Why increase your hourly rate?
As a self-employed person, you determine your own hourly rate. That rate should fit your activities, your expenses and the income you need. Due to inflation and rising fixed costs, a rate that was sufficient before may later fall short. Also, if you have gained more experience or bear more responsibility, this often comes with a higher rate. Increasing your hourly rate is therefore a normal part of doing business and not an exceptional step.
When does an increase make sense?
An increase in your hourly rate makes sense when your costs increase or your work content changes. Think of higher insurance costs, software subscriptions or other fixed costs. Additional experience, specialisation or working more efficiently can also be reasons to review your rate. Many self-employed people do this annually so that the rate remains in line with their situation. By doing this structurally, you avoid having to make large increases all at once later on.
Price indexation
Price indexation is a common way to increase your hourly rate without discussion. You adjust your rate based on general price increases to keep your income in proportion to rising costs. By increasing your rate index the increase remains explainable and predictable for customers.
Determining the hourly rate: calculation tool
Determining an appropriate hourly rate requires understanding your income and expenses. You need to take into account your desired income, your fixed and variable costs and the number of hours you can actually invoice. A calculation tool will give you a quick insight into what hourly rate is needed to arrive at an achievable income.
Tips on increasing your hourly rate
A rate increase works best if you prepare it well and build it logically. The following points will help:
- Increase your hourly rate once a year, e.g. on 1 January
- Increase by a concrete percentage, such as 3% or 5%
- Apply the new rate to new orders and renewals
- Keep existing agreements until the end of the contract
- Check annually whether your rate covers your expenses and desired income
Communicating with customers about a rate increase
Good communication makes the difference between understanding and resistance. Inform customers about a rate increase well in advance and be clear about the effective date. Explain calmly why your rate is changing and what this means for the cooperation. Stand by your rate and avoid excuses. A businesslike and clear explanation provides clarity and increases the likelihood of customers accepting the increase.
