Rogue Ink

July 11, 2008

The Money Talks, Day Two: Hourly Rates, Calculation and Confirmation. And Confusion.

Filed under: Writing — Tei @ 2:17 am
Tags: , ,

As many people have chronicled, freelancing means you are not only your own boss, you are your own accountant, secretary, marketing director, manager, public relations assistant, customer service representative, and intern. You are also that guy who is totally useless but who is so distinctly socially unnerving that no one questions the reason he is ever issued a paycheck. You are generally that guy when no one else is watching (which is what makes you different from that guy) but still. But you know you have moments when you wake up in the morning all cockeyed and unshowered and wander over to your desk vaguely scratching at your armpit and smiling in a vaguely disturbing way at the dream you sort of half-remember. That guy’s in there.

Assorted Professions Hours

Now, I am not going to calculate the value of those professions’ time. Especially creepy guy, because whatever he makes, it’s too much. Furthermore, if we actually figured out an hourly rate for each of those professions, we would discover something we had suspected all along but refused to say aloud in hopes that we were wrong. But we weren’t wrong, were we? No. For we are Legion. Or something. What was I saying?

Oh, yes. Whatever the combined total of the hourly rate for those professions is, you can’t afford it. That’s right. You can’t afford you. You will never, ever be paid enough. This is the fact of freelancing. Welcome to the party. Your much-needed booze is at the bar, where it’s supposed to be, but you probably can’t afford anything, so it’s good that the pub only serves theoretical internet booze, and not the real stuff, or you’d be sadly staring at a bottle of Glenfiddich about now wondering why at least the boss part of you doesn’t get paid a decent wage.

So let us abandon the battle of paying those professions a reasonable wage. In fact, we shall not pay them a wage at all. We shall instead double the wage we pay ourselves for our actual profession. Because let’s face it, you will never, in all your time as a freelancer, be able to issue an invoice that states someone owes you for accounting that you did for your own business. Although that would be a more honest way to go about it, sadly, that is not the way of the world. Which is why we are the Rogue.

Freelancer Hours

You don’t get paid at all for Assorted Professions hours. That sucks. So how much do you get paid for the Freelancer Hours?

Remember the first day of the Money Talks, where we figured out how much money I had to make daily? It was about $230. We’re going to round that number up to a solid $300 a day. Theoretically, I would work an eight-hour day, which would give me an hourly rate of about $35. Except that’s not at all what I need to make by the hour. Because of the Assorted Professions, who all need to get paid too.

Half your day is going to be taken up with work that is not Freelancer work (we’re going to discuss this more tomorrow, but assume for the moment that I am correct. Go on. It won’t hurt you). Therefore you need to make double your hourly rate every time you do billable Freelance work. Half for the Freelancer, half for the Assorted Professions. I told you they were never going to make anywhere near enough money.

So $300, divided by four hours now, is $75 an hour. Which, as it happens, is in fact my rate.

However – and here’s the kicker – this is actually a bad way to calculate an hourly rate. This is a fantastic way to confirm that your hourly rate is in fact going to work for you, but it’s a lousy way to calculate one. Note: do not calculate your hourly rate off of the money you’d like to make. You will screw yourself, because you can come up with a budget (dinglefrapp, for those of you still with me) that is astronomical and justify just about any hourly rate in the world. Which is lovely, but totally useless when it comes to setting a rate that people will pay.

Although I double-dog dare you to try quoting someone a rate of $1,200 an hour and try to justify it by explaining that your Dinglefrapp Plus demands that hourly rate. Go on. I’ll wait. Meanwhile, the rest of us will calculate an hourly rate the normal way, and confirm it with the strategy I just defined.

The Simple Way to Pick an Hourly Rate

Ask around.

I know. It sounds so dumb. I wish I could say “climb a the tall mountain beyond the sunset. You will see a man by a tree. Do not speak to him, or he will kill you. Instead, walk around the tree and talk to the toad on the ground. Say, “Potato salad.” The toad will open his mouth, revealing a pebble shaped like a pomegranate seed (or possibly an actual, fossilized pomegranate seed). Take the pomegranate seed to the original statue of Persephone and stick it into the stone pomegranate in her hand. Then do the hokey-pokey. A dove will fly out of her hair and tattoo a number into your forehead with its beak. That number is the rate you should charge all and sundry for the services you perform.”

