Why You’re Undercharging in Your Business (and How to Charge Higher Rates)

Have you ever thought that if you asked for more money from your client, they would fire you?

In the beginning months (or sometimes years), many freelancers ask for very low rates or even agree to work for free—for exposure, for referrals; there’s always a handful of reasons to justify it to yourself in the moment.

But, have you ever heard of an AC technician coming to your house and saying he’ll work for free because he’s only been at it for 6 months?

Did you ever get a great deal on your mechanic since he was a new employee?

Um, definitely not.

So why is it that we creative entrepreneurs tend to value ourselves so lowly?

In this video, CreativeLive instructor and business coach Sue Bryce explains why she believes so many entrepreneurs aren’t charging what they’re worth.

Do you think that fixing a physical problem like a mechanic does, is worth more to someone, because he offers a skill that no one else can easily learn?

Do you think that just anyone can pick up a camera and take wedding portraits that invoke emotions, design a poster that gets a product to sell out, or write compelling copy?

Yes, you do. And that’s why you’re charging less.

You probably know someone who plunked down a lot of cash for the latest, pro quality camera. He used it once on a vacation, posted a billion high quality photos on Facebook, and everyone now says ‘wow, that guy is professional photographer.’

Nope. They don’t say that at all.

Because he is not a professional. Having the tools does not mean you know how to use them to maximize their potential or create something that is truly one of a kind.

But, you know how to do those things—it’s what makes you a professional.

You’re the one who has invested time, mental and emotional energy, and your own hard-earned money into turning a passion into a business. Not everyone has the ability to follow through and accomplish that.

How to Charge Higher Rates in Your Business

Think about it this way. Do you know why saffron is so expensive? You know, the spice that turns paella yellow. It depends on where it comes from, but on average, genuine high grade saffron can cost around $500 per ounce. Crazy expensive. Why? Because each flower (which blooms for just one week per year!) yields only three strands of dried saffron, and it takes about 14,000 strands to make just one ounce.

And did I mention that each step of the harvesting process must be delicately done by hand? There is no saffron-making machine. It takes many, many people, and many, many hours of hard work to hand-pick the strands from each flower and process them for packaging. Just think about the investment of time and money for every ounce of saffron that is produced. It’s immense.

Now, how does this relate back to you?

You’ve spent a lot of time (years) acquiring your skills, degrees, and professional experiences. You’ve spent a lot of time (and still are) figuring out how to run your business, tinkering with how to make it successful; maybe you’ve taken some classes here at CreativeLive.

You’ve invested in the materials, tools and workspace to make it all happen. You are marketing yourself, which also requires time and money, not to mention the emotional energy of putting yourself out there. Therefore, you, as a creative entrepreneur, are very much like saffron. You are like a precious spice. (Say this every morning when you wake up.)

So why shouldn’t your fees reflect that investment of time and money? Really, what’s the difference?

Glass ceiling? What’s that?

If you aren’t feeling the saffron analogy just yet, another excellent reason to ask for more from your clients is simply because you can.

As a self-employed creative who sets your own rates or product prices, you are doing what salaried company employees will never be able to do, as long as they have an office job. For women who are becoming entrepreneurs after dealing with the formidable glass ceiling in corporate America, this is a pretty big deal.

In the US, women working part-time are earning $10 more per week than men working part-time, while in the UK, a survey in 2014 showed that freelancing freelancing women out-earned freelancing men in every major area where freelancers tend to be hired, including writing, designing, illustrating and social media work.

So for you female creatives out there, this is very good news. It’s a strong reason not to give up on your business and go back to your full time job where you’ll be slaving away for someone else while earning 15 percent less than your male counterparts.

As a worker bee in the corporate world, you were essentially following a path that was already built for you to follow—which means there are always limits in place, no matter how high up the ladder you reach.

When you go out on your own as an entrepreneur, however, the traditional “glass ceiling” does not exist anymore. You build your own path, so you get to set your own rules.

And that brings me to one other very important reason to stick with your freelancing dream, you can truly achieve a satisfying work-life balance. You can work to live, not the other way around. Especially for women who are mothers, this is a big deal, since American companies offer less than adequate maternity leave terms. Did you know that the US is the only developed country in the world that still does not guarantee paid maternity leave? Chew on that.

Everybody else is doing it—that’s why you shouldn’t.

Let’s say that one day you wake up and go to your favorite corner cafe to find a huge painting of a bicycle hanging on the wall, and it’s entirely slathered with pastel purple paint. You’re not really sure why. Then suddenly, every cafe around you has the same massive bicycle painting in a different pastel hue. Doesn’t it kind of make you want to run to a cafe with nary a bike painting in sight?

If you owned a cafe and every cafe owner around you is hanging paintings of vibrant bicycles, but you have zero interested in bikes, then why would you follow the trend? Might people think it’s weird that you’re not conforming to a new industry standard? Perhaps. Will people remember your cafe because of your perceived weirdness? Yes they will.

As a creative business owner, it’s so crucial to use your differences (weirdness) to your advantage (something you’ll learn in Sue Bryce’s upcoming class).

It’s your creativity that your clients are after, so show them how you are not like anyone else. Show them that even though there are thousands of other crafters, designers, and photographers out there, you and only you can satisfy their specific needs. It’s like being the muse for many artists at the same time.

Your uniqueness inspires your clients to hire you.

Your special set of talents and skills are able to attract a variety of people. You can’t impress everyone, you can’t make everyone become your client, but you will eventually find that very special crowd who can’t get enough of you and your work.

Yes, sometimes, you will fit your clients’ needs simply because your location or delivery option is convenient for them; other times it might be your competitive pricing that draws them to you. That is something you cannot predict, which means your job is simply to create your best work and price according to what you believe it is worth. To what you are worth.

Practice like you mean it.

Starting now, you have to practice your negotiating skills with each new client you obtain, and never forget that you can renegotiate with each current client you have.

If you need to, practice your negotiation chat in front the mirror or with a friend. Explain why you and your work are so unique and saffron-like. Of course, you might only be negotiating via email, which makes it a LOT easier. Still, you’d be surprised how many freelance writers are unable to ask for more money even in writing (the very medium of their work) for fear of scaring away their client.

The thing is, the worst your client can do is say “no.” That’s it.

They will probably even apologize, and say they don’t currently have the budget for your rates, but maybe in the new year, they will. And then you can decide if you want to stick with them a little longer, or move on to the better-paying clients that are most certainly out there. The more you go through this process, the easier it will get.

Your confidence in your talent and skills will show in the way you market yourself and present your value propositions during fee discussions. If you don’t value yourself, why would your client do it for you?

Even if you don’t believe that you are worth it yet, start charging a higher rate than you expect. See what happens. Once someone pays it, that becomes your new standard, and you will start to see your true worth. Your clients will see it as well and respect you more for it.

The freelancer economy is a whole new way of working, and it’s only just the beginning.

As a creative entrepreneur, you are in that very exciting phase of helping to set new standards for freelancers in your industry, every time you negotiate your rates. So next time, remember what you represent and stand by your worth.

Want more insights on how to charge higher rates? Watch Vanessa Van Edwards FREE class Negotiating Client Contracts. 

Everything you wanted to know about starting and running a small business. In one place. Check out our FREE small businesses classes in our Back To Biz program. 

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Suchi Rudra

Suchi Rudra is a nomadic writer of articles, stories and songs, taking inspiration from her travels. Follow her wanderings at Tread Lightly, Travel Naturally.