Recession-proof your services

Economically, a recession is “a significant, widespread, and prolonged downturn in economic activity” and when there is a recession, prices usually increase and businesses have less money. Most recessions only last a few months, although some may take years to turn around. In 2022 we’ve seen prices rise globally but judging by the info circulating, 2023 seems to be the year for the next recession so we thought we’d teach you what we know about getting through difficult times as a freelancer.

How does a recession impact my potential clients?

Companies impacted by a recession will experience or have experienced a decline in business and when this happens, generally, there are major staff layoffs and the tendency is to hire freelancers to outsource tasks in an attempt to lower operating costs, which is great news for you.

Profits decrease
Your client's business isn’t generating sales because consumers are careful about spending. They'll need to cut costs and might decide to make employees redundant, to not invest in new products, and cut overheads to offset the loss of revenue.
Less credit
Increasing interest rates and tighter lending requirements affect businesses and also consumers.
Quality declines
Because manufacturing slows down and bills go unpaid, companies look for ways to cut costs and improve results. Some opt for a temporary reduction in quality to keep the business running.

How will a recession impact my prices and living expenses?

“In general, prices tend to fall during a recession. This is because people are buying less, and businesses are selling less. However, some items may become more expensive during a recession. For example, food and gas prices may increase if there’s an increase in demand or a decrease in supply.”

They answer probably every question in the book, but since we’re here for the pricing, we just want to give you an idea of how this recession - which is unlikely to be like any other one in past - will impact outside of your work.

Shopping: people will cut down spending on many non-essential things but they might instead end up spending more for prime necessity products or services, many of which will see price increases due to the global political and economical situation.
Buying and renting a home: while as a rule of thumb buying real estate could be a great investment during a recession, housing - rental or for sale - might only get cheaper in markets that are badly hit by the recession.
Travel: Travel is rather unpredictable and while the industry is expected to keep on growing, it might not reach pre-pandemic growth.

Axel Hefer, CEO of Trivago sums it up well: “With a recession looming, consumers will likely adapt their travel in three ways: shorten the length of their trips, select cheaper destinations and use more price comparison platforms…we [already] saw these shifts in consumer behavior in Western Europe as the recession is expected to hit harder there than in the U.S.”

7 tips to survive the recession as a freelancer

Working and living in a moment of recession means you might be tempted to do is to lower your prices but let’s see what tips you can concretely action, to recession-proof your business:

Take care of your existing clients
Strong customer service can help you maintain your relationships through tough times.
Do new market research
It's important to understand what other freelancers in your field are charging. Look for places to find data on rates for similar work - instaprice a great place for that but you could also do the search on your own. This will give you a baseline for what you should be charging.
Consider your experience and skills
They should be a key factor in determining your rates. If you’ve been a freelancer for many years and have relevant experience, you should charge more than someone who’s just starting out.
Don't be afraid to negotiate
Remember that you are providing value to your clients, and you should be compensated accordingly.
Be transparent about your rates
If you’re charging more than other freelancers in your field, make sure you can justify your higher rate with your experience and skills.
Consider offering discounts
You may consider discounts to attract clients. However, be sure to set limits on the discounts you are willing to offer, so you don't end up undervaluing your services.
Don't undervalue yourself
It can be tempting to lower your rates to attract clients but if you consistently undervalue your services, it will be difficult to raise your rates in the future.