With the new year fast-approaching, it's a good time for all types of freelance writers to evaluate their business plans and marketing plans to make changes. One of those potential changes is setting your freelance writing fees. Many freelance writers don't know how to properly set their writing rates from the start, so they over-price or under-price their work, and ultimately they fail as a freelancer because they can't get the work, or they burn-out trying to keep up with things like low-rate bulk orders constantly. If you decide to re-evaluate your freelance writing rates for 2008, use this guide to point you in the right direction (these tips are based on Setting Freelance Writing Rates the Right Way on my freelance writing blog): Know What You Need As a service provider, it's not smart to compete solely on price. By offering the lowest prices, you may very well have a full client schedule. However, you might still not be making enough to pay the bills, or enough to cover you should you become ill or simply need a short break. This is why lower-rate writers often find themselves burning out, stressed by the workload, and hating what they used to love (although it can happen to writers at any level if they take on too much). It's why a lot of freelance writers fail. It's important to know what you need from the start. Here are a few things to keep in mind or think about: Freelance writing rates don't directly equate to a salary ($30k / year as a freelance writer isn't as much "take home" pay as $30k per year from an actual employer). Here's a better way to look at it: Your freelance writing fees (yearly) should equate to the employee's total expense to the employer instead (their salary plus benefits plus bonuses plus the employer's contribution to any taxes). To help, go to Salary.com and look up your job title in your area. As an example, I looked up a level 1 (beginner) Web content / copywriter in my area. A base pay of $45,000 / year actually amounts to around $65,000 / year when you factor in what they're earning in benefits and time off. So if I were working as a full-time Web writer for a publisher in my area, with a $45,000 per year salary, I would have to earn $65,000 / year as a freelance writer to be in an equivalent situation financially (the same health coverage, ability to take time off, the same retirement savings, etc.). On top of that, you still would have to factor in any business expenses on top of that $65,000 (marketing expenses, office supplies, phone, Internet, office furniture and equipment, books, magazines, and education, etc.). Figure out what you need to survive (rent/mortgage, utilities, food, transportation, business expenses, etc.), and tack on an extra 10%. Understand that you'll pay more taxes as a freelancer than you did as an employee (in the US) - As an employee, you pay a portion of your Social Security and Medicare taxes and your employer pays the rest. As a freelancer, you serve as both the employer and the employee, so you pay for it all in the form of the Self Employment Tax (on top of your income taxes). Now that you know what to factor in, crunch the numbers and figure out what you really need to earn each year if you want to make it as a freelance writer. How Should You Charge? Writers can set their freelance writing fees in a number of ways. Most commonly you'll see per-project, per-word, or per-hour rates. All can work, so you'll need to know your target market to understand what appeals to them (do that by looking at rate structures of highly successful writers in your niche or specialty). No matter how you've decided to bill your time as a writer, you need to come up with an hourly rate goal. To do that, you need to understand a few more things: Freelancers will rarely be able to bill out a full 40 hours in a typical full-time work week. Expect to bill out around half, especially in the beginning, as the rest of your time should be spent on marketing and administrative work to keep the business going and growing. You won't work a full 52 weeks in a year. Account for holidays, vacation time (yes, you're allowed to take a break - believe me... you'll earn it!), and sick time or personal days. (I usually calculate using 45 weeks to factor all of this in, and leave a little bit of a buffer to account for any severe illness or major unexpected expenses.) I love the 10 percent rule... whenever you're coming up with financial needs, add 10% (something unexpected always comes up). If you didn't add 10% earlier when deciding on your needed yearly earnings, do it now by altering the time you expect to be billing out. So to figure out what you need to charge hourly, start with your yearly earnings goal (let's use the $65,000 from the above example). Then divide it by your weeks worked (let's use 45 weeks). Then divide that result by the number of billable hours each week (we'll say 20 for the example just to make it an easy 50-50 cut from a 40-hour work week). Here's what it looks like: $65,000 per year / 45 working weeks / 20 billable hours per week = about $72 per hour You now have a more realistic look at what you'll need to earn hourly to earn your yearly income goal. Once you have this hourly rate, you should be able to set your per-project or per-word rates by simply knowing how long you average to complete certain types of projects. In some cases, you'll do the work more quickly and earn more hourly, and in others the projects will take longer than expected, and you'll earn less per hour. It generally balances out well, but remember... that's why we added that buffer earlier. You now have a better idea of how to set your freelance writing fees in the new year, to ensure a profitable year. Are these rates you just worked out significantly higher than what you're currently charging? If so, don't let it stop you from raising your rates if you really want to and think you can. Your current clients may not be willing to pay those rates. Then again, your current clients may have been the wrong market for you to target from the beginning. Never adjust your minimum earnings goals (what you need to get by) to fit a specific market. Instead, alter your target market to fit those goals.
Wow... now that's a detailed guide on setting your rates if I ever saw one. Can't believe I actually learned something considering my omniscient intellect and all Thanks for the article.
Very well written, explained quite a bit and even expanded some idea's of my own that I had. Thanks for answering my questions via PM.
I think your approach is effective, as it's focused on business, not just on "writing for the sake of writing". Thanks.
