Well this is a rather tricky dilemma that many freelance contractors are faced with, especially those who are new to the scene. It needn’t be all that difficult though, if you follow a few simple pointers. And because your question is in two parts, I’ll answer each separately:
1) As a new freelancer, setting your rate is as important as spending a decent amount of time polishing your freelancer profile. While on the subject, be sure it promotes you and your skills in the best way possible. Next, decide what hourly rate you would like to earn. Put a figure in your head. Then browse jobs you’re interested in and check out your competition and their hourly rate. It is quite easy to spot the above-average and more successful ones, because they will typically charge a higher fee, but you will be able to identify a reasonably clear average during your search.
Now it makes perfect sense, while you build a work history and gain some feedback, to put in the extra hours as an investment in yourself. Knock a dollar or two off that average and see if you’re willing to work at that rate. There is no need to sell yourself short, remember, because there may be other jobs that more specifically suit your skills and experience, where you may get closer to your desired hourly fee.
While going through this initial learning and growing curve, also be prepared to bid lower on fixed rate jobs, to gain valuable experience, feedback and portfolio items. With determined effort, dedication and quality deliverables, your reputation will grow steadily. And you will be developing relationships with potential long-term employers. Which leads to the second part of your question:
2) Raising the bar, or your hourly rate, should first be justifiable to you. Know that you are worth what you feel you want to increase your fee to, not simply because some of your competitors are at that level. Having probably gone through step 1 above anyway, you are almost entitled to a rate increase once your reputation has been established.
The good news here, is that you can quite comfortably increase your rate without causing too much of a stir, because many potential employers will be seeing your profile for the first time and won’t know what you charged before. Even if they remember your name from a previous application, it is unlikely that they will remember your fee. Anyway, it’s your choice to charge at your discretion, as long as you’re not pricing yourself out (which you will notice immediately by a drop in success) and that employers still believe they are getting good value for money.
Regarding current or regular employers, you are employed (partly) because of the quality of your work, as well as your fee. The easiest way to justify an increase is to explain step 1 to them and hopefully they will understand your perspective and accommodate your increase, which, of course, must be within reason. If they are unwilling to accept your increase, negotiate. Determine what a fair compromise is. Decide whether this new rate is profitable for you, or whether it would be best to terminate that contract and find more lucrative work.
But always remember, establishing long-term relationships is first prize in freelancing. Freelancers know the feeling of being constantly unemployed and looking for work. The longer you work and the better you perform, the more likely your employer is to accept a rate increase. Cherish these relationships!
In closing, remember too, that freelancing is growing phenomenally and competition will naturally increase. Establish and value your reputation, and be sure to constantly monitor your hourly rate in comparison to others in your field, so that you continue to market yourself at a rate that offers the best possible return on investment for you.
And in a perfect world, we would all like to remain optimistic, and reassured in the knowledge, that our rates will always increase!
