How to increase your hourly rate

There are several reasons to increase your hourly rate: 

• Your craftsmanship, knowledge and the quality of your work improve over the years. 
• You want to build up a financial reserve for economically difficult times. 
• Your costs increase, whether or not due to inflation. 

Maybe you are reluctant to increase your rate because:

• your customers will expect more from you; 
• you are afraid that you will lose customers; 
• you simply do not feel comfortable asking more money.

Respond to changes

Make certain you have good insight into the financial side of your company, so that you can respond to changes in time. Adjusting your hourly rate can be a good measure. Use your business plan for this. After you have been in business for a while, your goals and activities may change.  The market and the economy are constantly changing. Think of inflation, rising costs, legislation and the rates of your competitor.

You can also take price developments in the market as a starting point. You can adjust your rate based on a price index from Statistics Netherlands. Watch the video to find out how to do this.

Communicate with your customer

Have you decided to increase your hourly rate? Communication is the next step. Although most customers accept that prices go up over time, for the sake of transparency it is best to let them know. Or see it as a chanve to connect with customers who you may not have spoken to for a while.

Here are 7 tips:

1. Communicate in a timely manner

If you have a large group of regular customers, it is important to inform them about the rate increase in time. Also let them know when the increase will take effect. A sudden confrontation with a rate increase is often found to be very annoying. There is no standard text to announce a rate increase. Prepare your own text for this, one that suits your company. 

Do you increase your hourly rate every half year of annually, due to inflation? Include it in your general terms and conditions. That way, the customer will not be surprised.

2. A personal approach 

If you have few customers, or a few very important ones, inform them personally about the rate change. Visit them or give them a call. You can use the contact moment to talk about possible future assignments.

3. Do not make excuses 

You have carefully considered your rate increase. You do not owe your customers an apology. Send your message about the rate increase as firmly as possible. Uncertainty gives them the impression that there is room for negotiation. 

4. Give regular customers an advantage 

Thank your most loyal customers for their loyalty and reward them. For example, by giving them a one-time discount or including something extra, like maintenance. Be creative. That way, your price increase may be a positive instead of a negative. 

5. You can implement the increase in steps 

The advantage of a gradual increase is that your customers get used to the new price. But if your customers react negatively to price increases it is better to go for one increase. 

6. Use your hourly rate as a marketing tool 

When you start as an entrepreneur, you can offer your customer an introduction discount. At the same time, tell them that a higher rate is actually customary for your knowledge and skills. If you do not communicate this in advance, you may lose your customer when you increase your hourly rate. 

7. Vary your hourly rate 

Does an assignment take longer than a certain period? Then apply a lower rate. Or use a different rate for qualitative hours than for quantitative hours. 

Determine your hourly rate 

Are you having trouble determining your hourly rate? With a rate that is too high, you price yourself out of the market. An asking price that is too low can give the impression that your work is not very valuable. Calculate your hourly rate based on the video Calculation example of your hourly rate. 

Hourly rate calculation tool 

Use the KVK hourly rate calculation tool (only in Dutch). This allows you to calculate your hourly rate based on a desired net income.