I don’t really agree with that. There are lots of freelancers who make more than they would if they worked at a firm, and lots of clients who will pay big money to a trusted freelancer.
Or opened their own firm. There are certain advantages to “working solo” just as there are advantages to working for “The Man” or even being “The Man” - you just have to weigh each one with its respective disadvantages before weighing each one against each other.
I think you are mistaking owning a firm with working for one. If you compare work hours for a successful business owner with employees and a successful freelancer. The business owner should be making more per hour, simply because their employees can be doing more than one job at a time. Sure you have more overheads there, but if you have consistent work for your employees the more jobs per hour can be done and therefore the sky is the limit with the amount of money you can make.
And one of these advantages of working solo is the ability to raise your rates. It takes confidence to risk losing a client due to a rate hike, but the fact that these other companies are willing to pay more suggests that your work is proving itself in the marketplace.
Exactly. There’s an old saying. “You get what you pay for.” Not to say that it’s a bad thing for new freelancers, since we can’t always start freelancing with a full portfolio of happy clients to show prospects, but rather to say that as we get better, we can (and should) charge more.
I’m not saying there isn’t a bigger POTENTIAL income as a business owner, but I wouldn’t say that you can’t make huge money as a freelancer. That’s just not true. I know freelance specialists who make $225/hr and they are doing quite well.
Maybe if you’re worried about how they’ll take a proposed rate increase, tell them that you have other clients who are prepared to pay higher and that you can’t afford to work for client #1 at the same rate anymore because effectively, you’re losing money working at the old rate. If they value your work, they’ll agree, if not, then you decide whether they’re worth sticking with.
Ugh - that’s a bit heavyhanded, don’t you think? Basically telling clients that they’re now second class citizens due to market pressures?
Better way to say the same thing: it’s a time issue. On top of normal inflation and expense pressures (coughENERGYcough), your workload’s increased since your last rate hike, and so you need to raise your rates to manage ongoing demand for your time. Any businessperson would understand that one and not begrudge you for it. However, since this is such a great client we’re talking to, you’re grandfathering them in at the old rate (for a limited time) - basically, because their work should always still take priority.
Also, a certain segment of your client base will simply look at the rate hike and take it as an opportunity to find someone cheaper (even than your old rate); by announcing a rate increase, you draw attention to your rates, which in turn leads to conversations, which in turn lead to meetings, which in turn lead to the dreaded “I’m the new general manager and I’m gonna make a name for myself by cutting this budget regardless of all other factors” scenario. Those clients will likely jump ship, no matter what you do.
What’s interesting though is that with those clients, there’s always a certain amount of internal dissention, particularly if you did a good job. Not everyone is going to like or agree with that new general manager, and so when the GM hits a brick wall, you might get the call later as the Guy They Should Have Stuck With. That could lead to work at your new rates or even referrals down the line.
I had that happen very recently. Back in March, I got into a bit of a snit with a client for whom I’d done a large, high profile assignment. They were very happy with the work, but the creative director made some critical mistakes, got fired, the GM took over direction, and suddenly was asking why I wasn’t charging half of what I was. The stuff they got from other writers was garbage, and they loved my work, and wanted to keep working with me - but only if I charged what the junk writers did. We had words and parted ways, and I figured I’d never hear from them again.
A couple weeks ago I was contacted by a marketing rep with a large local financial concern, who’d been referred to me by an account rep with my former client - they both sat on a committee with the local advertising council and a card was passed along. My guess is not everyone there agreed with the GM’s decision.
I agree, you should write a professional letter explaining that you are raising your rates. The explanation should include the fact that you are “growing your business” and you need to raise your rates to maintain “excellent customer service”…or something to that effect.
It would depend how you put it. Reading back over it, it does sound a bit strong and what I was getting at was similar to what you mentioned with it being a time/demand issue.
Highlight the benefits of getting things done by you…then approach him regarding the raise.
Someone has to to look at the big picture, if none did, something wouldn’t get done so here goes. A lot of auto workers kept wanting raises also, well they raised their selves right out of a job. Why do you think so many people are outsourcing to forign countries? Because we have become a hoggish, “got to have the bigger suv society”. Sometimes, it’s just nice to be thankful for what we have. I thank GOD for what I have. Go after needs first and don’t worry about wants. Be careful, and don’t forget, there are people in Mexico learning php, css, etc. If we as a country aren’t careful, one day we will loose the industries we have now. “GEES”
People outsource to other countries for a variety of reasons. If it’s because they are only searching for the cheapest price, then so be it - let them go. Are you suggesting that your average Western developer never raise his rates and instead try to keep his prices low so he can compete with a guy in India? It’s not possible. The average cost of living in India is around 10 times lower than that in the US; getting paid $350 for a 3 page site is a fantastic sum for a guy in India, but in the US, you’ll go broke pretty soon.
