digitalv - 6:08 pm on Aug 12, 2004 (gmt 0)

I have been charging a small fee while freelancing on the side of my "regular gig" all these years, and now I need to raise my prices to survive

I've always been a fan of honesty and this pretty much says it. It's one thing when you have a side business and just want a little extra spending money, you can afford to be cheap. When you're running a real business, you don't always have that luxury.

How your clients will react depends a lot on how much work you do for them right now. If they will benefit from you being a full time designer based on the CURRENT work you're doing, then most won't have a problem with it. However if the benefit isn't immediately present they might not be too happy. To clarify, what I mean is that just because you have more time to focus on them doesn't mean they actually REQUIRE that from you. If they don't need any more from you than you're currently giving them, then a price increase will be seen as nothing more than charging more money for the same service. However if there are things they want to do with you that they can't right now due to your time restrictions, then they will most likely look forward to having more of you to go around. You should have a pretty good idea of which of the above applies.

Since you have only 3 clients, you also should prepare yourself for the fact that they may drop you entirely and find someone new. Personally if I were in your position, I wouldn't increase their rate at all until I had some new business (at the new rate) to compensate for any losses. It doesn't matter if anyone else knows what another customer is paying you - if anything, you can use that to strengthen your commitment to your customers. If a new customer has a problem with the fact that they're being charged more than Company X, inform the customer that when you originally agreed to work for Company X it was a spare time thing and you had a full time job paying the bills. Now that you're out on your own, you have new expenses that weren't there before, you're more experienced now than you were then, blah blah blah etc. Tell your new customer the bottom line is that you agreed to work for Company X at a certain rate, and that's what you're going to continue to charge them. Stick to your guns - don't let them haggle with you, even if it means they're going to walk. Once you have enough new business at the new price to afford to lose your old customers, approach them with the price increase then. That way if they run for the border at least you don't have to go back to working for someone else. Also, once you're solo I would try to find some business that has nothing to do with Company X so the situation doesn't even prevent itself anymore.

We've all been starting on our own once. If you ask most successful business who started solo, most will tell you they successeded largely because they stuck to their guns and sometimes had to walk away from a deal that wasn't going to be worth the money it paid. If you ask most business owners who have failed, they'll tell you it was because they undercut themselves so bad that they couldn't afford to pay the bills. We all learn from our mistakes, but it's a lot easier to learn from other people's mistakes instead :)