I've been working as a contract editor for the same company for about seven years. About three years ago, they changed the terms of their contract, which is now resulting in a huge pay loss for me (we went from getting royalties on books sold to getting paid per word). Although I did very well the last couple of years, this year I'm making about 1/6 of what I made the previous two years. We were told they can't give us raises due to IRS regulations; because we're contract workers, we have to submit a rate change request and they'll either approve it or not. My recent review was superb. How do I word a letter requesting an increase, and what sort of percentage would be reasonable? I can't really go by industry standards because, honestly, there aren't any.
Best way to ask for higher rates is to do just that: ask for a higher rate. Mention you have good reviews and have been a steady reliable worker for many years and request a rate suitable for your quality. Compare it to other work you did to determine what is a good rate. If comparison is not possible, than simply request a rate that you think makes it worth your while.
One note though: be prepared to walk if you do not get a higher rate. If you're not, that seriously undermines your position for negotiations and as soon a they figure it out you will have a very hard time negotiating higher rates.