How to Increase Your Prices When You Move Somewhere More Expensive
A little while ago, I was talking to a mentee who was planning to move to a more expensive location. We were discussing the potential need to increase her prices as a result of the higher costs involved. However, my mentee didn’t think she could charge her customers more just because she was moving to a more expensive country. It wouldn’t be fair to pass that additional cost on to her clients. Or would it?
The thing about pricing your services is that you need to make sure you’re earning enough through your business to cover your expenses. This includes your personal expenses. If you aren’t earning enough to make ends meet at the end of the month, you need to be raising your prices or looking for a job that will allow you to live comfortably instead.
If you feel the same way as my mentee, it’s completely understandable. It’s easy to get attached to your customers, and you may think that your move has nothing to do with them. It might therefore feel unfair to increase your prices with them just because you’ve decided to move house. However, you’re running a business, and if your costs increase, your rates will likely need to increase too.
In this blog post, I’m talking you through how to set your prices to maintain a sustainable business, the impact that a move will have on your rates, and how to increase your prices to make sure you’re earning enough at the end of each month.
How to set your prices to maintain a sustainable business
Personally, when it comes to setting your prices, I don't encourage thinking too much about what other people are charging or what are considered average industry rates for your services. This is because there's no guarantee that charging those rates will enable you to earn what you need.
All freelancers and small business owners have individual circumstances that are unique to them. If you live in London, for example, your cost of living will be a lot higher than if you live in a city in the north of England. Similarly, you might have to care for children or elderly relatives, meaning that your capacity might be a lot lower than that of your colleagues, but you might still have similar income requirements.
If you want to run a sustainable business that is able to support you, you need to make sure the rates you’re charging enable you to cover your own costs and financial needs with the capacity you have available. For example, if you have 20 hours available for paid client work per week, you need to calculate your rates so that what you earn over those 20 hours will allow you to cover your business and personal expenses.
When these numbers don’t add up, you have a problem. This is because, to make ends meet, you’re going to have to work extra hours that you don’t have.
Understanding the impact your move will have on your rates
I always recommend redoing your rate calculations whenever your circumstances change. This could be whenever your financial needs increase or your capacity reduces for whatever reason.
When you move house, I would suggest redoing your rate calculations once you’ve moved and you have a clearer idea of your new financial requirements.
You’ll probably find that you need to raise your prices if the place you’re moving to is more expensive, whether you’re moving to a new city within the same country or to a different country altogether. In fact, even if you’re staying in the same town, if you’re moving house and your rent or mortgage is higher, you’re likely to need to raise your prices then, too.
If you won’t be able to cover your personal expenses in your new location with your existing prices, it’s essential that you put your prices up. Your rates should take into account your circumstances, your expenses and the cost of living. If they won’t allow you to cover everything, you either need to increase your prices to reflect your new expenses or find another source of income, such as a job.
Charging higher rates to existing clients
When you need to increase your rates by just a small amount, your clients may well be willing to accept your higher prices.
However, if the difference is significant and you need to charge considerably more, it’s quite possible that your existing clients won’t be able to accommodate your price increase to the extent you need them to.
When you find yourself in this situation, it’s a good idea to start working towards finding other clients who can pay the rates you need to charge. I can assure you that there are clients out there at every budget level. You just need to find the ones with the bigger budgets!
How to increase your prices and find customers with larger budgets
In the past, I’ve spoken about how to charge more when you need to be earning above industry averages. My approach here is very similar.
Start by assessing your existing clients. Is there anyone you're already earning your higher rates from? If so, ask yourself why it is that they’re able to pay you more. Is it to do with their location, the industry they operate in or the size of their company? You might find that large multinationals have bigger budgets than smaller companies or that the amount of money circulating in a certain industry seems to be a lot higher.
Perhaps it could also help to target clients in different countries. Just as freelancers in countries with a higher cost of living are likely to charge more than those in countries with a lower cost of living, clients are based all around the world. Some will naturally have bigger budgets than others due to economic differences where they're located.
In this blog post on how to identify your ideal client using your income goal, I look at how targeting different types of customers in certain locations and niches can help you earn more.
Another technique you could try is to target high-end clients who expect a more all-round service. Ask yourself if there’s any way you could add value to your services to justify a higher price tag.
No matter which approach you decide to go for, know that there are clients out there who are willing to spend more. It’s just a matter of finding them!
If you’ve moved house or if your circumstances have changed recently, I hope this blog post has encouraged you to revisit your prices and increase your rates if you need to.
If you’re not sure how much you need to be earning to cover the cost of living where you’re based, as well as your own financial requirements, you might be interested in Charge with Confidence. During the programme, I’ll help you identify precisely how much you need to be earning per hour to cover your expenses in the amount of time you have available for client work. Click on the button below to find out more.
Hi, I’m Susie
I mentor freelancers on pricing and business finances so you can earn a decent living doing what you love.
I’m a translator, editor, chocoholic, crochet addict, animal lover, and budding gardener (get it?) who loves empowering others to achieve their goals.
