The short version: You undercharge because you confuse confidence with arrogance and because nobody has shown you what your time is worth. Stop charging by the hour, audit one month of invoices to find your real rate floor, and raise prices 20 to 30 percent before you feel ready.
The Day I Realized I Was Broke on Purpose
In 2019, I was running a full marketing consultancy. Eighteen-hour days. Client roster that included household names. Revenue: about 85,000 pounds a year. I was burned out, furious, and completely broke.
Then one Tuesday morning, my accountant asked me a question that changed everything. "Lilach," she said, "what would happen if you fired your three smallest clients?"
I did the math. Those three clients brought in about 12,000 pounds annually. They also consumed roughly 40 percent of my time because they were high-maintenance, constantly requesting revisions, sending messages at midnight. I was charging them between 50 and 75 pounds per hour because they were "starting out" or "couldn't afford more."
When I fired them and redistributed that time to higher-paying work, my revenue didn't drop by 12,000 pounds. It went up by 28,000 pounds. I'd been functioning as a subsidy for clients who had no business working with someone at my level.
That year taught me something hard: undercharging isn't generosity. It's poor business math wearing a kindness costume.
Why You Keep Doing This (And It's Not What You Think)
Most advice about undercharging focuses on mindset. "You're not believing in yourself!" "You have imposter syndrome!" This is partially true but spectacularly unhelpful. The real reason you undercharge is simpler and less romantic: you have no framework for knowing what to charge in the first place.
You probably started by guessing. You looked at what others charged and knocked 20 percent off because you didn't have a portfolio yet. Or you calculated your living expenses, divided by the hours you could work, and added a safety margin. Or you just picked a number that felt "reasonable" and never revisited it.
Then something worse happened: clients paid it. And the moment a client pays your rate without pushback, your brain categorizes it as correct. It isn't. It's just what they were willing to pay.
I've worked with hundreds of freelancers and service providers over two decades. The pattern is identical. Virtual assistants charging 18 pounds per hour when they should be at 40. Content strategists quoting 800 pounds for work that requires 20 hours (that's 40 pounds per hour, which is junior copywriter money). Brand consultants bundling five days of work into a 2,500-pound flat fee because they're terrified of saying "this is a 6,000-pound project."
The second honest thing I'll tell you: you keep undercharging because raising prices feels like you're admitting you were wrong before. And you were. But that's not the real cost. The real cost is compounding.
The Compounding Cost of One Underpriced Year
Let's use real numbers. Say you're a freelance social media manager in the UK. You charge 25 pounds per hour. You work 35 billable hours a week, 48 weeks a year (allowing for holidays and non-billable time). That's 42,000 pounds gross annually.
You feel underpaid. You are. But here's where it gets expensive: you spend three years at this rate because raising feels risky. You're "building a reputation." You're "establishing your base."
After three years, you finally raise to 35 pounds per hour. You've left 120,000 pounds on the table. And it gets worse, because your next rate increase compounds from that lower base. If you'd started at 35 pounds and raised by 15 percent every two years, you'd be at 48 pounds per hour by year five. Starting from 25 and raising late, you're at 40.
That's not a small margin. Over a 20-year career, that difference is roughly 400,000 to 500,000 pounds. And you didn't leave it because you weren't good enough. You left it because you picked a random number five years ago.
The Audit: Finding Your Real Floor
Here's what works. Don't raise prices on instinct. Audit one month of your actual work.
Step one: Open your invoice history and pick the last full month you worked. Export every invoice you sent. If you use Wave or Xero or even a spreadsheet, this takes 20 minutes.
Step two: For each invoice, calculate the real hours of work. This includes the work you billed for and the work you didn't. If you did a client call, that's time. If you sent a proposal, that's time. If you reviewed their feedback and made revisions, that's time. Most freelancers undercount by 30 to 40 percent because they don't include communication and admin.
I did this recently with a content strategist I was coaching. She thought she'd worked 22 hours on a 1,100-pound project. When we counted everything (initial strategy call, proposal revision, project kickoff, three rounds of feedback, final delivery, post-delivery tweaks), it was 31 hours. Her effective rate wasn't 50 pounds per hour. It was 35.
Step three: Calculate your effective hourly rate for every single invoice. Don't average them yet. You need to see the range. Most service providers discover they're charging anywhere from 18 to 65 pounds per hour on the same roster of "similar" projects.
Step four: Find the 25th percentile. That's your floor. The lowest quarter of what you're being paid. If your floor is 28 pounds per hour and your median is 42 pounds per hour, you have a 14-pound range of underpricing.
In my experience, when you do this honestly, you'll find you're undercharging between 30 and 50 percent of your client work. Not all of it. Some clients are paying fair rates. But a significant chunk are subsidizing the rest.
The Immediate Action: Raise by 20 to 30 Percent Before You're Ready
This is the part where most advice gets fuzzy. "Raise gradually!" "Test your market!" "See how clients respond!"
