Hands down, the question I am asked most often is, “How much do you charge per hour?” The second runner-up is, “How do you decide how much to charge per hour?” The answers to both of these questions aren’t nearly as straightforward as you might think; for one thing, projects differ, and while I keep a certain ballpark figure in my head, sometimes I charge by the hour, and sometimes I charge per piece or even per entire project. It varies depending on the situation. For another thing, how I set my rate works for me but may not work for someone else. It’s a pretty individual thing, and so when I’m asked these questions I tend to try generalize and then I worry that folks think I’m being evasive (when really I’m just trying to explain what I see as all the factors in deciding).
[Sidebar: For whatever it's worth, I do always try to point folks at a good resource in terms of finding an appropriate range of fees. For my fellow writers, maybe look at this table of editorial rates to get a general idea.]
This brings us to the question Karen asked a couple of weeks ago, and I promise, this is all related. She said:
I am relatively new to freelance, although I’ve been reading this blog (via wantnot) for several years. I don’t remember seeing you talk about how you handle the administrivia. I feel like I spend a frustratingly vast amount of work time doing things that can’t be billed for — invoices, finding a better way to do xyz, relevant webinars, that kind of thing. (Perhaps you don’t work hourly but instead flat rate per project — I know there are a million and six ways to do freelance, but at the moment I’m almost entirely billing by time.)
This is relevant to rate-setting and the thing that I think trips up most newbie freelancers.
There is a lot of administrivia involved in running your own business, even if your “company” is just you and the computer, and your “product” is words. We talk about overhead when discussing big corporations, but it’s sort of like people forget that even freelancers have overhead expenses, as well. Maybe you don’t need to rent a big office building, but you have to have workspace, relevant equipment, and then things like time to fill out invoices and even to pursue new work. You’re absolutely right: as a freelancer it’s common to—as Karen says—find yourself spending a “vast amount of work time doing things that can’t be billed for.”
One solution to this problem is to reduce the amount of time you have to spend on such activities. Billing software, for example, is the sort of thing that may require some time to get set up, but ultimately may decrease the amount of time you spend on paperwork. Depending on what you use, you may easily be able to track hours, generate invoices, record payments, and even balance your accounts all via the same program. That sort of automation is a good idea because streamlining common actions saves you time and hassle, and potentially reduces the possibility of mistakes (in billing or whatever), too.
But what about the things like “relevant webinars” that Karen suggests? How do you save time on those? The answer, of course, is that you don’t. Sure, with time and experience you’ll get better at figuring out which time expenditures are most likely to pay off, but time is time and sometimes you just have to invest time in something for which you won’t be directly paid (but which you hope will be a career builder).
This is how you arrive at the second solution to this problem: You increase your hourly rate on the things which you can bill. Don’t go nuts; if you start trying to charge clients astronomical rates, you’ll soon be without clients altogether. But if you look at the rate chart I linked above, you’ll see a line item where “Writing, nonspecified” is listed as “$40 - $100/hr.” That’s a really big range. What’s appropriate to charge will vary depending on the type of writing, the client, the experience of the writer, etc. But when you’re setting your rate, keep in mind how many hours each week you’ll be billing.
Let’s break it down: If you charged $100/hour for your writing, and then you worked 40 hours a week, 52 weeks of the year, you would earn $208,000 annually. That’s… well, do you know any freelancers like you and me who are earning that much? It’s possible, I suppose, but I’m just going to go ahead and assume that most of the folks I know aren’t doing that. And it’s not because they’re not necessarily charging $100/hour, it’s because no freelancer ends up with that many billable hours. But you can make a very comfortable living charging that (or less) and working full-time, but where maybe only half of that work time is directly billable to clients.
In other words: Find ways to streamline the administrivia, sure. But if you find that you can’t make a decent amount during your billable time and handle all of the other stuff, you’re probably not charging enough. Raise your rates.