Raise Your Rates and the Leak Gets a Raise Too

I’ll just raise my rates.

You have probably said that to yourself while writing an invoice at 9 p.m. It sounds like a plan, and it feels like progress.

The raise everyone recommends

The advice is everywhere right now, and part of it is sound. The Lonely Entrepreneur’s underpricing report says about a third of small business owners, in one 2026 survey of roughly 900, have no plans to raise prices. Staying frozen costs money. A raise helps. I’m not arguing that.

What a higher rate does to an unbillable hour

Here is where I part ways with the crowd. Take a 40-hour week as a sample. Say you bill $200 an hour and move to $240. Good move. If you price by the project, the same math runs on your effective hourly rate.

The same report puts unbillable time at 30 to 40% of a freelancer’s week. On the sample week, that is 12 to 16 hours nobody pays you for. The other 24 to 28 hours now earn $40 more each, which is $960 to $1,120 a week. That win is real.

Now look at the 12 to 16 hours. At $200, they are worth $2,400 to $3,200 if you could sell them. At $240, they are worth $2,880 to $3,840. The raise gave the leak a raise of $480 to $640 a week, and your new rate did not shrink the leak by one hour.

The hours that were already handled

Some unbillable time has to happen. Sales and admin are part of running the business. The part worth your attention is the manual slice, like the second look you take at something already handled. That is the Touch Tax. You were paying it at $200. At $240 the bill grows, and nothing on the invoice tells you.

Before you raise your rates

Raise them. I mean that. A higher rate pays you more for the hours you sell. It leaves the hours nobody pays you for exactly where they were, and those hours charge you every week at whatever rate you set.

Picture the same week with Thursday afternoon back in your hands, and put the $240 on top of that. That is the week the new rate was meant to pay for.

A raise belongs on hours you keep.

The free Profit Leak Scorecard shows where else your week leaks before you change a number on the rate card.

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