By: Alli Hill
The Great Resignation has given traditional employees a lot of leverage work. According to SHRM, 58% of companies say they’ve offered higher annual salary increases than normal. In addition, more than half of employees have left roles in the last year for jobs with higher compensation. But how do you negotiate a raise with your boss – when you’re the boss?
It’s a myth that business owners can “choose” their own salary. You have legit business expenses that keep your doors open and the lights on. And even when those are paid up, you don’t get to cash-grab whatever is left over.
But as life gets more expensive and you really need (or just want) a raise, there are a few things you can do to make it happen.
5 Ways to Give Yourself a Raise When You’re Self-Employed
Let’s explore some terrible and awesome ways you can keep more of your business revenue in your own pocket without putting your business in a financial crunch.
Raise Your Prices
It’s the most obvious answer on how to give yourself a raise when you’re self-employed. Just increase your prices, they say! You’ll make more money on every sale, they say!
Except what “they” aren’t telling you is that you could end up pricing yourself out of your loyal customers’ budget. And then you’ll sell less.
I offer this advice from the perspective of a freelance writer. I provide a service, not physical, tangible products. I work mostly with businesses, not consumers. But businesses also have budgets to stick to. If I raise my prices too much, they won’t be able to afford my services anymore.
You spend a lot of time and money figuring out how to get freelance clients. Once you lose your loyal customers, you have to spend time, money, and energy going after new ones. That’s expensive. It can cost you more in the long run. (There goes your raise).
So why did I even mention it? Because sometimes, it does make financial sense to raise your prices. I advise service providers to only raise their prices if they have maxed out their time and are getting more work than they can handle.
To me, this is a clear sign that your prices may be too low already. People love a good deal and it’s a no-brainer to work with you! So you can afford to charge a little more, even if you do end up losing a few customers because of it.
Work More Hours
Another obvious answer: just work more hours! The more you work, the more people you can serve and the more money you’ll make.
Except who wants to work more? Sure, it might give you more time to take on more customers or projects. But that extra time has a cost, too. You could end up needing more overhead. You’ll be spending less time with family or hobbies that bring you joy. It could lead to burnout or a lack of self-care, both of which might force you to take an unpaid break.
Think carefully about whether working more hours is the best solution to getting a raise.
Reduce Your Operating Costs
You can get a raise without taking on more work, working longer hours, or raising your prices if you trim your expenses. Suddenly, all that unnecessary capital you were using to power your business becomes pure profit.
Speaking as a service provider, I already run a very lean business. I don’t have physical inventory or a storefront to maintain. I use free software tools whenever possible, including CRM, social media post scheduling, and image editing. I work from home, not a co-working space. I think carefully about every business expense.
If I were to cut something from my operating budget, it wouldn’t amount to much of a raise.
Most business owners have already looked for ways to chop their expenses. No one likes having to pay for something if they really don’t need it. If you find that you can get by without something major, by all means, do it. But trimming nickel-and-dime expenses here and there probably won’t give you the big raise you deserve.
Expand Your Services
I love having scalability in my business. To clarify, scalability refers to the ability to grow your revenue without simultaneously growing your expenses. One way I made my business more scalable is by adding extra services that offer high value to the customer but required a minimal time investment from myself.
For instance, I offer a range of add-on services to my writing clients. In addition to a blog post, they can order social media captions, email newsletter copy, meta descriptions, and images for that same blog post. All of these elements work together to create clean, cohesive content. It doesn’t require much extra effort from me since all of the content is related and I wasn’t “starting from scratch.” But it’s extremely important and valuable to the client who wants complete, turnkey service and doesn’t want to spend their own time handling all the “extras.”
The formula for making this work to generate profitable revenue is to think of what else your client might need beyond the basic service you already provide. Then, explore how you can meet those additional needs without spending a lot of extra time or having to invest in extra tools or expenses.
Spend More Money
If you want to give yourself a raise when you’re self-employed, the best thing you can do is to spend more money. Yes, I said spend more, not save more.
Spending money in business should be treated as an investment. You expect to get something out of it. So when you can invest in something that will ultimately make you more money – more than you spent to get that something – then it’s well worth it.
One of the best investments I’ve ever made was outsourcing tasks that generated monetary value in my business. For example, when the COVID pandemic blew up almost overnight, my schedule was swamped. Everyone needed writing, right then and there. They had important messages to communicate to their clients and everyone wanted to be treated like a priority.
So I enlisted the help of a couple of other freelance writers. They allowed me to take on more business, maintain a fast turnaround, and generate more revenue. The clients were happy because they got high-quality work at a reasonable rate. Ultimately, they cared about the outcome, not who was handling the work. It was some of the best money I ever spent – because it made me more money AND grew my reputation.
Getting Off the Time-for-Money Hamster Wheel
All of the above ways to give yourself a raise when you’re self-employed work. Some work better than others. But the single best thing you can do when you want to make more money is to get out of the mindset of trading time for money. Scale your business so that you can generate more revenue without working more hours or taking on more overhead. This way, any extra “raise” you earn actually goes to you and not your business.
I talk a lot about being a profitable freelancer on my blog. Join me at FreelanceSpeak.com and start earning, learning, and growing!
Alli Hill is a freelance writer, SEO pro, and mompreneur with a background in content marketing. She is the founder and director of FreelanceSpeak, offering blogs and other content to support freelancers at every stage of their business. She loves hiking, kayaking, and reading, and she is sometimes funny.