I cannot say this. (Actually, I can, I just did. But I lied.) Ask around. Ask every freelancer in your profession you can get your hands on. If they won’t tell you how much they charge – and this is the really smart bit – ASK THE PEOPLE WHO HIRE FREELANCERS. Ask marketing directors, PR people, corporations with a lot of output, hit up every contact you have and ask them how much they paid by the hour.

You will mostly get project quotes, not hourly quotes. That’s fine. Figure out how long it would take you to do the project, divide those hours by the total project quote, and you will have an hourly rate. Yes, I know. You’d think they’d encrypt this information or something, but no, it’s just basic division.

For freelance copywriters, I found that a standard basic industry rate ranged from $50 to $150 per hour. Most of the people up past $100 are seriously famous copywriters like Bob Bly, and I am nowhere near Bob Bly. I’m also not bottom of the barrel. So I was dealing with somewhere between $50 and $100, and guess where I wound up? That’s right. $75 an hour.

And then I made myself a dinglefrapp, and confirmed that $75 an hour was going to meet all my needs.

For the Clever People

Some of y’all are doing the math right now and saying, wait a second. $75 an hour times 8 hours in a workday times 40 hours a week times 50 working weeks in the year IS A SHIT-TON OF MONEY, DUDE. (And by ‘shit-ton’ we mean ‘$120,000’. You totally DO NOT MAKE THAT MUCH MONEY.

True. I don’t. Well done, mathematicians. But you have forgotten something, have you not?

Assorted Professions also need TIME.

Tune in tomorrow, where I will thwart you number-people yet again.

Subscribe. I have a bad taste in my mouth from all the math.

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23 Comments »

  1. /me reads

    /me nods

    /me thinks that math tastes like an almost-badly-made espresso; bitter enough to make you blanch a little, but still good for the pick me up when you finish it (:

    Comment by toothsoup — July 11, 2008 @ 2:29 am | Reply

  2. One of the worst things that a freelance writer can do is bill by the hour. I think you know this personally – if you work faster than Joe, then you are losing money. Joe works slower but works more hours so comes out with… ta-da, the same rate as you at the end of the day. Only his hourly rate is $37.50 an hour or so.

    Bill by the piece, by the word, by the project. This is what people like to pay for, this is what you should charge for. Not for your hours.

    I’m also interested to hear what you’d have to say on the charge more work less versus charge less work more theory – because both end up at the same amount of money.

    A last curiosity of mine – the topic is about money. Only about money. Money alone. But… there are many more factors to setting rates than just deciding, “I can’t afford me! So I’ll charge a TON!” It just doesn’t work that way, hon.

    Comment by James Chartrand - Men with Pens — July 11, 2008 @ 2:52 am | Reply

  3. You make me laugh so much. Thank you.

    Comment by David — July 11, 2008 @ 1:16 pm | Reply

  4. Riffing off James (something I find myself doing *a lot* in blog comments), nearly everybody in my industry (individualized coaching for triathletes and runners) offers “Gold, Silver and Bronze”-type programs with monthly charges ranging from US$75 to $1200 and service levels ranging from God-knows-what to, um, God-knows-what.

    Considering these fee bases, my reaction’s always been: there’s no transparency here; you SAY you’re offering “hand-tailored” services, but it feels like you’re providing generic programs with a thin veneer of customization and that you’re being disingenuous about this.

    Since I base my “prescriptions” for my athletes upon my detailed assessment of their unique strengths, limitations and life circumstances, I never offer an identical array of services to any two of them. Thus I can’t justify any kind of “bundling.” I charge $90/hour, BTW.

    No problem, right? Everybody works differently, right? Not so: my competitors are getting the work; I ain’t.

    I recognize my thinking here is self-defeating. Please help me find a better way!

    Thanks, all.

    Comment by Mark V. McDonnell — July 11, 2008 @ 1:58 pm | Reply

  5. I am more project focused. I din’t think in hours of time. I think that is the Realtor in me. Egads peoples..if I charged based on how long it took to sell a house in THIS market..you all would OWE me your whole house!

    Knowledge is worth money more than hours.

