The Fine Art of Raising Your Prices
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It beats the heck out of me why homebased business owners have such a tough time asking for a raise.
After all, aren't we made of sturdier stuff? Didn't we stride confidently into a new career where most other mere mortals fear to tread? Are we bold risk-takers? Relentless opportunity grabbers? Fearless taskmasters?
Well, yeah. But why do our once-proud spines turn to Jell-O when it comes to asking clients for a raise? Some homebased professionals I know say they don't want to rock the boat and risk losing a client over a 10-percent raise. Others say they need more experience first; then they can bring a stronger case to the bargaining table. All I know is my wife-bless her dear heart-suggested one day with all the subtlety of a jackhammer that I ASK FOR MORE MONEY NOW!
So I did. And you know what? With a little trial and error, I started getting what I wanted. And I haven't lost a single client because of it.
Here are a few tips I learned along the way:
- Be prepared. The first thing I did was to establish a gauge for freelance writers of my experience, background and caliber. Many Web sites, like FreeAgent.com, Guru.com, About.com and others, list what independent contractors in certain industries earn per project. You can also call professional associations for their national salary survey information, quiz other friends in the industry, or simply go online to a major search engine and type (in my case) "freelance writer and rates." For example, a trip to About.com revealed that writing for a financial magazine was worth, on average, about $1 per word.
Using that as leverage, I immediately approached the money magazines I was writing for that weren't paying me that much and diplomatically pointed out the fee discrepancy. In all cases, a raise ensued. One editor told me that "a budget is a budget," but he'd give me the extra 25 cents per word because he didn't want word getting out that he ran a cheap ship.
- Document your value. Once you've assessed the situation, formulate a sales pitch with you as the star. Call your client and set up a formal appointment to discuss your value to the company. Be prepared to demonstrate that value and to establish a market value for your position. If the thought leaves you queasy, type some notes for your own use or even prepare a written report to leave with your client.
- Keep it impersonal. Any human resources director will tell you the worst reason to ask for a raise is because you need one. So what if you want a new car or Lasik eye surgery? That's not your client's problem. When asking for a raise, keep the conversation away from what you need and steer it toward what benefits you bring to the company.
- Don't be afraid to ask. Another editor I approached about a raise was more to the point: "Why did you wait so long? All you had to do was ask."
In most cases, I found clients wanted to help and give me the raise. But a strict corporate code that isn't often breached states that a company never offers its vendors a raise. So you've got to belly up to the bar and ask.
- Know thy client. Sometimes I've found it helps to think like one of your client's employees. For example, you should know what the client company's raise policy is. Are raises merit-based? Are they a fixed cost-of-living increase that everyone gets? Is there a percentage range depending on performance? That way you can have a more productive discussion once the issue is on the table.
- Counterattack. It's OK if your client says there's no money in the budget for your raise, but don't leave it at that. Go ahead and ask when you might see the raise you hoped for. Better yet, if you've saved your client major money or generated piles of cash through your superior consulting or graphic art skills, devise a way to share in the profits you brought in. For example, if you're a Web designer who just revamped a stale site, ask for a commission for every hit. Even if it's a small commission, if you've done your job right, it should add up. Sometimes clients need to be shown that a raise can be paid for out of the revenue you've created.
All in all, the key is to get your request for a raise in front of your client. Be prepared, don't be afraid to ask, and don't be afraid to toot your own horn because nobody else will.
Brian O'Connell is a Framingham, Massachusetts-based freelance business writer. His most recent book, B2B.com (Bob Adams Media), is available this September. His earlier books, Generation E: How Young Entrepreneurs are Changing the Corporate Landscapeand The 401(k) Millionaire, are available in bookstores. A frequent contributor to many national business magazines, he can be reached at Bwrite111@aol.com.