Being self-employed can make increasing your prices seem scary and, dare I say it, greedy. But aligning your prices with the market and competitors is an important thing to do – and may lead to the realisation that you’re not currently charging enough.
Wondering how to go about raising your prices? Here are my top five steps.
1) Do your research
The first thing you need to do is dedicate some time to researching what others are charging, and what you need to charge. You can do this by searching for your industry keywords in Google and finding people who have similar services, or having a look on websites that list how much self-employed people are charging for certain services. For example, if you work in the media, NUJ Media has a comprehensive site with prices for all the big media outlets.
You also need to make sure that the price you’re charging is one that covers your costs and also covers additional self-employed costs like holiday pay and National Insurance. There are a few calculators around that will help you work it out (try Contractor Calculator), or you could search for how much your role would be full-time as an employee.
Don’t restrict yourself to hourly rates either. Take into account your experience, client background and new skills.
2) Choose your time
One of the best times to unveil a price increase is around the start of the year. You’ll need to give good notice, so look at early December to start emailing your current clients. The email or letter can be something very simple, along the lines of:
“I’ve really enjoyed working together over the last year, and I’m looking forward to hopefully continuing that working relationship. At this time of year, I like to review my business and prices, to check they’re aligned with the market and my competitors. Following this review, my prices will be increasing from January 30th to xx. I appreciate there’s never an ideal time for a price increase, so I wanted to give you some notice before the price rises. I’d also like to offer you a special offer (see the next step below)”
If you’ve learnt any new skills, done something particularly brilliant for a client or have made a big change in that particular client’s business, make sure you mention it in the letter to remind them why you’re worth the raise.
3) Give your current clients an incentive/bonus
One way to soften the blow for your client, is to offer them a special deal or incentive. For example, you could offer to keep the price at the current one for two or three months if they buy in advance. Make it clear this offer is ONLY for your current clients though. Another thing to do is to offer a small early payment discount if they start paying within 3 days of recieving the invoice. This is a great tactic if they’re a slow payer!
You may also want to offer packages, so if they can’t afford to pay you for your current services, they can still hire you for a smaller group of skills. Discount your time, not your fees.
4) Assess your ideal customer
You may find that one or two of your clients decide they don’t want to carry on with you. That’s absolutely fine. If, based on your research, you’re charging the right amount, then you’re targeting the correct clients. It’s ok to be too expensive for some people, especially if your skill set and experience grows. You may well find that by increasing your prices, you start to appeal to a whole new market who understand that high quality = higher prices.
(My experience though, is that as long as you don’t have a huge hike in prices, people are usually happy to continue)
5) Update your prices everywhere
Finally, make sure you’ve updated your prices everywhere. If you share your prices online, make sure you update them. Double check your invoice software. Make sure any paperwork you have with them on is updated.
One other tip when it comes to upping your prices. If you’re updating your prices, it may also be a good opportunity to send your client an updated Terms & Conditions document.