freelance Editor Charge?
You Should Know Your Worth
Let’s go back to a W2 job for a moment. The longer you stay at the same job, the more you are going to get paid. The reality is that the longer you work for a specific employer, the more valuable you become to that company.
You know how the company operates and understand their daily operations. You know how to do your job and you do your job well.
Frankly, it would be nearly impossible for the company to replace you in a timely manner.
When you work as a freelancer, all of these points hold true. The only difference is that you are in control of what you charge instead of an employer controlling how much they pay you.
If you are wondering, “how to calculate my freelance rate,” think about the working relationship you have with your freelance clients.
After a while, you understand each of your individual clients. You know what they expect and you know how to meet their needs.
Even though you are afraid that you may scare off some of your clients, this fear should not completely scare you away from raising rates. The reality is that your clients do not want to have to deal with replacing you.
Therefore, consider raising your freelance rates a small percentage from time to time. If your clients understand how much you are worth, they are going to understand that you were going to charge more after a certain amount of time.
After all, you have a job to do just like regular W2 employees.
See Related: How to Get Freelance Clients
You Are Receiving More Requests from New Clients Than You Can Handle
Ultimately, the world of freelance work comes down to supply and demand when you are wondering “how to calculate my freelance rate.”
There may come a point when your work has gotten so good that you are receiving more requests from new clients than you can possibly handle on a platform such as Fiverr.
If this is the case, then it is time to raise your rates. The reality is that you are worth what the market says you are worth.
If the market is saying that you have too much work to handle, then you need to consider charging more for the work you provide so that you can handle the work requests.
This is just another reason why it is important for freelancers to track the number of hours they are working on a regular basis. Sometimes, you might be working more hours and not even realize it.
If you use a freelance rate calculator, you will be able to easily track the number of hours you are working.
If you realize that you were working about 30 hours per week about six months ago and now you are working about 60 hours per week, this is a sign that you are generating new clients.
Even though you like the fact that you are making more money, you might not like the fact that you have less time to do other things that you enjoy.
Therefore, it is a good idea for you to reduce the number of hours you work by charging more for the work you provide. If you are receiving a lot of requests from clients and you are having a hard time prioritizing them, prioritize the clients who are willing to pay you what you are worth.
See Related: Toptal vs Upwork: What Is Better?
You Are Providing a New Service
Finally, if you realize that you are providing a new service that you did not provide in the past, it is definitely time for you to consider charging more money.
For example, lots of freelance writers generate blog posts, technical articles, and website copy on a regular basis.
They probably have a set per word rate that they charge for the services. Or, they have negotiated a separate flat rate with individual clients to make the pricing easier.
On the other hand, copywriting is only one portion of digital marketing.
Some freelance writers are trying to expand the services they provide on platforms such as Solidgigs to become a one-stop-shop for some of their clients.
Therefore, some of the services that they may consider adding in the future include:
- Website development, such as posting their own copy on the website of their clients for them
- Generating MLA citations for technical articles they might be writing for some of their clients
- Adding images and videos to the work that they produce to make it more comprehensive using a platform such as 99designs
- Conducting search engine optimization refinement using advanced plugins (such as Yoast on WordPress) for all of the articles that they write
If they were not providing these services in the past, then it is important to consider charging more money for these services.
Even though the services above are not going to necessarily add words to the content they produce, they are still spending a lot of time providing these services.
Therefore, they need to charge a fair trade for the services they provide. This is just another sign that it is time to raise the freelancer rate.
See Related: Best Apps for Freelancers
How Can I Raise my Freelance Rates?
Once you are staring at black and white numbers from a freelance hourly rate calculator, it is clear that it is time to charge more for the work that you provide.
At the same time, you need to make sure that you raise your freelance rates appropriately. You can’t simply send invoices to your clients with higher rates and expect that they are going to simply pay it without asking questions.
Therefore, there are a few important points that you need to keep in mind if you are trying to raise your freelance rates the right way on developer platforms such as Toptal, freelance writing sites, or even for private clients.
See Related: Freelance Skills to Learn
Give Your Clients a Lot of Notice
If you are thinking about raising your freelance rates, the most important tip that you need to keep in mind is that you need to give your clients plenty of notice. Nobody likes surprise bills.
For example, if you have an emergency home repair or a large medical expense, you haven’t budgeted for it. Therefore, it only makes sense that you’re going to be frustrated.
If you are raising your rates, make sure that the notice comes several months in advance.
Then, make sure that the notice is conspicuous. It might even be helpful to reach out to your long-term clients in advance to let them know personally that your rates are going up.
There’s a good chance they’re going to understand why. They have stuck with you for a long time because you provide exceptional services. They understand that you are worth it.
See Related: Fiverr vs Freelancer
Make a Routine
Inflation is not going anywhere anytime soon. Of course, your expenses are going to be the same as well. As long as inflation continues to go up, you need to make sure that you raise your rates appropriately.
Therefore, it might be helpful to develop a routine with some of your clients.
Even though long-term and repeat clients are not as common as they once were, you might want to consider raising your rates by the same amount for new clients every year.
Then, you only have to raise your rates for repeat clients sporadically because you are charging your new clients more money. Think about this as giving your long-term clients a discount in exchange for their loyalty.
Of course, there may come a time on their rates have to go up as well.
See Related: Best Freelance Writing Jobs
Don’t Increase Your Rates Too Much at Once
If you realize that you are severely undercharging for your services, you might be tempted to raise your rates all at once. If you jump the percentage too much, you are going to scare off your clients who believe they are being gouged.
Instead, limit the percentage increase to small increments over a prolonged period of time. That way, you are doing what is right for not only yourself but your clients as well.
These are a few of the key points that you need to keep in mind when you are going to raise your freelance rates. Take the time to inform your clients of the raise in advance.
Explain to them why you are raising your rates and do not increase your rates on new clients too soon.
As long as you are upfront with your clients, there is a good chance that the vast majority of them are going to understand why you are increasing your rates. Make sure that you are getting paid what you are worth as a freelancer.