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
An agreed price index can justify an increase. Check which index, commencement date and notice period are in your agreement. Indexation does not mean that you can unilaterally adjust every ongoing contract or that every customer will agree. Read the Chamber of Commerce explanation on raising your hourly rate.
Fictional calculation example: with €75 excluding VAT and a chosen increase of 4%, the increase is €3. The new rate is €78 excluding VAT. Formula: current rate × (1 + percentage / 100). The 4% is merely a calculation example, not a prescribed or current index.
Determining the hourly rate: calculation tool
Determining an appropriate hourly rate requires insight into your income and expenses. You must take into account your desired income, your fixed and variable costs, and the number of hours you can actually invoice. First, read the explanation about calculating your hourly rate as a sole trader and then use the calculation tool below with realistic billable hours.
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:
- Review your tariff regularly and choose an appropriate moment for a change
- Justify the increase with your costs, activities and any agreed indexation
- 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.
Sample email for a new assignment or extension
Dear [name],
For new assignments from [date], my hourly rate will be €[new rate] excluding VAT. The current rate is €[current rate]. This change is due to [specific reason]. The agreed terms remain in place for our current assignment. For an extension, I will set out the new rate in the quotation beforehand. I would be happy to discuss this at our next meeting.
Yours sincerely,
[name]
Adjust the text to match your actual agreements. For indexation during an ongoing contract, use the terms and period you agreed upon for that purpose.