    When I hired the magic Pen men I never once asked how many hours they were going to spend. Frankly don’t care.
    Harry could do the whole thing in an hour, put his feet up and ER with us til the cows come home.

    I am paying for their TALENT. not their time.

    ( Wow..did I just turn ER into a verb? dang..I like it that way)

    Comment by wendikelly — July 11, 2008 @ 2:05 pm | Reply

  6. Bless you Tei!

    You’re one of the few people who gives an honest discussion of how much money free-lancers make.

    A lot of blogs seem to dance around this subject. They talk about self-actualizing, maximizing their potential, and they’re SO GLAD they’re not working in a cubicle farm.

    Yeah..but how much do they MAKE?

    For those of us considering a professional writing career, that would be a really GOOD THING to know.

    Reading between the lines, I get the impression that it’s not all roses and sunshine…that some of these poor souls work insane hours and earn just enough to starve.

    Keep up it up! I’d like to know more about how your DingleFrapps are working out!

    PS. 75 bucks an hour sounds great, but it’s definietly NOT the equivalent of a $120K year job.

    Comment by Friar — July 11, 2008 @ 2:57 pm | Reply

  7. @ Friar – We’re a six-figure business. Above $120k/year. That help? We’ve said that before on our blog, actually.

    @ Wendi – See, by the hour sucks because what if the person takes too many breaks, fudges the numbers or drags a project out unnecessarily? While it certainly doesn’t take us an hour to do a project, how long it takes us truly is our problem – it’s not up to the client to pay more than he should or get a bargain steal. Per project/piece is fair to all involved, I’d think.

    @ Mark – Is riffing off of me a good or bad thing? Never heard that term beyond a guitar riff…

    Comment by James Chartrand - Men with Pens — July 11, 2008 @ 3:32 pm | Reply

  8. G’morning, all.

    See, I’m so glad someone picked up on the whole mistake-to-charge-by-the-hour thing. I know this, Jamie-boy, which is why I’ve never yet actually said to my clients that I charge $75 an hour. I’ll be talking more about this tomorrow, but setting an hourly rate for YOURSELF determines how much you’re going to charge per project. You don’t just pull a random number out of your ass. You say, hm, how long will it take me to do this, and how much is my time worth. And then you quote the client a number. If you come in with fewer hours than you thought you would, hurrah for you. Extra money. If you come in with more hours than you thought you would, you’ll adjust what you quote for that project next time, because you’re not making your optimal hourly rate.

    This is a by-and-large comment response, because we’re all more or less on the same subject here. I’d have gone into why charging by the hour isn’t a good idea in this post, but in case you haven’t noticed, adding all my special little roguish asides tends to make these things crazy long. So that’s for tomorrow. Tra-la!

    Jamie-boy, I don’t know what ‘other factors’ you’re discussing on setting rates, besides, you know, what people are willing to pay for you, which I sincerely hope I covered in finding out what the industry standard is. But that is ALSO a money topic, so spill, darling. What are these other factors, pray?

    Comment by Tei — July 11, 2008 @ 5:06 pm | Reply

  9. Factors that affect your pricing:

    Your skill level (you can’t charge for what you don’t have)
    Your experience (new in the business should charge less)
    Your knowledge (goes hand in hand with skill level and experience)
    The market (if it can’t support your rates, you’re screwed)
    Perception (do you come off as worth it to others?)
    Branding (have you branded yourself properly to justify the rate?)
    Justification (are you truly worth that amount? Can you back it up?)
    Reputation (how do others perceive you? Do you have reviews and testimonials?)
    Ethics and morals (how do you feel about your rates? Can you sleep well at night?)
    Your location (if you live in California or Nunavut, that affects your rates)
    Competition (lots? none?)
    Supply and demand (is this in demand? is there too much of it?)
    Cost of living (is inflation up? what’s the exchange like? what does it cost to live?)
    Flexibility (are you firm or willing to negotiate?)

    How’s that?

    Comment by James Chartrand - Men with Pens — July 11, 2008 @ 9:04 pm | Reply

  10. Oh, see, I just assumed that everyone on these boards was, you know, qualified. Thusly I didn’t bother. Neener neener.

