Pricing your services as a freelancer or contractor can be tricky when you’re just starting out, but one of the great things about running your own business is that you get to set your own rates and then raise them as your experience and value increases.

I often get asked if there is a right way or a wrong way to raise your rates, and what is the best way to go about this as a freelancer. Legally speaking, there is! I also know (first hand!) that this conversation can be uncomfortable. In this blog post, we’ll dive into how to legally raise and set your freelancer rates and some tips to help you do so. 

Reasons to Increase Your Freelancer Rate

First, you might be wondering whether it’s time to raise your rates. Let's consider a few reasons why it might be time to increase your prices.

Reflect Expertise in Your Industry 

One of the biggest reasons why you might raise your client rates is to reflect your increased expertise and experience in your industry. As you get further along in your freelancing journey you gain more knowledge and expertise. You may also have taken courses or have other designations that set you apart from others in your field, or simply increase the value of work you pass on to your clients. This is a really good reason to raise your rates: you should be compensated for this!

One of the traps freelancers can fall into is thinking that because they've become more efficient at their work and certain tasks don't take as long as they used to, they shouldn't charge more for their services. Not the case! You shouldn't penalize yourself for this and you need to stop thinking about exchanging your time for money. Let's reframe that as exchanging value for money. Not thinking like this will likely lead to your burnout, and not being able to scale your business.

Offer Limited Spots to Higher-Paying Clients

Many freelancers prefer to work with less clients, but charge more per client. If this sounds like you, you’re likely going to have to raise your client rates so that you work with less clients but still hit your earnings goals. It’s really just math here: Your hourly or flat rate fee (if you offer project based or bundled packages) will need to be higher for these clients as opposed to charging less and having more clients to manage. 

Freelancers that work with a few clients month-to-month on a retainer basis or that offer VIP days or intensives often charge more for these services. Consider a quality over quantity business model if this fits for the services you provide. 

Growing Your Own Team

While many contractors operate independently, others operate by growing their own team of freelancers. By growing your team, you automatically have more expenses, but you also can offer more value and expertise to your clients and take on more projects, which is very beneficial to the client.  

By providing more value, experience, and skill through you and your team’s services, you can charge more. This also helps cover the cost of paying your team.

How to Legally Raise Your Rates

Now if you’ve read this and thought, 'yes it’s time to raise my rates, but I don’t want to lose my current clients', I get it! These can be intimidating conversations to have. But from as someone who frequently hires freelancers in my business, let me tell you that I expect that the service providers I hire will increase their rates at some point. 

But that doesn’t mean you just get to increase your rate with your current clients whenever you want. You should have this kind of language included in your contract with parameters around timing and process of how this would happen for your clients. 

How to Set Your Contract Up When Raising Your Freelancer Rates

Whether or not you want to increase your rate right now, I highly recommend including language in your contract that allows you to do this. 

Your contract should clearly communicate to your client that, while they are hiring you at a certain rate, that rate may not stay the same indefinitely. I often see freelancers begin to resent their original clients who hired them early in their business at a rate that is a fraction of their current rate. 

Having this type of clause in your client contract also makes it easier to rely on when you decide to raise your rates. Plus, it makes bringing up the conversation less awkward, as they have already read and agreed to the clause in writing. 

For example, if a client hires you to provide social media services for a 1 year term, your contract might provide for an extension to your term on the same terms and conditions, except that your rate may increase at the time the contract is extended.

If you signed a contract for a length of term, then you most likely can't change your rate mid-way through the term unless the scope of services changes. When the contract terms ends, that’s when it would be appropriate to let your clients know that your freelancer rates are increasing. Otherwise, you could be found in breach of contract, which is a major no-no, and likely not the best way to go about maintaining your client relationships!

What Happens if Your Contract is Silent on This? Or Doesn’t Have a Term? 

