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Do you ask for an annual pay rise from your ongoing clients?

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Community Guru
Scott E Member Since: Jul 26, 2015
11 of 26

Of course it's a valid point to make! I'm not sure if I'm speaking some kind of crazy language here that nobody understands, but I'll try and break it down into some kind of example. We'll ignore taxes for now for ease of math and geographic differences in rates: 

 

2015: You need $20 an hour to survive, you charge $100 an hour, you have $80 disposable income per hour. 

 

2025: You need $40 an hour to survive, you charge $100 an hour, you have $60 disposable income per hour.

 

2055: You need $120 an hour to survive, you charge $100 an hour, you can't survive. 

 

So in my book, anybody who doesn't raise their rates at some point, in line with the economics of the world we live in, is going to face a dwindling quality of life. In some instances, there may come a point that they can no longer survive on what they are charging... although if the rate is high enough, then it's likely it will never drop below 'the lack of survival point' before they reach retirement.  

 

Sure, you don't need to put your rates up every year, and the rate you increase it by doesn't have to be 100% linked to inflation or the cost of bread, or your expenses etc, but you do have to put them up at some point. 

 

Surely you can agree with that?

"Welcome, humans. I'm ready for you!"
- Box, Logan's Run (1976)
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Community Guru
Darrin O Member Since: Jan 20, 2015
12 of 26

@Scott E wrote:

Of course it's a valid point to make!


It's not.  You're not listening (or thinking) about what others are saying.


2015: You need $20 an hour to survive, you charge $100 an hour, you have $80 disposable income per hour. 


Again, the approach is not to charge a fixed rate of $100 (or whatever).  It is to send a message to your clients:

 

The current market rate for my work is X.  I have a line of people eager to pay me that, so you need to go above and beyond what the market offers if you want me to make your project a priority.  It can be more money or a flexible schedule or whatever we can agree will make the project more attractive.


Sure, you don't need to put your rates up every year, and the rate you increase it by doesn't have to be 100% linked to inflation or the cost of bread, or your expenses etc, but you do have to put them up at some point. 

 

Surely you can agree with that?


No.  Stop trying to be right and start thinking about what has been said.  The approach is not to never raise your rate.  The approach is not to only raise your rate yearly.  The approach is to adopt a formula that constantly adjusts itself with every new project you get from new and existing clients, based on no other external factors.

If it still doesn't make sense here's a breakdown I did for AdWords a few years back.  Google doesn't sit around fretting about what it should charge or when.  Neither should you.

 

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Community Guru
Scott E Member Since: Jul 26, 2015
13 of 26

"Stop trying to be right and start thinking about what has been said."

 

I am right though. Prices go up, that's the way the world works. You can come up with your own equations or reasons or justifications for if and when and how a price should increase, but none of that matters if the price does increase. The price has gone up.

 

There may be instances when your fee will go down for one reason or another, based on many factors... but can you think of any reasonable example where, all things being equal, the price you charge a client will be less than it is now in ten/twenty years? 

 

"The current market rate for my work is X.  I have a line of people eager to pay me that, so you need to go above and beyond what the market offers if you want me to make your project a priority.  It can be more money or a flexible schedule or whatever we can agree will make the project more attractive."

 

That's lovely, but it has nothing to do with raising your rates. What you've said there works whether the market rate for your work is $10 or $100. You can approach your clients however you want, develop whatever type of relationship with them you want and only pursue projects that provide you more than the market rate... but my point is that your X now, is very, very unlikely to remain X for ten/twenty years. 

 

"The approach is not to never raise your rate.  The approach is not to only raise your rate yearly."

 

So the approach is to raise your rates, surely?

 

"...based on no other external factors."

 

You wouldn't have done very well if you lived in Zimbabwe then.

 

Your link doesn't seem to work for some reason. But anyway...

 

"Google doesn't sit around fretting about what it should charge or when."

 

They may not fret, but I'd be very surprised if they didn't have teams of people considering what it should charge and when. Just because they don't alter their prices doesn't mean there's not a massive bunch of people with giant spreadsheets keeping an eye on revenues and profit margins. External factors could definitely become an issue in that example.  

"Welcome, humans. I'm ready for you!"
- Box, Logan's Run (1976)
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Ace Contributor
Brian E Member Since: Jul 21, 2015
14 of 26

I see where you're coming from but I think this should also be qualified somewhat by profession. Some jobs like writing have no barrier to entry in terms of equipment. Work like mine and yours requires some bit of investment to even have a rig fit to run.

 

That's a large issue with sites like these. You'll get someone charging $3 an hour using a Windows 95 rig promising the world and you can't convince the client unless your planning on those graphics to finish rendering around 2022 the contractor is more than likely lying. The math doesn't add up on cost operate compared to price charged for some projects. But I think that argument is a separate sense of what is being discussed here.

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Community Guru
Jennifer M Member Since: May 17, 2015
15 of 26

I raised my rates last year. I didn't swing it on people I was currently working with but I did tell people who came back to me for more work. I'm kinda a no-excuses type of girl, so I just say "Hi, thank you for considering me again. My rates have gone up." 

 

Some people will go with it and others won't. It's easier to get new people to pay the rates rather than someone current. 

 

If I screw up and underbid, I will honor the bid unless I feel like the customer threw a fast one and did a bait and switch. But, when that's happened, I just cancel the gig.

.

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Community Guru
Fergus M Member Since: May 23, 2015
16 of 26

"Do you ask you long term clients to provide an annual pay rise?"

 

No. I tell them that my rates are going up on the first of January.

If liberty means anything at all, it means the right to tell people what they do not want to hear.― George Orwell
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Community Guru
Douglas Michael M Member Since: May 22, 2015
17 of 26

John,

 

As part of my payment terms, I offer clients the same rates for comparable work through the end of the calendar year. (I may offer an extension for clients I pick up in the fourth quarter; I don't publicize that, and it's at my discretion.) This puts them on notice that rates may vary from job to job and are subject to annual change.

 

I benchmark my rates against those of the Editorial Freelancers Association, which are updated based on member surveys. This data, along with tracking how fast I am at editing (standard) and writing (painfully slow), lives in a spreadsheet I use to provide estimates. The same spreadsheet helps me objectively rate the text I'm working with to determine the appropriate cost based on the level of editorial intervention it requires.

 

The point of all this detail is:

  • If you feel you're undercharging, you probably are.
  • Objectifying your rates and your rate review process places your needs and those of your business ahead of the expressed "needs"—often wants—of your clients.
  • Holding firm requires being prepared to lose good clients.

Best,

Michael

 

 

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Community Guru
Jennifer M Member Since: May 17, 2015
18 of 26

I think there is a certain psychology to it too. If you have enough work, it's easy to do it. Just tell them that x is your rate, and that's it. No excuses. No reasons. Just "Yep, this is my rate as a professional." When you start making excuses why you need it, you're kinda showing a **bleep** in your armor. That's why I keep it short and sweet and just tell them that "My rates have gone up." 

 

I understand not doing well though and giving in to lower rates. Been broke, downtrodden and all that fun before, so I get it.

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Community Guru
Scott E Member Since: Jul 26, 2015
19 of 26

Did you write what I think you wrote prior to armor, and it got bleeped out? Blimey.. they're on the ball!

"Welcome, humans. I'm ready for you!"
- Box, Logan's Run (1976)
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Community Guru
Jennifer M Member Since: May 17, 2015
20 of 26

heeehee yes they did. It's auto-bleeped, so the mods don't have to clean up after my horrible sailor mouth.

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