Latest / Freelance Careers with Fexingo: Independent Work, Consulting, and Self-Employment / How to Use a Client Price Index to Raise Freelance Rates
Transcript
- Lucas: So you land a retainer client, the work is good, the relationship is solid, and then twelve months roll by and you realise — you're still charging the same rate you agreed to when you were both still finding your footing. Luna: Right, and that rate probably reflected a discount for the uncertainty of a new engagement. But a year in, you're delivering more value, you know their business inside out, and inflation has done its thing. Lucas: Exactly. And the standard advice is — just have the conversation. But a lot of freelancers dread that conversation because it feels like a confrontation. So they kick the can, and their effective hourly rate quietly drops. Luna: If we've helped you think through a career move or a pricing strategy, and you value having this show free of ads and fluff, you can support it at buy me a coffee dot com slash fexingo. It's a simple way to keep independent business content independent. Lucas: Yeah, we really appreciate that. So one way to take the emotion out of the rate conversation is to tie your increase to something outside both of you — an objective benchmark. I want to talk about what I'm calling a client price index. Luna: A client price index — meaning you index your rate to something your client themselves publishes or controls? Lucas: Exactly. Not the CPI, not some generic inflation number — but the actual price increases your client passes on to their own customers. If they raise their prices by five percent this year, your retainer goes up by the same percentage. Automatically, or with a simple trigger. Luna: That's brilliant because it makes the increase a matter of data, not a matter of how brave you feel at the moment. It's a structural solution. Lucas: Right. I first saw this used by a brand strategist I know — she works with a mid-sized B2B software company. She'd been on a flat retainer for two years, and every time she thought about asking for a raise, her contact would say budgets are tight. Luna: Classic. And it's hard to argue with 'budgets are tight' when you don't have a counter-framework. Lucas: So she looked at their public-facing pricing page. They'd raised their software subscription prices by seven percent the year before and another six percent the year before that. She went back to them and said — your prices are going up every year, your customers are paying more, and I'm effectively taking a pay cut relative to the value I'm delivering. Let's index my retainer to whatever percentage you announce for your next annual price increase. Luna: And how did they react? I can imagine some clients pushing back because it feels like a loss of control. Lucas: They actually agreed, with one caveat — they wanted a cap. So the clause said any increase tied to their price index would be capped at eight percent per year, no matter what they raised their prices by. That was a compromise she was okay with, because even a six or seven percent increase was way better than the zero she'd been getting. Luna: So the cap protects the client from a huge spike if they have a one-off big price jump, but the freelancer still gets a predictable, fair increase. Lucas: Exactly. And the key is — the index has to be observable and verifiable. Not a hand-wave. In her case, it was literally the price listed on their website for their standard plan. Any freelancer can do this if their client publishes prices, or if there's an industry benchmark the client themselves uses. Luna: What if the client doesn't publish prices? Say it's a consulting firm or a bespoke service provider where every engagement is custom-priced? Lucas: Then you need a proxy. One option is the client's own internal wage growth data — if they have a standard cost of living adjustment for employees, you could index to that. Another is an industry-specific index. For example, if you're doing marketing work for a law firm, you could index to the average hourly rate increase for associates in that market, which is published by legal industry surveys. Luna: So you're essentially finding the most transparent number that correlates with the value you're creating. But let me play devil's advocate — doesn't this lock you into a formula that might not capture your individual value growth? What if you've gotten dramatically better in year two? Lucas: That's a fair point. The index handles cost of living and market-rate adjustments, but it doesn't automatically account for your personal improvement. So the smart play is to combine the index with a periodic value review — say every two years, you revisit scope and deliverables. The index keeps the base rate current, and the value review lets you add a step-change for scope expansion. Luna: So the index is the floor, not the ceiling. Lucas: Exactly. And when you present it to the client, you frame it as alignment. You're saying — our interests are aligned. When your business grows and you can charge more, I grow too. And when times are tough and you don't raise prices, I don't get an increase either. It's symmetric. Luna: That's a much easier conversation than 'I need more money because I want more money.' It's 'I need more money because your own pricing data says it's fair.' Lucas: Right. So let's get concrete on how to build this. First, identify the index. It should be a number that's regularly updated — annually or semi-annually — and publicly visible or verifiable by both parties. Second, decide on the frequency of adjustment. Annual is most common, because it matches most companies' budgeting cycles. Luna: And you want to tie the adjustment date to something predictable — like thirty days after the client announces their own price increase, or on the anniversary of your contract. Lucas: Third, negotiate the cap and floor if any. A cap protects the client from a huge spike — but you might also want a floor, so that if the index is negative or zero in a downturn, your rate doesn't drop. You can agree to a zero floor — meaning no decrease — with a cap at, say, eight percent. Luna: That feels fair because it's not a one-way ratchet in your favour. It's a floor that's symmetric with the cap. Lucas: Exactly. Fourth, put it in writing. The clause should be short — something like: 'The monthly retainer shall increase by the same percentage as standard subscription price increase as publicly announced each January, subject to a maximum increase of eight percent per annum and a minimum increase of zero percent.' Luna: And if the client doesn't have a standard price increase — say they're a startup that hasn't changed prices in years — then you'd need a different index. But for many established businesses, this is a viable path. Lucas: A good alternative is to use the Consumer Price Index for urban consumers — cpi u — but that's less aligned to the client's business reality. A better one might be the Producer Price Index for their industry, or even the Employment Cost Index. But the strongest is their own price list, because it's directly tied to their ability to pay. Luna: So let's talk about timing. When in the relationship do you introduce this? If you're a new freelancer just starting with a client, is it too early? Lucas: I'd say it's easier to introduce at the start, because it's part of the contract framework. You say — I'd like to include a pricing adjustment mechanism tied to your price index so that our partnership stays aligned over time. But if you're already in a relationship, you can bring it up at the next renewal or when you're discussing a scope change. Luna: And if the client says no? Then you're in the same position you'd be in anyway — you'd have to have the awkward annual conversation. Lucas: Right. But even if they say no, you've planted the seed. And you can ask — what alternative mechanism would work for you? Maybe they prefer a fixed percentage increase each year, like three percent. That's still better than nothing. But the index approach is the most objective. Luna: I'm thinking about a risk — what if the client stops publishing their prices? Or changes their pricing model entirely? Lucas: Good risk. You want a fallback clause. Something like — if the index becomes unavailable, the parties will mutually agree on a substitute index, or default to the annual percentage change in the cpi u. That way you're not left without a mechanism. Luna: So the contract has to be carefully drafted. But once it's in place, it's almost set-and-forget. You just check the index once a year, send a brief note, and the rate updates. Lucas: Exactly. And the psychological benefit is huge. You never have to 'ask' for a raise. You just inform. It becomes administrative, not relational. And that's the whole point — remove the friction from pricing. Luna: I love that. So for any freelancer listening who has a client with a published price list — or any observable, regularly updated number — this is a concrete tool. You can start preparing the conversation today. Lucas: Yeah. And if you're not sure where to start, pick one client — ideally one you've been with for over a year — and look at their pricing history. If they've raised prices consistently, you have a case. Write a short proposal and test it. The worst they can say is no, and you're no worse off.