You have to realise that people will continue to buy from local developers simply because of other factors beyond price - convienience, confidence, reliability, gut feeling, supporting local business commmunity, xenophobia, loyalty etc - whatever is most important to them.
Yea, things used to be cheaper here until we got greedy. For example, in some states a house cost 500,000 where it should cost 50,000. As long as WE keep paying crazy prices for things, things will keep getting out of hand. Case in point:::: The autos that are build in Mexico saves the auto makers money. But at the dealers they are still charging the same as if union labor did the work. 2.00/hours vs say 30.00/hour so now a 30,000 auto should cost 2,000. I haven’t seen this kind of price since the 70’s. We are slowly ruining our own nation because of things like this. Think man, if everyone refused to pay the same for the products that were produced with less labor cost, then prices all over would come down. But are the people smart enough to do this? Duh no
Boy, what a great thread! 
Here’s my two cents.
Although the question is valid, and the advice given is quite excellent and
insightful. My objection is re: the question itself… I see it (sympathetically) as being on the wrong ‘plane’. So here’s my perspective, for what it’s worth…
The advice given about freelancers not having to “ask for a raise” is so spot-on.
Having been out on my own in various capacities since 1994, that resonates.
But I think a better mindset is, you shouldn’t HAVE to ask for a raise at all.
The mindset should be to “outgrow your clients”. If you are really ready for a raise, then you will be able to replace you current clients with better, higher-paying clients.
To raise your rates with a client, is just not the right place to be. You do more work, or get more efficient, or leverage the project… whatever!
But to ask for a raise SCREAMS at them… this is a (struggling) “employee kinda” person. It’s bad Karma.
So I’d suggest if your skills are really elevated, then go after new clients with THAT.
hth, and don’t take it the wrong way.
Robert Warren, you are THE MAN on Sitepoint. Have you published your postings yet? Enjoy them every time.
-steve
I think freelancer the greater competition, payment freelance gradually has bad prospects in a network too decreases
I’m sure there are a few folks hanging around here who’d disagree, but thanks. Just trying to help where I can.
Have you published your postings yet? Enjoy them every time.
Nope, but I’ve been known to scavenge old ones for article and blog entry material from time to time. I sometimes think that’s half the reason I keep coming back… that, and the free coffee, of course.
Off Topic:
Rob, it’s only free because I don’t drink coffee 
One of my favorite parables starts with a famous artist sitting on a park bench. A passer-by recognizes him and asks him to draw something, anything, for her daughter as a present to say that she had seen this famous artist. The artist obliges and in less than a minutes sketches a quick drawing. “That will be $10,000” he says. “What!” the passer-by responds, “How can you charge so much? It only took you a minute to draw!” “No,” the artist explains, “it has taken me a lifetime to draw.”
You’re not just getting paid for your time, you’re getting paid for your expertise. As your skills and experience develop, then of course you should be increasing your rates. Even your existing clients should realize this. If you think they might balk, though, try raising your rates gradually over 6-9 months, for instance.
People need to understand their legal rights in terms of contract law. If you are going to freelance, consult a lawyer… it’s worth the investment as you learn a tonne of useful information.
Depending on the stipulations of the contract, you as a contractor are free to break it at any point with sufficient notice, providing you’ve filled the conditions of the contract (minus amount of time served).
If you are contracted to build a site, your legal obligations end when you’ve completed the site.
If you are contracted to maintain a site, your legal obligation ends when you’ve performed the work you are required to based on how much you’ve been paid (i.e. if you get paid $3000/month, at the end of the month you can break your conract… if you do it on the 15th, you’d have to pay back $1500).
The reason for this is because it is tantamount to slavery to force a person to work and not explore their options. Providing you’ve fulfilled the terms of the contract (again, length of time is not a term), you are free to end the contract.
Term of contract from a freelancers end is not a breachable term. An employer can’t make you work for 4 months when you only want to work for 2. Providing you are only being paid for services you rendered, there is nothing they can do.