How would you feel about having your freelance writing schedule booked weeks or months in advance? Do you wish you had the luxury to be more selective in the freelance writing jobs you take on, able to turn down anything that doesn't appeal to you? Plenty of freelancers are already in that boat, myself included. It's a great place to be, but a reader brought up a good question a while back in a comment -- if your schedule is constantly full, doesn't that mean it's time to raise your rates?
The short answer is "no." Demand alone isn't enough of a reason to raise your rates. Today I want to talk about why, before you rush off to raise rates for 2010 just because you have adequate demand at your current rates.
Not All Work is Created Equal
It's true that constant demand is one sign that it might be a good time to raise rates. But that doesn't mean it's always true. For example, the bulk of my work comes from regular clients who place relatively large orders every month. I have a booked schedule well into the New Year. This year I only took on about five new clients due to the existing commitments. I don't expect that to change in 2010. Yet I turn down multiple offers every single week (referring those buyers to colleagues).
Does that mean I should raise my rates with my other clients, or replace them with higher paying ones? No. Why? Because an influx of offers in no way means those working relationships would be equal to my existing client relationships. I have long-term contracts. There's no guarantee of that with a new client. I've found an amazing balance between great rates and stability rivaling that of a regular full-time job. Hypothetically I could drop client A (who orders $2000 worth of content a month) and replace them with client B (who will pay a bit more). But client B might not stick around beyond a month or two, meaning I'd then have to replace them again with someone new.
Stability and long-term contracts are a huge factor you can't afford to ignore.
New Clients Equal More Work (and Sometimes Less Money Hourly)
You also have to look beyond your base rates. You can't think of it as "client A will pay me $450 for the project and client B will pay me $600 for the project, so I should go with the new client B." When it comes to freelance writing rates, you have to revert everything back to hourly levels.
If you've been working with client A for a year, chances are good that you're already intimately familiar with their business, products, or services. You probably know who their target market or target readers include, and you know how to tackle the project to appeal to those people. You might be able to turn that project around in 5 billable hours, meaning you'll earn $90 per hour.
With client B, you don't know any of that information up front. If you truly want to do your job well you'll have to invest more time into research. You'll review the client's website thoroughly. You'll look at other documentation they send you. You'll have phone or in-person consultations with the client. You'll research the target market / readers and how the competition successfully appeals to them. It might take you 9 hours overall with that additional work. Even at the higher per project rate, you would only be making around $67 per hour.
Unless you know up front that client B plans to be a long-term repeat client (meaning that initial time investment will pay off over time as their projects become faster to complete), the better business decision is to stick with client A. The lower rate is actually more pay per hour (and more hours to devote to other projects).
Changing Rates Sometimes Means Starting Over
Unfortunately, there's always the possibility that you're at the maximum rates your current target market will pay. Therefore, if you want to raise your rates, you'll have to change your target market. That means starting over. You'll need to tailor your services and your value proposition to an entirely new group of potential clients, re-think your marketing strategies, and revamp your network. Do you really want to do that?
If you're not happy with what you're earning (such as being stuck at content mill rates and wanting to double or triple them), then do it. You have to change your market to change your career path. But in a case like mine, when you're already earning a very comfortable hourly rate, overhauling your career targets (and all of the unpaid marketing and administrative time involved in doing that) doesn't make sense.
So no, demand isn't enough to signal that it's time to raise your rates. Hating your current work, feeling taken advantage of, and being pushed to the burnout point cranking out content just to make a livable hourly wage... those are reasons to raise rates (if you can offer the value to back it up).
That said, don't ignore the demand either. A sudden influx doesn't always mean something. But if that increased demand sticks around for six months or more with no signs of letting up, take it as a sign that it might be time to evaluate your overall situation as a freelance writer. Only that will tell you whether or not it's really time to increase your freelance writing fees. In the end what you should strive for is balance -- rates that allow you to pay your bills, set money aside for savings or investments or leisure activities, and still enjoy enough free time that you can pursue your own hobbies and projects or spend more time with friends and family.
Finding that balance might seem like a dream to some, but I can tell you it's absolutely attainable. As with most things freelancing, all it takes is a bit of business sense and planning.