As we come to the end of the year, and thoughts turn towards the New Year, it’s often a time when freelancers consider raising their rates. Are you considering raising your rates? How do you know whether it’s a good idea or not?
Perhaps you’re considering raising your rates but you’re worried it will result in fewer bookings. That’s a very valid consideration. It is to be expected that when you up-level your business, you will lose some clients who don’t come along for the ride, but, on the flip-side, you will also gain a new group of clients. Every time I’ve raised my rates, my business has gotten better. Yes, there is usually a dip initially, but after the adjustment, my business has gotten even busier.
When I was first starting out, like most artists, I was charging a low rate, which I justified by thinking that I didn’t have the experience (or portfolio) to warrant charging any more. While it’s true I didn’t have a lot of experience, I hadn’t worked with many clients, and my portfolio sucked (let’s be honest here!!), I quickly realised that charging a low rate meant that I was attracted the type of clients I didn’t really want to be working with.
When a client is focussed on the PRICE, rather than on the quality, value and experience they are receiving, they will always be looking for a way to spend less money, and get MORE out of you for your money. Ironically, I’ve found that the clients who want to spend the least money are often the biggest hassle!
If you are marketing your business on price, and “competing” with other artists based on price, this only ends up in a race to the bottom; a race that nobody wins. Well, except maybe the bargain-hunter client. But then, even they don’t win, because the artists become resentful at doing work for such a low price!
So, let’s get back to considering RAISING your prices.
The best time to raise your rates is when you are regularly turning work away because you are too busy. Of course, you can (and should) refer those excess bookings to other artists within your circle, and you maybe also considering changing your business structure and building a team of artists who work on a contract basis for your business (but that’s a whole other kettle of fish I won’t get into here).
Supposing for now that you want to stay a sole freelancer, if you are so busy you are having to regularly refer out work, raising your prices is a great way to “work smarter, not harder”.
As you become more experienced, and you build a larger audience, it’s natural that you will become busier. As you grow as an artist, your business will grow, and of course, so should your prices.
I also recommend keeping your prices in line with other artists who you are referring work to, and who refer work to you. I have a couple of artists in my circle, and whenever we refer work to each other (particularly commercial work), we will always clarify the rate that we usually charge the client. The last thing we want to be doing is undercutting each other and losing clients! If you have trusted artists in your circle, this is a perfectly valid conversation to be having.
While it is normal as a freelancer to be running your business at a loss when you first begin (as the cost of setting up your business, especially stocking your kit, will be greater than what you’re earning as you’re just getting established), if you’ve been in business for a more than a year or two, you should definitely be profitable. If not, is it a business or just an expensive hobby?
Many businesses choose to review their prices at the end of the year, and may introduce a price rise in January. New Year; new pricing. Consumers are conditioned to be accepting of New Year price increases, so if you are considering a price rise, this could be a great time to do so.
Knowing your numbers is really important and will help you determine the profitability of your business at any given time. Any successful business will be able to tell you the cost of each sale, and how much profit they are making per customer. It shouldn’t be any different for us as freelance makeup artists, because only when you know the cost of your business will you know if you have set your prices correctly.
The “quiet time” (work-wise), over Christmas and January could be a great time to look back over your figures for 2019 to determine the profitability of your business, and raise your prices if need be.
If you’re not sure about how much your business is costing you to run, or how many clients you need to have in your chair each week to make a profit, download my FREE rates calculator and costs worksheet HERE