Glad to see people are finding it useful. It would be interesting to hear where people actually are as opposed to where they'd need to be after crunching the numbers. For those who have tried it, have you come across any surprising numbers, drastic changes, or realizations that maybe you didn't think of before? There's something else that's interesting for those not wanting to actually go through the whole process: If you forget about adding in the extra padding through the weeks worked and such, it works out very closely to $10 / hr for every $10k in overall earnings you want to make in a year (so $50 / hr to earn $50k / year, etc.). You'll notice in my earlier example that it works out to a bit of a higher hourly rate. That's because I decreased the weeks worked to 45 (you don't have to go that low) in order to account for more time off, slow work periods if they come along (for me that usually is the week before Christmas and the week before Thanksgiving). So if you go with the $10 / hr for every $10k estimate, just remember to then add a bit to the overall to account for things like that. However, crunching the numbers long-form is a good idea, as it's going to hopefully get you thinking about things you didn't really think about before (like the fact that all of your hours really aren't billable).
It's funny because clients often think that if you charge a certain rate you're hauling in that amount 40 hours per week.
Exactly... and quite a few writers make that same mistake. They don't understand that to earn the same income as a full-time salaried writer, they may have to bill out close to twice as much for their billable hours. If the buyer doesn't take the time to look at it thoroughly, they can feel like they're being ripped off. However, paying $50 / hr for a freelance writer only on an as-needed basis would almost always save them a good bit of money as opposed to hiring an actual employee (in a legal sense) for half that hourly rate (because they'd have to tack on expenses like benefits, taxes, required insurance, training costs, etc.). It's just tough for some people to look at the overall picture as opposed to the hourly rate glaring them in the face.
Exactly. The actual cost of hiring an employee for a professional position is often one to two times the candidate's salary plus benefits (which adds up to thousands). Hiring an employee costs an AVERAGE of $48,000 to find a worthy professional. That is just the search and integration of that employee into the company and doesn't include any moving costs or what the employee would cost in terms of benefits, salary and the all-important toilet paper usage. If you were to go through an agency to employ a copywriter (for example), they mark up the rate and you pay my rate or double my rate. I have often put together far more efficient creative teams to meet advertising/writing objectives and it ends up costing less than half of what it would cost to use an ad agency or similar business. So hiring freelance is often very cost efficient and you typically get people who are more well rounded, have excellent business acumen, great contacts because they have to be their own marketing, business and IT person. We troubleshoot issues that would otherwise fall to someone else in a business environment.
Hi everyone. This is my first post. Nice article jhmattern. Just to take this a step further, how you set fees depends on the type of writing you do. I used to follow the Peter Bowerman (Well-Fed Writer) way of a flat fee based on an hourly rate. For instance, if your rate is $50/hour and a typical brochure takes you 10 hours, then you charge $500. Regardless of whether it actually takes you 8 hours or 12 hours. I think that method is effective if you're writing articles and marketing collateral. I don't think it works in every case, though. For instance, in direct response, which is what I do now. In direct response, the copy is directly tied to results. So if a sales letter I write will potentially make my client $100,000 this year, there's no way I'm charging an hourly rate. Why? Because I may write a letter like that in only 4-5 hours. If I charge $200/hr, that's a $1K for me and $100K for him. Hum.... I'm not sure I like that. So in direct response, I (and most others I know) charge a flat rate for the project, which might include the letter, order forms, follow-up emails, revisions, testing, etc. A project like this goes for anywhere between $3500 and $20,000 depending on the experience of the writer. And clients pay it...gladly. Because if they know they stand to make $100k, spending $10k is a pretty good deal. Does that make sense? Again, I'm not disagreeing with the OP. Just taking it a step further into other areas of copywriting. Good thread and nice board.
Coming up with an hourly rate doesn't mean you can't charge per project, which is something I did actually mention in the original post. The post was to help writers understand what they really need to charge in order to meet their basic income goals (because most new writers don't have a clue how to do this when they start out, and they tend to learn the hard way time isn't all billable, there are added expenses, etc.). What it sounds like you're talking about is charging a higher rate simply because you want to, which you can do with per-project rates, hourly rates, or per word rates. If you have the marketing ability to pull off higher rates with your target buyers, then by all means, there's nothing wrong with doing that. A lot of us do it all the time (in copywriting, PR writing, and other areas of business writing especially). That's because we set our income goals not on what we need to get by, but on what we want to earn based on what we feel we deserve, or what we consider a "comfortable" living. The idea here was simply to teach people how to stop undercutting themselves and dooming their freelance careers by not knowing how much they really need to charge (as a base) in order to make it as a freelance writer.
Good stuff, as usual, Jenn. btw - not sure if you saw it, but apparently you are "the absolute best copywriter on DP as evidenced by your posts" in another thread I came across. I'd say this is yet another nice example of quality material. Let's just hope the people that need it take the time to read it carefully. Rebecca
lol No, I didn't see that actually. While I'm flattered, I'm definitely far from the best copywriter here (not my specialty to begin with). There are quite a few copywriting pros that could wipe the floor with me I'm sure.
Well, I think if there is gushing going on, internetmarketer needs to provide a link to said gushing so jhmattern can relish the nice words.
Absolutely. I'm not disagreeing with you at all. Just throwing in my 2 cents from my experience. Again, nice article.
Sure thing! Someone in the middle of this thread made the statement. Just a little warm fuzzy for you on a cold winter morning. Now I'm off to get a toddler and infant ready to fly up to the mountains (still not sure why I thought this was a good idea....) Happy Holidays!