How I Increase My Rates as a Side-Hustler Without Losing Clients (And You Can Too)
Charging more for better service is the way to grow and convert our side-hustles to the main hustle (and to combat inflation)
Inflation in the United States stands at 7% as I type this article. In Singapore, I sense the inflationary pressure at 8–10%. My cup of coffee tells me that.
My usual cup of morning brew went from $0.90 to $1.00. The counter-girl was sheepish when I stared at the receipt. We have to price up, I’m sorry! was the muttered response to my silent disbelief.
I am not suffering from inflationary pressure alone. Price increases of necessities hit all of us. To relieve that pressure, we have to up our service rates. We deal with increasing expenses with increasing incomes.
I know this is a tricky issue. You are thinking, but my clients and prospects will ghost on me!
It does not have to be the case. Here, I offer 3 ways to increase the service rates to help us grow our overall revenue, profit margins and cushion the insidious inflationary impact.
Increasing Organic Service Rates — Accounting for Cost of Living Allowance
Yes, this concept exists. It is common in the technology space where I work.
Some companies build salary adjustments into their compensation structures to offset the effects of inflation on their employees. Cost-of-living adjustments (COLAs)… are generally equal to the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers for a specific period.
- How Does a Cost-of-Living Adjustment (COLA) Affect My Salary?
You increase your service rates to factor in increased material cost. If you sell sugary drinks for $1 a cup, and sugar goes from $0.10 per sachet to $0.20, you pass that additional $0.10 to your customers.
So, you price your drink at $1.10.
I work as a copywriter as a side-hustle. This is a project-based business. Therefore, it is difficult to increase the price in the middle of a project.
This is what I do:
- I routinely update COLA into my contract agreement with clients.
- I explain that prices are inflation-adjusted.
- Pay attention to this one. I will draft out a list of expenses that will require reimbursements from the client.
Let me elaborate on the 3rd bullet point because it is the most effective in mitigating inflationary price pressures. I pass such work expenses to the client as necessary business expenses.
That list includes sourcing for external vendors, finding visual designers, collaborating with website builders, and so on.
From there, I bill my customers for additional time incurred. This is a result of managing a comprehensive copywriting project over a simple one. This is one active manner of impounding COLA into your side-hustles.
Author’s Note: If you find it tough to increase your organic cost of service, find ways to do more by becoming a project manager. From there, you can bill customers on the total time spent. More on that below.Next Thing You Can Do — Keep the Rates. Control or Play with Time.
You do not have pricing power as a young side-hustler. Therefore, you must be creative to increase your real income.
Real income is an economic measure that provides an estimation of an individual’s actual purchasing power in the open market after accounting for inflation. It subtracts an economic inflation rate per dollar from an individual’s income, typically resulting in a lower value and decreased spending power.
You can increase your real income without increasing your service rates. We do that by adjusting the time variable hidden in plain sight in all contracts.
This is what I do (specific to my copywriting side-hustles):
- I reduce the number of free revisions from 2 to 1.
- I reduce the number of free during-project client communication sessions from 5 to 3.
- I reduce the number of payment milestones from 3 to 2. Now, I collect payment before commencement and upon acknowledgment of work accepted. I scrapped the mid-point payment milestone.
What I reduce is now offered for a fee. I charge for client-requested revisions and additional consultation hours.
When I spend less time on administrative matters such as chasing customers for payment (from 3 to 2 times), I get back more time to pursue new clients and deals.
This way, you lower the risk of losing existing clients from a higher price point, and you get more time back at your disposal. Getting time back is getting money back.
Author’s Note: Remember, time IS money.Sell More Than 1 Thing. Offer Them In 1 Package
“If you have only 1 thing to sell, the chances of a client sitting there and listening to your bu**sh*t and giving your money is 0.”
Avoid offering straight-through services. In the world of copywriting, it can refer to cents per word, dollars per page. To up our real incomes, we need to think package.
I routinely pack project management, vendor collaboration, digital marketing consulting, training workshops with my organic copywriting offer. That way, clients get more from my work.
My pricing power goes up. I price my service packages at a 30–50% premium above my organic copywriting services.
There is another advantage. I can focus on that few good clients to deliver good work for a higher inflation-adjusted service fee. Premium clients have higher expectations, but they do not cost me more in terms of time.
They do not ask for excessive draft revisions for free.
Author’s Note: You must find ways to price up. That is the only way to grow your revenue to counter 7–10% inflation. Otherwise, you will be committing the same amount of effort in your side-hustles while earning less.Summary
You need not lose clients to a higher service rate.
Understand that there are many ways to increase our rates. It can be factored into the price, the time we spend to deliver one piece of work, expense reimbursement, and providing better packages for client selection.
Be flexible. Be dynamic. Apply different techniques to different client profiles.
For instance, apply the time-back approach to price-sensitive clients. That way, we get a win-win.
And knowing how to navigate through the choppy waters induced by inflation allows our side-hustles to survive into the long-term.
As a content contributor, I write my observations from daily life and my business exposure. Because our life experience is the bedrock of our unique perspectives.