The Self-Employed Pricing Trap (And How To Escape It)
If you’re self-employed, there’s a good chance the rates you charge for your services are too low. Maybe you started out charging less to gain experience or attract clients, then never adjusted.
This is the self-employed pricing trap: a cycle of undervaluing your work, attracting price-sensitive clients, and feeling stuck when it’s time to raise your rates. It’s a common challenge, but one you can overcome.
Why Self-Employed Workers Undercharge
Several factors make it easy to undercharge for your services:
- Lack of clear benchmarks. Without a set salary range or standard pricing guide, self-employed professionals aren’t sure what to charge, and usually decide on a lower amount.
- Fear of losing work. Raising rates can feel risky. Many worry that higher prices will drive clients away, especially when winning consistent work feels uncertain.
- The Grateful to Be Here mindset. There’s a tendency to equate opportunity with obligation, feeling like you should accept whatever rate is offered just to stay busy or build goodwill.
These patterns are understandable, but they can quietly undermine your business if left unaddressed.
The Escape Plan: Raising Your Rates With Confidence
- Do the math. Calculate what you need to earn annually, factoring in expenses, taxes, and non-billable time. From there, work backwards to a sustainable hourly or project rate.
- Conduct a competitive review. Know who your competition is, and what they charge. Consider what you do that is unique to your product or service. If you discover you’re already charging more, then you’ll need to defend why your pricing is supported by your point of difference.
- Communicate clearly. If you raise your rates and present it with hesitant, uncertain language, customers will pick up on it. Instead, consider approaching your rate change as a natural step in your business growth. Because it is. You’ve gained experience, improved your skills, and that progression deserves to be reflected in your pricing.
- Set boundaries for existing clients. It’s okay to keep legacy clients at old rates for a while, but put an expiration date on it. For example you can say, As a thank-you for being an early supporter, I’m offering you your current rate until [specific date], after which I’ll be adjusting to reflect my updated services. Or offer a private sale at a specified time for long-standing customers. This allows them time to adjust while keeping your business moving forward.
- Charge for the outcome, not the time. If you are a service or contractor business, consider moving away from hourly rates and toward value-based pricing where possible. Customers care less about how long something takes you to do and more about what it does for them.
- Practice saying it out loud. Literally. While getting ready in the morning. In front of the mirror. The more comfortable you are stating your price, the more credible it will sound.
When you finally raise your rates, something interesting happens: You get better customers. Not always immediately, but over time the ones who respect your value stick around. The ones who were looking for cheap labor vanish. Even more importantly, your pricing begins to align with your experience and goals. You move from reactive decisions to more intentional, confident ones.