How to increase your hourly rate

As a freelancer you determine your own hourly rate. Many freelancers calculate their hourly rate when they start their business and leave it at that. But you should review your hourly rate at least once a year, and decide whether you need to adjust it. When do you increase your rate? And how do you communicate your increased hourly rate to your customers?

There are several reasons to increase your hourly rate: 

• The quality of your work and craftsmanship improve over the years. You can ask for a higher reward for this. 
• 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. Your business plan, including the goals you want to achieve, is a practical tool to check whether your hourly rate is still up-to-date. Adjust your goals annually to your current situation. The circumstances in which you operate in business 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.

Communicate with your customer

Have you decided to increase your hourly rate? Communication is the next step. First determine how often your customers purchase your product or service. Is that every now and then, or even once? Then you may not need to notify your customers of the price increase. For customers, the intervening period is long enough to forget the old price. Often, they simply accept that prices go up over time. You should inform more frequent and regular customers. 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. 

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. This certainly applies to customers from whom you expect a negative reaction. 

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 

Make an offer to your most loyal customers; thank them for their loyalty by letting them buy at the old rate one last time. Tell them that a slightly higher rate will apply next time. 

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 a price increase, opt for a one-off 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 Netherlands Chamber of Commerce KVK hourly rate calculation tool (only in Dutch). This allows you to calculate your hourly rate based on a desired net income.

KVK hourly rate calculation tool