While employees have performance reviews as an opportunity to discuss a higher salary, freelancers are often deprived of the chance to justify rate increases. In this guest post, Jenna Bunnell of Dialpad shares effective tactics for negotiating a pay raise as a freelancer.
So, you’ve built up your freelance business and gained a network of clients, but how do you ask for a pay increase without ruining all that goodwill? Many people find it awkward to discuss money, but you’re selling yourself short if you’re earning less than you should. As a freelancer, you deserve a fair reward for the benefits you bring to your clients and fair compensation for the security you miss out on. In this post, you’ll learn some tips for successfully negotiating a pay raise — if you don’t ask, you don’t get it!
Why Is It Hard for Freelancers to Get a Raise?
Regular employees get yearly pay reviews or appraisals when they can discuss why they deserve a raise. They might even get a raise automatically, in line with inflation. But that’s not the case for freelancers.
You don’t work for that company full-time, and you’re likely to be working remotely — which can mean “out of sight, out of mind” and less opportunity to impress the boss, as they can’t physically see how hard you’re working. Plus, bosses don’t want resentment from employed staff if they realize the freelancer is getting paid more.
Female freelancers can find it especially hard to ask for pay increases. Women typically negotiate 30% lower raises than men because they’re more reticent about tooting their own horn. Male freelancers are 4.5 times more likely to make over $150,000 per year than their female counterparts. All of this means that clients often get away with underpaying freelancers, and very few freelancers are satisfied with how much they get paid.
When Should I Ask for a Raise?
You Haven’t Done It in a While
You shouldn’t still be charging the same rates as when you started out. You have more experience now and a solid reputation. Plus, the cost of living goes up yearly, so why should you have less in your pocket? Review your rates yearly or even every six months — put it on your Excel to-do list.
It’s Easy to Attract Clients
Although you don’t want to make life hard for yourself, there’s such a thing as “too easy.” If new clients agree to your fees immediately, then you’ve probably set them too low. In all likelihood, you could have gone higher and still gained their custom.
Your Schedule Is Full
This is another sign that you’re not charging enough. It proves that your freelance business is doing well, which is the ideal time to expand it. By only keeping or taking on clients who are willing to pay higher rates, you’ll be able to provide better quality service.
Others Are Earning More
Don’t be the one who misses out! Look at the rates for other freelancers offering similar services and find out the going rate for your industry. Are people charging based on experience and achievements? You can do the same.
Tips for Successfully Negotiating a Raise
1. List Your Skills and Achievements
The best way to remind yourself of how awesome you are is to make a list. Come up with a process map table, note all your clients and projects from the past year, list any new skills you developed, and include testimonials from clients. Were there any notable achievements for yourself or your clients? Did you drive thousands of new followers to your client’s Twitter? Did your article rise to the top of the Google SERPs? You can use all this to prove yourself in negotiations.
2. Decide What to Ask for
There’s no point asking for a ridiculously huge hike, but don’t undersell yourself either. If you start high, there’s room for compromise. Ensure that the new rates will cover your overhead and still allow for a profit margin. The increase should be significant enough that you won’t have to ask again for at least six months.
If you’re negotiating with multiple clients, do it one at a time. Start with the lowest-paying one and don’t be put off if they don’t bite — you can afford to lose a low-payer.
3. Tell them Your Situation
Yes, freelancing brings many perks, but the trade-off is that your job is less secure, and you don’t get the benefits that employees do. You must pay for your social security and use your equipment and utilities when you work from home. The client probably hasn’t thought about what life is like for freelancers, so you need to help them understand exactly why you need and deserve a higher rate.
4. Demonstrate Your Value
You also need to show your client how valuable you are and how that value differs from that offered by regular employees. As well as your flexibility, you’re saving them money. They don’t have to provide sick pay, annual leave, or 401k contributions, nor even buy you a desk or computer.
If you’ve worked for this client for some time, they’ll have come to rely on your services. They won’t want to train an employee to replace you or even hire a new freelancer who doesn’t have the same company knowledge. If you’re now an expert on VoIP, you’re the best person to market it to their customers.
5. Use Your Power
As a freelancer, you’re under no obligation to continue working for that client. Unlike an employee, you don’t have to give notice (unless your contract says otherwise). You can turn down work if you’re too busy or don’t like how you’re being treated.
In short, you hold some power over your client, especially if you have a network of other (better-paying) customers. You may have gained some previous negotiation experience with other clients, so you can use the best techniques.
6. Timing Is Everything
If you suddenly announce you’re hiking your prices next week, that won’t go over well with the client, who may give you a knee-jerk reaction (which might be “no”). Be aware that they might need time to run it past someone else, or factor it into their budget. It’s better to give them advance warning, such as two or three months, and arrange a time to discuss the matter. You can send a follow-up email to remind them of the increase. Make sure you let existing clients know of the change before posting new rates on your website.
It’s also a good idea to put in the request in the fourth quarter, as this is when companies usually create budgets for the following year. If you work for international clients, make sure you know when their fiscal years start and end.
Choose your timing wisely — don’t ask for negotiation when the client is busy with a critical stage in a project timeline, or you may not get the attention you deserve. If it’s going to be tricky to meet in person, try a video teleconference. Most business telephone providers offer this feature that you can take advantage of.
7. Negotiate Without Fear
Never apologize for raising your rates. Yes, it’s good to demonstrate your value, but you don’t actually have to justify asking for an increase. Don’t worry about what the client will think, and don’t sell yourself short for fear of losing them.
Even if this is your first negotiation, go into it with confidence, armed with the facts to back up your request — the value you bring to the company, the money they save, the average rates for freelance pay in your industry, and examples of other clients who pay well. Track your hours, and show them how long you dedicate to their projects each year.
8. Choose Your Words
Always be polite rather than aggressive, and present your case measuredly. It’s important not to sound ungrateful or like a flake who’s planning to move on as soon as something better comes along. Remind your clients that you value their customs, but explain that you need a fair wage and you could be making a lot more with other companies.
If it’s not going well, ask for honest and helpful feedback about why they don’t want to pay more. Maybe suggest a compromise, or package your services to accommodate valued clients who just don’t have the budget. Know when to walk away but always keep it civil if they change their minds.
9. Let New Clients Know the Score
Requesting more money from existing clients who provide a reliable workload is easier, but you must also apply your new rates to prospective customers. They don’t know what you charged previously, so they won’t realize that you recently became more expensive. It’s worth putting a clause in your contract to say that you reserve the right to reassess your rates yearly. Your clients will then come to expect small regular increases. If you go on for years with the same rate and then suddenly introduce a hike, it will come as a shock.
Prove Your Value and Earn More
Although most freelancers aren’t in it for the money (only 7% of respondents to one survey said they did it for the financial upside), you still deserve to be paid a fair wage. And the only way to get that is to enter negotiations with your clients. It can be daunting, but by following the tips in this post, you’ll have the confidence to demonstrate your true worth and convince your clients that you’re indispensable.
Jenna Bunnell is the Senior Manager for Content Marketing at Dialpad, an AI-incorporated cloud-hosted platform that provides ivr phone system for business owners and sales representatives. Dialpad’s guide to call center staffing provides a valuable solution to get started with call center operations. She is driven and passionate about communicating a brand’s design sensibility and visualizing how content can be presented in creative and comprehensive ways.
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