Handbook / Pricing your work

How to raise your prices as a freelancer or small business

Most freelancers and small business owners undercharge for too long. Costs rise, skills improve and demand grows, yet prices stay where they were set in the first nervous months. Raising prices is uncomfortable, but it is one of the most direct ways to improve income without working more hours. This guide covers when and how to do it.

Signs it is time

• You are booked solid or turning work away.
• Clients accept quotes immediately without discussion.
• Your costs, such as software, insurance or materials, have risen.
• Your skills, results or reputation have grown.
• You have not raised prices in over a year.
• Your effective hourly rate is below your target.

Calculate your effective hourly rate per client, using tracked time and the fees each client paid. Your financial records make this possible; keeping them is good practice anyway.

Choose the increase

Consider:

• your floor: the rate you need to cover costs, taxes and income goals; see hourly rate
• market rates for similar services and experience
• demand: high demand supports larger increases
• value: what your work is worth to clients, as discussed in value-based pricing

Smaller regular increases are often easier for clients to accept than rare large jumps.

New clients first

The easiest step: quote new clients at the new rate from today. You lose nothing, and you test the market. If new clients accept, that is evidence your existing rates are low.

Existing clients

Treat existing clients fairly:

1. Check your contracts. Some include notice periods, fixed prices for a term or annual review clauses. A contract price generally cannot be changed by one side alone; both sides need to agree a new deal, so changes usually take effect at renewal or with a new agreement.
2. Give notice. Thirty to sixty days is common; longer for large clients or retainers.
3. Put it in writing. State the new price and when it applies.
4. Offer a transition for long-standing clients if you choose, such as a phased increase.

Wording the message

Keep it short and confident:

Example. I wanted to let you know in advance that from March 1, my rate for monthly bookkeeping will increase to 650 per month. This reflects the expanded reporting I now provide and rising software costs. Nothing else about our arrangement changes. I have really valued working with you and look forward to continuing.

Avoid long justifications or apologies. One or two reasons are enough.

Handling pushback

Most clients accept. Some will ask questions; a few will object. Options:

• Explain the value briefly and stay firm.
• Reduce scope to fit their budget at the new rate.
• Delay for a short period for a valued client, with a clear date.
• Part ways politely if the work no longer makes sense at a fair price.

Losing a small number of low-paying clients often frees time for better ones.

Retainers and packages

For retainers, raise prices at renewal or after the notice period your agreement sets. The guide to retainer pricing covers review clauses. For packages, update your price list and proposal templates.

Make it routine

Add a yearly price review to your calendar and include a review clause in new contracts. Clients then expect periodic changes, and you avoid long gaps that make increases feel large.

Common mistakes

• waiting until you are resentful or overloaded
• raising prices only for new clients forever
• announcing increases without notice
• discounting immediately when someone hesitates

After the increase

• Update everything: your website, proposal templates, rate card and invoicing software.
• Honour what you promised, such as a notice period or locked-in rate for current projects.
• Track the results: inquiries, conversion rates and any clients who leave.
• Use the extra margin deliberately, for example to reduce hours, invest in training or build a cash reserve.

Raising prices for packages

For packaged services, you can raise the price, adjust what is included, or add a premium tier. Adding a higher option often lets existing clients stay on a familiar package while new clients choose the fuller version.

If a client leaves

Thank them, offer a referral if you can, and leave the door open. Some return later, and the time freed up can go to better-paying work or finding new clients at your current rates.

Raise prices for new clients first, check contracts, give existing clients clear written notice with a brief reason, stay confident, accept that a few may leave, and review prices every year.