Why Calculating Your Freelance Rate Is So Important—and How to Do ItBy Aubre Andrus August 15th, 2016
When it comes to finding information on the perfect hourly rate, most writers are stumped. Just like there’s no easy job database of high-paying jobs for freelancer writers, there is no official guide to setting your rates.
“I did a lot of research online and there is really little saying this is a standard rate for this city and this particular experience,” said Melanie Padgett Powers, a former newspaper reporter who started her own business called Mel Edits.
Laura Shin, a journalist who coaches writers and shares writing advice at Ideas Words Empires, sees this problem all the time. She’s seen writers jump at $50 for a blog post even though she would only do it for $1,500. “People do not know what their own time is worth,” she said. “They think someone is going to tell them this is what you should be charging, but it depends on your personal experience.”
Personal experience is only part of it—talent is key as well. And that might be a tough realization for some freelancers to swallow.
“You have to have a realistic sense about how good you are.” —Laura Shin
“Any freelancer, they need to understand what their actual value is,” Shin said. “You have to have a realistic sense about how good you are.” It’s hard to put a numerical value on your talent, but it’s a necessary evil. Otherwise, clients are likely to walk over you in any sort of negotiation.
“People who want to be freelancers need to dispense with the illusion that this is about anything other than getting money,” said Mike Long, a freelance speechwriter and educator. “The people hiring you want to get you at a good rate and you want to make as much as you can.”
Find your hourly rate
Instead of thinking per word, you have to think per hour. It all comes back to that pesky business mindset that can be unnatural to many writers.
“You have to look at how much time you’re putting into each assignment,” Kelly James-Enger, a ghostwriter and author of Six-Figure Freelancing: The Writer’s Guide to Making More Money, said.
To figure out your desired hourly rate, you need to find not only how much money you want to make per year, but also how many billable hours you’ll work each week. When Powers and her business coach calculated a reasonable hourly rate based on her experience, services, and location, she only needed to work 17 hours per week to meet her income goal. But finding 17 billable hours can be more challenging than you think.
Most freelancers spend about 30 percent of their time completing non-billable work like pitching, researching, interviewing, responding to emails, marketing, networking, and invoicing, according to Shin. That means an eight-hour workday only leaves you with about five billable hours.
So when finding your own rate, be realistic with what you can charge and how many hours in the week you can work.
Then find your project rate
Once you’ve come up with an appropriate per-hour rate based on your desired salary, don’t tell your client. Instead, translate your hourly rate to project rates. It may seem like an unorthodox move, but it’s the secret behind many successful freelance careers.
A client might balk at an hourly rate of $100, but they won’t blink twice when you tell them the project will cost $2,000. Only you need to know that you’re estimating to spend 20 hours on the work.
Remember that a couple thousand dollars might sound like a lot of money to you, but it’s not a lot to a large corporation or wealthy client. “You can make a fine living off the scraps that fall off the corporate table,” Long said. “Their scales are different from ours.”
Calculating your per-project rate will also involve some conversations with the client. It’s smart, if not outright necessary with larger projects, to set expectations up front. For example, be clear that a rate only includes one round of edits. Or this tight deadline requires a $100 rush fee. Or that you’ll charge by the hour for conference calls.
The hard truth is that if you don’t protect yourself, no one else will.
It can take a while to perfect your rates. You’ll underprice some projects and overprice others. You’ll find that you’re really fast at some tasks and slow at others. Really, only experience will help you refine your rates.
In the past, Shin’s per-project rates have resulted in her making anywhere from $10 per hour for a really intense project that took her much longer than expected to $650 per hour for a high-paying project she completed very quickly. In other words, your rates will vary dramatically depending on the project and client, which makes organization and time management all the more important.
Time is money
There is one fixed resource that freelancers must learn to manage well: time.
“I counsel freelancers to think of time as their most important and precious commodity—it’s time that you can leverage to increase your pay,” Shin said.
“I counsel freelancers to think of time as their most important and precious commodity—it’s time that you can leverage to increase your pay.” —Laura Shin
Shin recommends writers religiously monitor how they spend their time during the work week. If you do that, you can learn exactly how long certain projects take you. You should quickly be able to find how many hours you’ll need to, say, complete an 800-word story with three sources. If you’re organized and have the answer, you can confidently charge your client and schedule your time accordingly.
James-Enger has a “daily nut” of about $450 per day—what she hopes to earn by the end of each workday for 50 weeks during the year. “If I put four days of work into a $900 article, I’m not going to make my goal,” James-Enger said. “If I take a story that pays $1,350, I know I’ll have three days to finish it.”
Shin loves to “gamify” her work and constantly challenges herself to complete tasks faster than before. By becoming more efficient, she can make more money. She uses time-tracking software like RescueTime and her personal favorite, OfficeTime. Both allow her to tally how much time she dedicates to each assignment, client, and task (for example, writing versus revising). She then runs reports to asses her productivity.
Writers operate on deadlines. “Gamifying” your time management with self-imposed deadlines can keep your income on track, and eventually help you increase your per-project hourly rate as you complete the work faster and faster.
Of course, every writer has their own optimal way of working: the name of the game is experimentation when it comes to productivity. But none of that matters unless you have your rates in order.
This is an excerpt from our free e-book, “The Ultimate Guide to Making $100,000 as a Freelance Writer.” Download it by filling out the form below.Image by Courtney Menard