None of this works because you will never feel ready. Confidence doesn't come before the price increase. It comes after. The moment a client pays your new rate without flinching, your brain updates its baseline.
What works: raise your prices 20 to 30 percent immediately on all new clients. Not your existing clients (we'll address that separately). Everyone who comes through the door after this week pays the new rate.
Why 20 to 30 percent? Because it's significant enough to meaningfully change your income but small enough that it won't shock clients in your market. If you were at 45 pounds per hour, you're now at 54 to 58. If you were at 1,500 pounds per project, you're now at 1,800 to 1,950.
What happens next is almost always the same. You'll get a few raised eyebrows. One or two clients will negotiate. Maybe one will go somewhere else. And roughly 85 percent will simply pay it. Because your services don't magically become worse at the new price.
I'm going to say something controversial: the clients who balk at a 25 percent price increase are often the clients you should be firing anyway. They're price-sensitive, which means they're relationship-sensitive. They'll be perpetually frustrated, perpetually requesting discounts, perpetually shopping around. You don't want them.
What to Do With Existing Clients
This is where it gets delicate and where I'm going to be honest about something most articles skip.
You have three categories of existing clients: the ones paying well (above your 50th percentile), the ones paying fairly (around your median), and the ones paying poorly (below your 25th percentile).
Leave the first two categories alone for now. Don't be greedy.
The third category: the underpriced ones. You have three options. Option one is to raise their rate at the next renewal or milestone, with advance notice and a genuine explanation. "My rates have increased by 20 percent for new clients. Your next project will reflect this." This works most of the time.
Option two is what I call "structured obsolescence." You stop taking on new work from them. You wind down gradually. When they need something, you're "currently at capacity" or you refer them elsewhere. This takes patience but it's clean and honest.
Option three, which I'll only recommend if option one doesn't work, is to fire them. Send an email. Thank them for the work. Say you're restructuring your service offerings and you won't be taking on their type of project going forward. Make it professional. Make it final. Move on.
Here's the thing most people won't tell you: keeping a client you're resentful toward is corrosive. It leaks into your attitude. It shows in your work. And it prevents you from taking on better-paying clients because your calendar is full of mediocre ones. Firing bad clients is a productivity move, not a cruelty.
Three Pricing Models That Work
If hourly rates are your current model, you might want to shift. Hourly billing creates a perverse incentive to work slowly. It also makes you feel obligated to log every six-minute increment, which is exhausting and administrative.
Project-based pricing: You estimate the total work, quote a flat fee, and you get paid the same whether it takes 12 hours or 18. This forces you to work efficiently. A content strategist might quote 2,200 pounds for a complete blog strategy instead of 50 pounds per hour times however many hours it takes. This is where most of the money is.
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Retainer-based pricing: You charge a monthly fee for a defined amount of work. A virtual assistant working with three clients might charge 1,500 pounds per month per client (roughly 25 hours per month per client, which is 60 pounds per hour effectively). This creates stable income and removes scope creep because you've defined the hours upfront.
Value-based pricing: You charge based on the value you deliver, not the time you spend. A brand strategist who takes a struggling company from 200,000 to 600,000 pounds in revenue might charge 15,000 pounds for the strategy work, not 50 pounds times 200 hours. This is harder to master because it requires you to understand the financial impact of your work, but it's the highest-income model.
When I made the shift from hourly to project-based pricing, my income nearly doubled in year one without increasing my workload. I wasn't suddenly better. I was just being paid for the outcome instead of the input.
The Mental Shift Nobody Talks About
Raising your prices requires something more than a spreadsheet and nerve. It requires you to accept that you can charge high rates and still be a good person.
Most underpricing comes from a belief that if you charge "too much," you're taking advantage. This is nonsensical. You're not holding a gun to anyone's head. You're offering a service at a price. They can take it or leave it. If they take it, they clearly believe it's worth that price.
The other part of the mental shift: you need to accept that some people will decide your services aren't for them. And that's fine. That's good. It means you're no longer competing on price with every other service provider in your market. You're competing on quality and fit with people who can afford you.
When you're charging 40 pounds per hour, you're in competition with every other 40-pound-per-hour provider. Thousands of them. When you're charging 70 pounds per hour, you're in competition with maybe 15 people in your city who are good. Much better odds.
What to Say When Clients Push Back
They will. Here's what works.
"I understand this is an increase. My rates reflect the quality and experience you've worked with. If this doesn't fit your budget, I'm happy to refer you to someone starting out who might be more affordable."
Don't justify by listing what you do. Don't explain your expenses. Don't apologize. If they wanted cheap, they should have hired cheap five clients ago. They're pushing back because they got used to the old price, not because the new one is unfair.
I've also found that occasionally offering a discount for long-term commitment works better than a straight price cut. "The project rate is 3,000 pounds. If you want to sign a three-month retainer at 2,400 pounds per month, I can do that." This keeps your day rate healthy while offering perceived value to the client.
