If you don’t raise your rates by 5.4%, you just got a pay decrease.
I always wondered how our rates never really increased over the years due to inflation… Does everyone take this into consideration?
A better way to phrase it might be “does ANYONE take this into consideration?” My rate has been the same since 2017.
i know right!
Damn right I’m taking this into consideration.
Has the cost of you doing business increased? Electricity? Internet? Fuel? Milk? Vegan ice cream? Each year, at least in the U.S., inflation has hovered around 2 ish per cent. Meaning, if you aren’t raising your rates with inflation, the buying power of your money decreases every year. If your rates have stayed the same since 2017, and you don’t raise them in 2022, that’s 5 years of 2% wage loss.
Hypothetically, @andy_dill, and I know this is a stretch :-), lets say you are really good at your job and earn $200,000. And, for the last 5 years, you haven’t raised your rates and you haven’t adjusted for inflation. Let’s also say that inflation is (conservatively!) 2%. So, $200,000 * 0.98 * 0.98 * 0.98 * 0.98 * 0.98 = $180,784. You’ve now lost 10% of your income.
This year, in 2021, inflation is currently sitting at over 5%. If we pull the actual inflation rates over the past 4 years and estimate that 2021 will be 5 %, a better equation would be something like:
$200,000 * 0.978 * 0.975 * 0.9781 * 0.9877 * 0.95 = $175,027. Boom. You just lost almost 15% of your income. That’s a lotta ice cream.
And you know I love ice cream!
$25,000 is like what…5-6 trips to the local Vermontonian hip ice cream spot?
the hip place only barters. I traded a kid’s drawing of a horse for a cone last week. My kid hates drawing horses though, so yeah, considering how much I had to pay to hire a kid to draw a horse, it’s in that range.
Can i ressurect this thread for a moment? Im about to raise my day rate due to inflation. It totally makes sense but even after 24 years of doing this job i am hesitant in having the conversation where i say im raising my rate for them to say thats impossible, no way! even though i know what their margins are and can totally afford an extra $50 - $100 day. most of us are in this trap of not rocking the boat. Before i send my email to a few of my clients i wanted to hear other peoples opinion on the matter and to see if anyone except our amazing Randy has done so! randy you are a beacon of hope!
check your private messages for the latest…
Also, you don’t have to use the phrase “I’m raising my rates.” It’s not a big deal. I’m a big fan of just saying…
2022 Q1 Rates
Hourly = blah blah blah
Day = blah blah blah
OT = blah blah blah
And don’t say “yearly rates”, break it down into quarters. You don’t have to make it a yearly/serious thing. You can break it down in quarters or half years, or, try different things with different clients. Experiment. Get some confidence in those kinds of conversations.
Every hiring authority I’ve spoken too understands it, is used to it, and is expecting it.
good to know, i was going to use the phrase adjusting my rate due to inflation. I like the idea of 2022 Q1 rates: what the hell is OT?
I would not even say “inflation” or use any kind of justification.
You want Theo, this is what Theo costs. End of message.
The more rationale you put into an argument, the more rationale someone can throw back.
OT is what we deserve. And until we start demanding it, we’ll never get it.
i agree, and i simply stated my new Q1 2022 rate to 3 companies so far and no one blinked an eyelid. golden.
I always mention upfront that I bill for OT and it’s been years since I’ve gotten any pushback. If, in the initial back and forth, it comes up that “oh we don’t do overtime”, I’ll then ask for a hard out after eight hours. If they say yes, great! If not, I’ll decline the booking.
What needs to go away is day rates. The big mothership shops in particular will not pay hourly rates and that’s just wrong. Day rates enable unrealistic bids and – sorry – I’m not doing 14-hour days at a flat rate just because the bid was low-balled.
The term “day rate” does not automatically mean they get to use limitless time in that 24hr time frame.
Unless you frame it that way!
I work on a Day Rate and stipulate that it is an 8 hour business day, and anything beyond that is OT.
Nobody fights, and I don’t have to argue when it’s past the hour. In fact, I lay out the hours as 9a-6pm (1 hour lunch incl).
No thank you to someone booking my day, finishing early, not having enough time to pick up another job while getting paid less than a day’s wage. Why would anyone want this?
Anyways. Do what you want…They key is to include all your Terms and Conditions in the beginning upon negotiation/acceptance.
I like that system and that’s how I bill a lot of my clients.
FYI, March 2022 inflation numbers are out… over 8% in March!!!
Randy, are you sure these inflation numbers are inflated?
Sorry. Sometimes I just can’t help it.