What’s the best way to increase your income?

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Lately, a few readers and online course alumni have sent me questions about increasing your income as a freelancer, particularly if you’ve been through a period of stagnation, where your income (even if you’re satisfied with it) has stayed the same for a period of years.Their questions included:

• Is stagnation negative, as long as you’re happy with your income?
• Is it better/easier to make a significant income leap, or to gradually “creep” your rates up?
• What’s the best strategy if you want to make a significant income leap?

This is exactly where I was from 2019-2022. As I described in my 2023 year in review post, my income was stagnant at about US $100K for those three years. While better than an income decrease, I wasn’t happy with it, for all of the reasons that the people who contacted me mentioned:

• With inflation, a stagnant income means that your actual purchasing power is declining
• A stagnant income may also mean that other things in your business are stagnant: maybe you aren’t working on your own skills as much as you should be, or maybe you aren’t marketing as much as you should be

Increasing your income is a really individual thing, but I did do it, raising my income (which I define as gross income, minus what I immediately pay out to subcontractors) from 110 to 145K in one year. A few observations, based on my experience:

• Ideally, we’d all “creep” our income up, a bit at a time, by raising our rates maybe 5-7% each year, similar to the raise we might request in a salaried job. But in reality, this is relatively uncommon in the translation and interpreting professions. That doesn’t mean it’s not a good idea; I actually think it is a good idea. I just mean that it’s not the norm. Lots of other professions do this: when I get the first invoices of the year from various professional service providers in my life (accountant, web designer, etc.), they’ve often raised their rates by around 5%, often with no notice. I simply see that the invoice is a little higher than the year before. This “creep” model has lot to recommend it, because the increase is small enough that it’s hopefully not a deal breaker, and because it avoids the phenomenon of, “haven’t raised my rates in five years, now here’s a huge increase.” Yet, very few of us do this. I think there are a few reasons: a) our perception (whether right or wrong) that clients, especially agencies, are very price sensitive and may send us less work if we raise our rates, b) our desire to just avoid thinking about rates in general because we’d rather translate or interpret, and c) the fact that, particularly if we bill by the word, an increase of something like 5% is a tiny amount. If an agency is paying us 15 cents per word, are we really going to raise our rate by half a cent, or does that seem ridiculous?
• The most common, and in my opinion, the worst way to increase your income is by working more at the same rates. Honestly (trust me, I see under the hoods of a lot of freelancers’ businesses!), this is what most translators and interpreters do. They want or need to make more money, so they just take on more work from their existing clients, or clients who pay around the same rates.

Following are a few factors that went into my significant income increase in 2023:

• I acknowledged the pattern of stagnation and set a new goal. At 110K, I wasn’t worried about where my next meal was coming from. I also wanted to aim for more like the equivalent of a six-figure salaried job, which is a lot more than 100K as a freelancer. So I set a goal of 120K, figuring that was at least a start at this goal.
• I focused on my very highest-paying work and didn’t feel guilty about it. This is a simple but pretty huge thing. I just think that as freelancers, we have such a hard time turning down work that doesn’t meet our financial goals, for a few reasons: fear of being labeled greedy, fear that we won’t have enough work, fear that the client will think or say negative things about us, fear that we’re acting arrogant and entitled, or “the client is so nice, I feel bad saying no!” I decided to let go of all of these fears, and just focus on making money while doing interesting and fulfilling work.
• I (mostly) let go of the fear of having dominant clients. My translation work is pretty diversified. I have regular clients but I don’t really have dominant clients. Interpreting is a different story: basically all of my work comes from a handful of conference interpreting agencies and two state court systems (Colorado and Utah). I have a few sporadic direct clients for interpreting, but mostly it’s my regulars. I’ve written before about whether this is a good thing or a bad thing, and I’ve decided that for now, for me, it’s OK, because I really like these clients, they have interesting work, they pay well, and they’re easy to work with. As I recommended in the blog post I wrote about dominant clients (yes, for once, I followed my own advice!), I put some protections in place, in case I suddenly lose a lot of work from one of these clients. Most importantly, I increased my business savings account to $15,000 (about three months’ salary and taxes at my current income level), and this money just sits there as a rainy day fund.
• I also told myself that I don’t need to earn this much every year. That’s just a fact. I had no trouble spending the extra income: first, by increasing my business savings account, then by doing some deferred maintenance on our house, then by buying a new electric car, then by taking some really incredible vacations (Iceland, British Columbia, and Belize). And yet, I don’t want to put pressure on myself to earn 145K every single year, because I don’t need to. I think it’s important, for your own sanity, to differentiate between an income jump that you *need* to make and an income jump that you *want* to make.

I hope these tips are helpful if you’ve set an ambitious income goal for this year!!