Increasing rates without losing customers can be tricky. If you’re like most freelance web designers, you probably started out by offering ridiculously low rates in order to get your first jobs. That’s a good strategy in the short-term because, without any experience, you have to rely on being cheap in order to entice those first clients to hire you.
However, in the long-term, working for peanuts isn’t the way to go. As you build up your credibility with clients and create a portfolio full of amazing work, you can – and should – command a higher fee for your services. Doing so allows you to cull the number of clients you have while making more money and reducing stress for you. Sounds great, right?!
But there’s a problem:
Many freelancers don’t know how to go about raising their prices.
The fear of losing current clients or driving new clients away with increased rates is enough for some freelancers to continue to toil away for pennies on the dollar. The good news is that there are a number of strategies to use to increase web design prices without losing a single client.
To help you achieve your financial goals now rather than later, give one or more of these strategies a try!
Do Some Legwork First
Before you go about raising your rates, you need to be sure you’ve thought the process through. This involves various steps, including developing a clear and easy-to-understand pricing strategy. It also involves some evaluation of your client base to determine the best way to handle a rate increase with each client.
Your Pricing Strategy
When you’re just starting out, you may not have much of a pricing strategy other than “I’ll take any job for any pay.” Now that you’re in a position to increase your rates, you need to establish how and what you will charge for your web design services.
Specifically, you need to decide on the fees you will charge for your services. Whether you work by the hour or by the project, these fees need to be crystal clear to the client. For example, present clients with your pricing plan in writing. A table of services and fees makes for logical organization and is easy for clients to follow. Along with your explanation of your new rates, include a statement along the lines of:
“Prices are not static and are subject to change from time to time as per my company’s long-range financial plan.”
You need not dive into a dissertation on why you reserve the right to change your rates. If clients ask, let them know that rates need to change to reflect increasing business expenses like additional training or improved equipment, to account for your expanding set of skills, inflation, and other factors. However, it is important to let them know that:
Rate increases are part of your strategic plan for financial success and are not the result of waking up one day and simply wanting more money.
By establishing a precedent for rate increases from the outset, you make it easier on yourself to initiate that dreaded “I’m raising my rates” discussion with your client. It also sets the expectation in their mind that at some point, your rates will go up.
Having a written pricing strategy will also help you initiate a conversation with existing clients. Simply email them your new pricing structure and invite them to have a conversation with you about the new rates, should they have any. The real shocker is this:
You will be amazed at how few clients actually raise any questions about your new rates!
Part of your pricing strategy should include an advanced warning to existing clients about the impending rate increase. Dropping a notice the day before you increase your web design fees by 20% is definitely not advisable. Instead, give your clients at least one or two months’ notice. Send them an email, include a message on their invoice, or mail them a copy of your new pricing structure, complete with the date your new rates will go into effect. Given some forewarning, the likelihood that a client will fuss over your new rates will be diminished.
Determine Each Client’s Value
Before raising your web design rates, it is important that you determine the value of each of your clients. How often do they offer you work? Do they pay on time? Do you enjoy working with them or are they driving you crazy? Asking these kinds of questions can inform you as to which of the approaches discussed below is best when raising your prices or dealing with possible difficulties concerning your proposed rate increases.
Evaluating your clients can also help you determine which clients you might consider keeping at a lower rate. For example, assume you have a client that pays on time, who gives you consistent work, communicates well, and sends fun projects your way. Let’s also assume that this client doesn’t have the means right now to pay you a higher rate.
While it’s nice to make more money, there is something to be said for hanging onto clients that provide you consistent business and who are pleasant to work with. There are a lot of things clients do that can be off-putting and aggravating, so rewarding some of your best clients by keeping them at a lower fee or increasing their rates more slowly can still be worth it to you. Plus, by demonstrating your willingness to work with them on price, you keep them happy and keep the work coming in.
The Slow Approach to Raising Web Design Rates
Some freelancers subscribe to this notion about increasing their web design prices:
Slow and steady rate increases are the best way to go.
The prevailing thought is that by taking a slow approach you can ease your clients into your higher rates and reduce the likelihood that they will raise objections to it. If your business is growing rapidly, you can probably get away with more frequent rate increases, say, three or four a year. But if your business is growing at an average rate, one or two rate increases per year is more advisable.
The question then becomes, by how much do you raise your rates each time? Obviously, a 50% rate increase twice a year will likely result in questions (and complaints!) from your clients. Likewise, small monthly increases in your fees will leave a bad taste in your clients’ mouths.
Here’s the deal:
A good rule of thumb is to raise your rates by no more than 20% each time.
An increase in June and again in December will provide enough time between rate increases and ease the blow to your clients’ pocketbooks. Again, if business is booming, you can probably get away with a larger rate increase, but you should still keep it to 25% or below each time.
Charge Higher Rates to New Clients, Immediately Increase Your Income
Another method for raising your rates is to do so only with new clients. Now that you’ve built up your reputation as a knowledgeable designer and you can command higher rates, start out new clients at your higher asking price. For example, if you charge existing clients $30 per hour, take on new jobs at $45 per hour or $50 per hour, or whatever the market will support.
