Accountant’s advice: How to negotiate a higher rate with your clients
If you’re a freelancer or an independent contractor, then you’ll most likely enjoy having the freedom to set your own rates and hours.
However, you may find it slightly less enjoyable when it comes to negotiating a higher rate with your clients. Chances are, you don’t know an awful lot about how to ask clients for a higher rate.
The majority of freelancers aren’t too fussed about landing their first job at whatever salary or hourly rate their boss considers appropriate. But when you work independently, you’ll continually be challenged with the chore of negotiating rates with clients – whether you need to up your prices to match with the level of the work or you just want a raise.
Don’t worry. We’ve pulled together a few tips on how to negotiate a higher rate with your clients. Essentially, it just takes a little practice and a strong strategy to help smooth out these discussions with your clients.
Leverage Your Freelancer Tax Situation
You’re responsible for your own payroll taxes and income, which is reason enough for asking more from your clients.
Don’t forget, the person who hires you most likely isn’t a freelancer. They probably don’t have a clue why your hourly rate needs to be increased.
It’s worth getting your clients to understand the reality of your situation and the countless tax accountabilities you have.
The next time you consider writing a rate negotiation email, remind your client that you pay your own taxes and do your own accounting. Or perhaps you use a chartered accountant such as Howlader & Co. that handles your bookkeeping and other time-consuming admin for you.
Whatever the case, it’s only fair for clients to pay you what you deserve.
Set Yourself Apart from Other Freelancers
If you want to feel less guilty about asking your clients for a raise, think about what makes you better than other freelancers. If you want to get paid more, then it all comes down to proving your worth, overdelivering on value and setting yourself apart from other freelancers. So, go that extra mile and deliver exceptional work!
If you feel confident you can help your clients reach important milestones and objectives as well as achieve specific results, this can make it simpler to request a raise from your client.
If your clients are thriving and achieving their goals, this allows for a little movement when it comes to pay. What’s more, it shows you’re well within your rights to earn your rate, thanks to the quality of your work and attention to detail.
Seek Out Better-Paying Clients
You can leverage your case for a raise by seeking out clients with even deeper pockets. When you negotiate, simply let your long-standing client know your new client pays you a significant amount more. When they realise this, they’ll hopefully come to the understanding that they need you around.
Don’t feel bad about laying out specific examples of clients who pay you well. Just be sure not to share any protected information.
For instance, if you’re a freelancer copywriter, you could tell a long-term client about a new business who pays you nearly twice your old rates. Assure them you really enjoy working with them but that you can make much more with other organisations – and see how they react.
Give Reasons for Requesting a Raise
When it comes to talking with clients about a raise, consider offering a certain reason, so the request doesn’t come out of the blue. For example, you may have previously taken on projects and quoted something or agreed on a specific rate with a client, only to discover there was a lot more work involved than you originally thought.
Rather than continuing to work at this lower rate of pay, it’s better to invoice for the initial project but state you’ll need to raise prices for similar, future projects. It’s important to explain to the client how your cost process was broken down and highlight any additional work you did if you feel it warrants a better rate of pay.
If there are any other reasons for asking a client for a raise, be sure to communicate this with them in an honest and open way.
Rather than asking clients for a raise, tell them. While this may seem extremely bold, it’s better to inform clients you’ll be upping your fees rather than asking for permission. Don’t forget – you’re your own boss and can decide when to increase your rates whenever you like.
A good idea is to tell clients about your rate increase once a year, well ahead of time, so they have lots of notice to either accept or end the contract.
Because of inflation, tax rises and the increase in the cost of living, you should be upping your rates every year or so anyway.
It’s worth noting that several clients may not be able to afford your raised rate, and that’s fine. Losing a couple of clients may mean the doors open to new clients who can afford your revised rates.
And the best tip? Don’t feel awkward or guilty about asking for a raise. If your revised fee seems reasonable and deserved, clients should be open to this. Also, as a general piece of advice, try to work with clients who’ll pay you well for your efforts and who have your best interest at heart.