One of the joys of being self-employed is that you decide your hours, choose your clients, and give yourself a raise whenever you want, right?
Ha. Ha. Ha.
A friend of mine (whose company manufactures sorting systems) likes to say, “When you work for yourself, you only have to work half a day, and you get to decide which 12 hours it will be!”
And you only get to choose which 12 hours if you don’t have a client in Sweden who needs to meet during your morning hours due to the time difference, thus blowing your plan to never have to people before noon.
And you only get to choose your clients if you have enough clients to choose from. (But hey, I can help with that. Download the Free Quick Start Guide).
And you can give yourself a raise simply by working eighty hours a week.
It ain’t all that. As a matter of fact, when you work for yourself, you DO get to choose your hours and your clients and give yourself raises. Maybe not straight out of the gate, but if you’re not heading toward a lower stress life with more hours to yourself, then what the heck are you working for yourself for? Go get a job. The benefits are better.
But if you are working for yourself, and you want to keep at it, and you’re ready to give yourself a raise, here’s how to do it.
- Build your skills. More on that here.
- Build your portfolio. More on that in a future entry.
- Give yourself credit. Publicly. Don’t be shy. Keep your online portfolio up to date (eek I’m behind on this) and post “I’m so excited!” notices every time you get an accolade or a new publishing credit (HEY, I’m about to have a piece published on Redshift under my byline, EEK! I’m so excited!).
- Back your pricing up with exceptional value. More on that here.
- Keep raising your rates. More on that… below.
Okay, so let’s assume you’ve gotten your feet wet, or maybe you’re well established now, and it’s time to raise your rates. It’s easy to do this with new clients: You just quote higher. I published a guide to optimizing that process here.
But what about existing clients? Well, that’s a little tougher, isn’t it? That’s the question Phil Ransom brought up on LinkedIn today.
My short answer is: I don’t. If I love working with a client and they are reasonably profitable for me, I don’t upturn that apple cart.
Over time, cost of living goes up. If you’re like me and you like to keep a good client around for a few years, eventually you’re going to have to boost your rates even with good old favorite clients in order to make the work profitable.
The good news is, a good client will understand. Here’s how to handle the communication.
- Sometime in early fourth quarter (October or November–fourth quarter is best because it’s when everyone re-evaluates their budgets for the next year, so they’re already in the right frame of mind), let them know it’s coming. Send a warm email reminding them how much you value them, and reference something you’re proud of having done together. Explain that in reviewing your P&L you realize that you’re going to have to increase your rates in order to maintain your current service level offering. Let them know that you understand that pricing increases impact their budgets, and that’s why you’re letting them know in advance. Tell them the amount of the increase (3-10% is appropriate) and when it will be effective (1st of January). Ask them to let you know if they have any questions or concerns.
- When you send your invoice for the 1st of January, include a brief, warm reminder to check the amount, as it has changed.
- Bookmark this article to re-read in October. 🙂
Most likely, if your relationship with your client is good, they will support the increase, even if they moan and groan about it. However, be aware that it may indeed complicate their budget. Be open to working with them to make it easier. For instance, they may ask for a few extra months to pull the necessary budget together. That is a reasonable accommodation. They may ask if there is anything they can remove from the retainer in order to keep their price the same. This is also a reasonable accommodation. Look for items you’ve been providing that are of low value to them, or that someone on their team can easily take over. Use the time you free up to find higher paying work.
If you get major push-back, it may be time to look elsewhere for better work. Of course, only you can make that judgment but I will say that I have never regretted letting an unprofitable client go.
Some experts advise regularly shaving the bottom 10% of your clientele off the bottom. I don’t practice this exact formula, but I do evaluate my client relationships regularly and am unafraid of removing a relationship when the time is right.
You should be unafraid, too. With a good solid sales process in place (download the Guide Book if you haven’t already!), you won’t have trouble finding good new work to replace it. Your new clients won’t even know they’re being charged a higher amount.
You deserve to get paid what you’re worth. So do it. Give yourself a raise.