The advantage of this method of rate increases is that it is immediate for your new clients – no easing them in over the course of several months or a year. You instantly begin earning a higher rate, which could be a substantially larger amount than what you charge existing clients.
Tackling rate increases in this manner is also good practice for broaching the subject with your current clients. Part of the hesitation about raising rates is the fear of losing customers, but if you can still get new clients at your higher rates, this will give you the confidence to start the conversation with your existing clients about raising your web design fees.
Prove Your Worth to Justify Higher Prices
An essential component of your price-raising strategy should be to demonstrate to your clients that you are worth what you intend to charge. What is really surprising to a lot of freelancers is:
Many of your clients already feel like you undercharge them!
So for the vast majority of people you work for, raising your rates won’t be an issue. However, there may be some that question why your rates are going up.
For these clients, it is important to remind them exactly what you’ve done for them. This doesn’t mean that you should fire off a snippy email to them that includes a bulleted list of everything you’ve ever done for them. But, providing data that backs up your value as a web designer can go a long way in legitimizing your new rates. As discussed in a previous article about demonstrating tangible results in your portfolio, the same holds true for this situation. Remind your clients what you can do in order to justify raising your web design prices.
In order to accomplish this, you’ll need to do two things: provide your clients with a market comparison of what other web designers charge and offer your clients services that go above and beyond their expectations.
Provide a Market Comparison
When informing your clients of your new rates, include a market analysis to show them where your rates stand in relation to other web designers in your area. If that data isn’t readily available, do some online research and find the average rate web designers charge (which is anywhere from $40-$100, on average). Hopefully, you aren’t the most expensive designer out there because if you are, that could be a problem. Keeping your rates competitive is crucial to convincing clients that your services are a good value.
What better way to prove your worth than to over-perform for a client? In the weeks and months leading up to a rate increase, go the extra mile for your client. Be helpful. Offer insight. Provide excellent deliverables. Doing so will help remind your client how indispensable you are. Additionally, they will see your true value and forget that they will soon be paying you more. Besides, being awesome and providing excellent services should be something you’re already doing anyway!
Compromise or Play Hardball
Different clients may require a different approach to raising your web design rates. Some may try to negotiate with you to cut your rate increase while others may straight up refuse to go along with any increases in your fees. Clearly, these clients require different strategies when trying to resolve the conflict.
Let’s say that you’ve notified your clients of an impending rate increase of 20%. Let’s also assume that one of your clients is not pleased with this development. To address this conflict, you can offer a compromised rate – higher than what you currently receive but less than what you originally proposed.
For example, rather than a 20% increase in fees, suggest a 15% increase instead. By demonstrating your willingness to compromise and reduce the amount of your proposed rate increase, you can alleviate your client’s anger about paying more while still making more money than you used to.
Sometimes a client might not be willing to compromise, and in those situations it may prove beneficial to you to inform them that you can no longer work for them. Clearly, this strategy can easily backfire, so it isn’t advisable to play hardball with your biggest or most lucrative clients. However, some clients may give in to such tactics, so long as you’ve proven your worth to them on past projects.
Playing hardball is not about being a jerk, it’s about being firm and standing your ground. It’s never easy to tell a client that you can no longer work for them, but a lot of times just the threat of walking away is enough to bring them around to paying your higher rates, or compromising with you at the very least.
How to Handle Losing Clients
Most freelancers that worry about raising their fees end up finding out that the vast majority of clients not only stay on but wonder why the rate increase didn’t happen sooner. However, freelancers will also find that sometimes clients aren’t prepared to foot a higher bill and seek out the services of another web designer.
While it may hurt your feelings (and your pocketbook, at least initially) to lose a client, in actuality, it could prove to be beneficial to you in the long run. The clients that refuse to accept a rate increase are probably the cheapskates that you wouldn’t be able to hang onto as your business grows anyway. Likewise, having fewer clients on which to focus means that they will experience even better value than before, and appreciate what you do for them that much more as well. The bottom line is this:
Would you rather have 50 clients who pay you a low rate, or 25 clients that pay you at a higher rate?
The key to dealing with losing clients is to end your working relationship on as good of terms as possible, so as not to squash an opportunity for work with the client in the future. Also look at it through a positive lens: It presents you with more opportunities to find new clients, get experience with new kinds of projects, and expand the footprint of your business that much more. Besides, taking on new clients means there’s no hassle about your higher rates because you can start them out at your new rates from day one!
Springing a fee increase on your clients can lead to some conflict and stress. But holding your ground and insisting on making a rate that reflects your level of quality and expertise is necessary as you build your brand and your business. While compromise might be necessary with some clients, it’s also important to stand up for yourself. If you’re a pushover and cave to every client’s demands, you will soon have a slate of clients that take advantage of you. Instead, bid them adieu, move on, and get other clients that are willing to pay for what you provide them.
What methods have you used to increase your rates? Get in on the conversation by leaving a comment below! And for more great insights into developing your web design business, be sure to join our mailing list to receive our monthly newsletter.
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