Should I increase my rates to kick off the new year?
We polled 275 freelancers, and asked whether they're increasing their day rates this month, and the reasons behind their decision
FAQ
It depends on your situation - but you should review your rates regularly, even if you choose not to increase them.
Many freelancers use the new calendar year as an opportunity to review and increase their rates.
It's impossible to ignore in recent years the increased cost of living, and the increased cost of doing business.
If you're not reviewing your rates on a regular basis, your income can start falling behind your costs - leading to problems.
Beyond the inflation, you've also been building up more experience and demonstrations of your impact over the past year, and have more to show as a freelancer - which can also mean you can demand a higher rate.
In January 2025, we polled 275 freelancers, and asked whether they're increasing their day rates this month, and the reasons behind their decision - and 48% will be increasing their day rates
Almost one-third are increasing their rates due to inflation - cost of living and business has increased, your clients will likely have put their rates up too - so your rates should at the very least rise in-line with that.
IPSE, who run a quarterly confidence index, suggest that average day rates increased in Q3 of 2024, from an average of £457 to £576, and day rate data from The GOODList also shows increased day rates in 2024.
However, day rates rarely paint the whole picture - freelancers are also reporting shorter projects, increased demands within a project, and work being harder to find.
19% said they were increasing their day rates to due having more experience, and a higher value to their work.
If you've been developing a stronger portfolio, adding new skills and capabilities, have more clients and projects under your belt - increasing your rates in line with your experience helps to ensure your income is not stagnating.
If you were in employment, your salary would be rising each time you moved to a new role - so when you're freelancing, it's important to remember this growth needs to happen for you too.
Whilst 48% are increasing their rates, 51% are not - and there are a few reasons why.
29% of our respondents said they were not increasing their day rates because they feel client budgets are shrinking, or less willing to pay higher day rates.
Increased costs are affecting all sorts of businesses, and our clients are not immune to this either.
Across the board, we're seeing clients reducing their budgets, or looking to work with freelancers perhaps on lower day rates, or get more work done for the same budget.
It's never been easier for clients to find freelancers, so they can often shop around to find something inline with their costs.
Day rates however, aren't the only way to price your work - and some freelancers are finding success with other pricing models, such as project fees - so clients see the value in the work being done, rather than just the time being spent.
23% of our respondents said they hadn't considered increasing their day rates.
It maybe that you're new to freelancing, or feel that your rates are good value for your experience, and that your clients are happy paying what you're currently charging.
For some freelancers who are just starting out - it might not be the right time to change your pricing just yet - but there's always value in taking a look at day rate benchmarks, and understand whether your pricing is still in line with both the market, the value of your work, and your own income needs.
Whilst January doesn't need to be the only time you review your rates, it can be a useful point of the year to review your business, and think ahead. Reviewing your budget, your income, and your goals for the year can help you to understand where you need to be, and how you can get there.
Many freelancers use the end of the tax year (April) as a point to do this work too.
Some freelancers worry about communicating new rates to clients - fearful of losing the client due to higher prices. Whilst we believe it's important for clients to pay fair value for freelancers - sometimes it might be easier to maintain some clients at the same rate, and only increase your rates for new clients.
Bear in mind though, especially if you have longer-term relationships, that it's easy to start losing money on projects, if you're undercharging - and if lower paying clients are taking time away from being able to find clients who are paying fairly, you might be losing out.
There's no rule which says you need to charge the same rate for all clients. Varying your rate depending on what value the project offers you, what opportunities it creates, what sector or context they're in, and what type of relationship you have, can all help you ensure you're offering good value to your clients, whilst protecting your income.
For example, working directly with a large corporate client might be a different rate to working via an agency, or with a small business.
Consider being flexible in the pricing you offer.
Whilst day rates are still a dominant way to price your work - there many other ways to charge your client.
For example, project fees based upon deliverables don't really expose a specific day rate, and can allow you to increase the overall cost of your work, without it feeling like your day rate is outside of their range.
Consider being flexible in the pricing you offer.
Remember that whilst a day rate might be a useful benchmark, it doesn't always reflect the real picture of what you're earning.
Depending on how you're contracting with a client, there might be deductions at source (i.e. if you're working via an agency, umbrella company or working on payroll).
Your costs might have increased too - whether it's Employer NICs for limited company owners, premiums on your insurance, the cost of travel or software subscriptions.
Adding £50 to your day rate might not feel like a big increase - but if your costs have increased, your take home pay and profit might actually decrease.
Ensure you're reviewing your budget properly to understand a real picture of your income.
Don't forget to look at data and benchmarks to understand the market - to check you're not undercharging for the work you're doing.
Speak with fellow freelancers too - to understand what they're charging, and how clients are currently reacting to pricing in your industry.
There's no simple answer to whether you should increase your rates to kick off the new year - it'll depend on your market, your situation and your goals.
But it is always a good idea to review your rates regularly, and ensure you're charging a fair price for your work.
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