    Comment by Tei — July 11, 2008 @ 9:12 pm | Reply

  11. Ok Tei,
    I’m stuck in my cube thinking, this is no bed of roses to freelance.
    So I am feeling grateful–Thanks to you.
    Although you never seem to need topic suggestions, I have one for you. As a denizen of the lusty weevil, what advice can you provide me on how not– to throttle co-workers who don’t know when to use “I” or “me?”

    Comment by Muffy — July 11, 2008 @ 9:55 pm | Reply

  12. I heard that assumptions can get us into a mess of trouble and that we should never assume 😉

    Comment by James Chartrand - Men with Pens — July 11, 2008 @ 10:07 pm | Reply

  13. And yet you continued to do so. Glass houses, matey.

    Comment by Tei — July 12, 2008 @ 2:47 am | Reply

  14. I appreciate what you are doing Tei, which is to offer specific suggestions/advice based on your experience for others to think about and apply to their circumstances as appropriate.

    It may be easier for a blogger to talk in generalities because this offers greater protection against criticism – you can always reinterpret a broad statement after the fact, stretch it to rebut detractors. But generalities do not help the people, in this case freelancers (particularly the aspiring ones), desperate for some meaty specifics.

    So thanks for braving the “fear that someone else, some evil internet person out there, will descend upon [you] and say, ‘You don’t know what the hell you’re talking about, those rates are too low, and it’s unprofessional to suggest otherwise. Also, your business is a sham and I heard that you keep Care Bears hostage in your pantry. You bastard.’ ” (words of the rogue from the first post in this series)

    Comment by Rebecca Leigh — July 12, 2008 @ 11:37 pm | Reply

  15. […] of the hardest aspects of becoming a freelancer is to set rates. I constantly get asked by friends and new freelance writers what I get paid for writing for such […]

    Pingback by Fair Pay For Freelance Writers | The Writers Manifesto Blog — July 15, 2008 @ 2:03 pm | Reply

  16. Perfect timing coming across this as I have been making plans to journey into the waters of the freelancing pool and this question has been weighing on my mind. Fortunately I don’t have a Dinglefrapp Plus, just the standard Dingleffrapp, but I do hope to upgrade when I become more successful 🙂

    Comment by Steve — July 15, 2008 @ 6:43 pm | Reply

  17. Tei,

    Where did you go? I am waiting for the next installment. I keep checking in to the Pub each day.

    Come back to us and tell us more.

    Comment by wendikelly — July 16, 2008 @ 10:14 pm | Reply

  18. Yes Wendikelly-
    I’m also looking for Tei..

    Comment by MonstersMama — July 20, 2008 @ 1:09 pm | Reply

  19. Come back, soultwin. Come back.

    Comment by Amy — July 22, 2008 @ 3:41 pm | Reply

  20. My sister, whom I told about your blog, told me today that her friend, whom she told about your blog, is freaking out that you have disappeared.

    It’s true. Your absence is disconcerting. I can only assume you have lost your Internet connection completely. Or your pot-smoking housemate next door has done something terrible to you. Or you’ve fallen on your swords by accident. Or you’re working your ass off on your new site or paying work. Or you’ve gone on a serious roadtrip in search of inner peace.

    Whichever it is, quit it. Get up. Resurrect, Rogue.

    Comment by Steph — July 22, 2008 @ 8:32 pm | Reply

  21. yeah, I’m in the full-fledge worry mode now.

    Tei,you have people out here who really care about you. Send up a flag, let us know you are drinking a Mai Tei on a beach somewhere, or have given up blogging for the summer or are so busy working you are suddenly too rich to think about us, any of those answers and any other creative ones would be fine, just be OK and know we are thinking about you and missing you.
    Hugs.

    Comment by wendikelly — July 22, 2008 @ 8:44 pm | Reply

  22. Where is the rest of the series? Us non-freelancers need something to read at work.

    —shuts door to office and begins to sob quietly—

    Comment by Rebecca — July 23, 2008 @ 4:26 pm | Reply

  23. I just came across your blog for the first time and I’m utterly impressed with how much useful information you squeeze into your hilarious writing. Honestly, I tried to read a sentence to my boyfriend and got such a hopeless laughing attack that he just ended up looking at me with one eyebrow raised and I could do nothing but continue my hysterical laughter into the laptop screen.

    Just a bit of silly praise!

    Comment by Zoe — July 28, 2008 @ 3:18 pm | Reply


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