Ok, well now you know you need to update your contract! But seriously, sometimes you have to work with what you’ve already put in place. If your contract is project based, start the conversation once the project ends and before a new one begins and have your client sign a new or amended clause with a similar clause as I mentioned above. If you offer ongoing services, I think having the conversation around the 1 year mark (or even at the start of a calendar year) is a good time to let your clients know you’re increasing your rate, (with open communication and sufficient notice being your guiding principles!) so no one is left high and dry.

Timing of raising your rates is also important! It’s a fine balance between not being too close to when you started working with them, not being underpaid forever (and that resentment starts brewing!), and not breaching your contract! When in doubt, check in with a lawyer or attorney who could assist you with your new rate rollout, and then while you’re at it, update your contract for all clients moving forward so you don’t find yourself in this predicament again!

Communication When Raising Rates is Key

Just like anything, when it comes to raising your rates, communication is key! If it’s not already included in your client contract, I recommend giving your clients at least 30 days notice of your increased rate or at least a bit longer than any notice period set out for termination of your contract. This is important for maintaining strong client relationships. That way your client also has some time to consider the rate change and make a decision whether they can continue to work with you. 

There are legitimate reasons why your client may not want to or be able to continue using your services when you increase your rates, so remember not to take it personally. Giving your clients ample notice ensures that you don’t leave them hanging and also gives you time to fill that spot with a client willing to pay your new rates if they choose to end the contract. 

Prepare for the Conversation!

If you’re uneasy about having this conversation with your client, then preparation is key! When raising your prices, have back-up. Show how your services have added value to your client’s business with proof via trackable metrics. For instance, if you run ads for your clients, showing a sales report showing you 10x their sales since hiring you will show proof you are worth the increase. 

Having the conversation prepared and armed with facts, data, and proof about how you have supported their growth and gotten them results in whatever form, will support and justify your rate increase. 

These metrics can also be helpful to include (without identifying information of your client) in your portfolio to show potential clients the results you have gotten (at your higher rate!). This will help them see the value in your services and understand why you charge the rate you do.

Remember, you can always have or at least start this conversation via an email, especially if this is the main way you communicate with your client. If you have this conversation in person or via video, then definitely...

ALWAYS Get Your New Rate Agreed to in Writing

You knew this was coming, didn't you?

When you do decide to raise your rates  ALWAYS, ALWAYS, ALWAYS get this in writing. The best way to do this is by using an Amending Agreement in your client contract. 

This is a straightforward way to make changes to your client contract and get the new rate agreed to in writing by both you and your client, and easily set out any other changes going forward, like your scope of services. 

Email is ok, but if your inbox is anything like mine, things get lost in there. Having an Amending Agreement ensures all changes are accurately captured and agreed to and is an easy way to keep this document separate and saved (safely) into your client's file. 

Update Your Portfolio or Website

After raising your rates, it’s important that you update these rates and services on your portfolio and/or website. It can be very confusing if you are charging some clients one rate, yet your portfolio and website have a cheaper rate or different services listed. 

To keep everything streamlined and lessen potential confusion, every time you raise your rates or change the services you offer, make it a part of your process to update it in these places as well.

Final Thoughts

Raising your prices can be an uncomfortable conversation, but it's also an exciting way to continue to grow your business and get compensated for the increasing value you bring to your clients. Like all things that feel hard, it gets easier with practice! Like I mentioned before, if you’re doing a great job for your client, they’’’ (1) likely expect your rates to increase and (2) are happy to pay them because they see the value you offer. If they can't pay your increased rate for whatever reason, parting ways simply means you’ve opened up space for a client who understands your value, and is willing to pay you for it. 

In case you’re wondering, all of our client service agreements have a clause that makes it easier to initiate these discussions AND lets your clients know your rate won’t always stay the same. That way, you can continue working with your client and get paid for the increased value you bring to them, with a simple change to your agreement. 

You can check out all of our service agreement contracts here. Each contract is lawyer-drafted, peer reviewed, and is available for both Canadian and U.S. freelancers.