The Timeline: How Quickly Should You Raise Prices
Here's a realistic schedule:
Month one: Audit your invoices and calculate your effective rate. Identify the clients paying below your 25th percentile. Decide which ones to raise on and which ones to phase out.
Month two: Raise prices on all new clients by 20 to 30 percent. Update your website, your proposals, your rate card. Send a gentle email to existing clients explaining that rates have increased for new work (not a threat, just information).
Month three to six: Phase in rate increases with existing clients as their projects renew or as you mutually agree. Give them advance notice.
Month six: Review again. You'll have data on how the market responded. You can do another small increase (10 to 15 percent) if needed.
Most people discover that after the initial shock, the world doesn't end. Clients still call. Better clients call. Your income is noticeably higher. Your calendar is better protected. And you're not seething with resentment.
When You Have No Idea What the Market Rate Is
This is a practical problem. If you're in a specialist field or if you're working across different countries with different rates, it can be hard to calibrate.
Here's what I do: I ask my clients. Not as a formal survey. But when a prospect comes in, I ask about their budget before I quote. "What range are you thinking?" Sometimes they have none. Sometimes they say 2,000 pounds for something that takes 30 hours. Both are useful data.
I also track what every other person in my space is quoting. Not obsessively, but when I come across another consultant's rate card or proposal, I note it. Over time, you build a picture of the real market.
If you're building a virtual assistant business, industry standard is roughly 35 to 55 pounds per hour in the UK market (depending on experience and specialization). Content writers are typically 45 to 75 pounds per hour. Brand strategists 85 to 150 pounds per hour. These aren't gospel, but they give you a reasonable floor and ceiling to work within.
The moment you know the market rate and you're consistently below it, that's the moment you're undercharging by choice, not ignorance. And you can fix that immediately.
I have written more around this on the site: How to Start a Virtual Assistant Business in 2026 (Without the Burnout), The One Freelance Tip That Changed My Income (And It's Not What the Gurus Say).
The Spreadsheet Trick That Finally Made Me Raise My Rates
I stopped guessing at my pricing the day I built a simple spreadsheet that tracked three numbers for every project: hours quoted, hours spent, and what I earned per hour once the dust settled. Within two months the pattern was obvious. A "quick" social media audit I priced at 200 pounds flat was eating 9 hours once client calls, revisions and research were counted. That put me at 22 pounds an hour, less than I paid my own part time assistant.
Once you have that real hourly figure staring back at you, undercharging stops being a vague feeling and becomes a number you can argue with. I set a rule after that: nothing goes out the door priced below 75 pounds an hour equivalent, and if a past client's rate would put me under that, I raise it at the next renewal with 30 days notice rather than mid contract. Out of 14 clients I did this with over a year, 11 accepted without pushback, 2 negotiated a smaller increase, and 1 left. Losing that one client freed up 6 hours a week that I sold to a new client at double the rate.
The other thing the spreadsheet exposed was scope creep, which is the quiet cousin of undercharging. Clients rarely ask you to do more work outright; they ask for "one more small thing" three times a project. I now log every one of those small things with a timestamp and a rough cost, and I show clients the running total at month end even when I am not charging for it yet. Most stop asking once they see the number. The ones who do not, I convert into a paid add on, and roughly 60 percent of the time they say yes because the value was already visible.
If you want a starting point rather than building this from scratch, track just these four fields for your next five projects:
- Quoted price
- Actual hours worked, including emails and calls
- Real hourly rate (price divided by hours)
- Any unpaid extras and their estimated hours
You do not need fancy software. A shared Google Sheet with those four columns took me fifteen minutes to set up, and it has done more to fix my pricing than any advice about "knowing your worth" ever did.
Frequently asked questions
What if I raise prices and lose all my clients?
You won't. At a 20 to 30 percent increase, you'll lose maybe one client per 15. And that client was probably costing you emotional energy. Your remaining clients' higher billing will more than make up the loss. If you lose significantly more than that, your increase was too high or your market positioning is off. But losing all your clients means you were undercharging so severely that people were only working with you for the price. That's not a sustainable business anyway.
Should I raise prices on existing projects mid-stream?
No. Honor the agreement you made. Raise on the next project or the next renewal. Breaking mid-project feels slimy and damages trust. But definitely raise on the next one.
What if I charge by the hour and my clients time-track me?
That's a sign you're in the wrong relationship with that client. Some industries require it. But if they're tracking your time, they're not paying for expertise. They're paying for busyness. You should be moving toward project or retainer work. If that's not possible in your market, your only option is to raise your hourly rate significantly (maybe 30 to 40 percent) to make the tracking worth your while.
How do I know if 50 pounds per hour is my real market rate or if I'm still undercharging?
Do the audit. If 50 pounds is your median effective rate (not your quoted rate, but what you earned after accounting for all hours), and if clients are paying it without pushback across different industries and client sizes, then you're likely in the right zone. If every client negotiates or asks for a discount, you're either in the wrong market or you're not communicating the value. Neither of those is a reason to lower your price.
