Creatives often struggle with how to raise their hourly rates assertively and politely. How do you go from $50/hour to $60/hour? Ramit Sethi explains his three-step formula for gradually increasing his hourly rate on his blog I Will Teach You To Be Rich:

  1. Let the client know what you’ve already done for them.
  2. Let the client know you are going to be adding more value.
  3. Explain why the rate is going up.

But how exactly might we communicate this to the client? Using the example of a tutor negotiating with their student’s mother, Sethi gives us the specific vocabulary to ask for more: 

Hello Nancy,

Just wanted to give you a quick update on how things are going.

This year I’m going to be making a few changes. First, I’m going to be adding a complimentary review session, once a month, where Betty can come in along with a few other students and we can focus on specific tactical questions that they have about their math homework and the upcoming preparatory test that they need to work on. 

Second, I also want to let you know that I’m going to be increasing my rates from $50 – $60/hour. If this is an issue, let me know – I’m happy to recommend other people at a lower price. But I believe that with the progress Betty and I have already made – plus the work that we’ve put in and the complimentary review sessions – that this continues to be a great value.

So I’m looking forward to hearing from you, and I hope things are going really well.

Sethi stresses that it’s the consultant’s job to make their client successful. Therefore serving your client should be the focus of your negotiation, not the extraction of as much money as possible.

Watch a quick video reiterating these points below.

  • http://www.scoop.it/t/daily-clippings/p/4019380338/2014/04/10/how-to-raise-your-hourly-rate-politely How to Raise Your Hourly Rate (Politely) | Dail...

    […] Creatives often struggle with how to raise their hourly rates assertively and politely. How do you go from $50/hour to $60/hour?  […]

  • http://www.kickstarter.com/projects/jmcaddell/lets-publish-the-mistake-bank-book?ref=home_location jmcaddell

    I believe there is a better approach. One thing consultants do is set expectations with clients that prices don’t ever increase. They do that by letting years go by without increasing prices! Then, they give themselves what feels like a well-deserved 20% bump after 5 years, and the client freaks out (no matter what added value goes along with it).

    My mother-in-law helped me solve the problem. She told me about when she owned rental properties; she figured out that she lost fewer tenants and gained more revenue by increasing prices a small amount (5% or so) each year, as opposed to holding rents for a few years and then raising prices (ironically, the same small increase after several years of no increase still caused an uproar). The small price increase became something people got used to, and revenue went up every year. The small increase wasn’t enough to give them an incentive to hunt around for a better deal.

    I’ve seen this play out in several different contexts. A small yearly increase doesn’t need elaborate justification. Then, if you do add on a new piece with significant value, you can charge for that, too, with the kind of explanation presented above.

    • http://hamzakhan.ca Hamza Khan

      While your approach seems effective – and is fairly common practice in real estate – it’s still a bit coercive for my own liking. I think that every increase justifies an explanation. That being said, I do recognize how tedious that can be. How have most of your clients reacted to a fixed annual increase?

  • Richard

    Please stop the auto play on this video. It’s really annoying every time I open a new tab for an article in Behance to have this same video playing

  • http://hamzakhan.ca Hamza Khan

    Right on, thanks for sharing! I’m going to try this approach with some of my clients.

  • http://iampariah.com/finds/design-business-links-21-april-2014.php Design Business Links 21 April 2014 | Pariah Burke

    […] How to Raise Your Hourly Rate (Politely) – 99U Creatives often strug­gle with how to raise their hourly rates assertively and politely. How do you go from $50/hour to $60/hour? Ramit Sethi explains his three-step for­mula for grad­u­ally increas­ing his hourly rate on his blog I Will Teach You T… […]

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