“How much should I charge?” is a common question we hear on the mediabistro.com forums. Writers who are moving into corporate writing after having worked as journalists reasonably want to know what’s a fair price to charge for their work.
The thing to realize is: There is no going rate. Not for press releases. Not for white papers. Not for any kind of corporate writing. Every project varies in its complexity, and prices ultimately depend on how many hours you put in. Nevertheless, there is a fairly simple way of figuring out how much you should charge. Follow these tips, and you’ll be well on your way to naming a reasonable figure.
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Know your hourly
rate
As a freelance journalist, you’re probably used to getting paid by the word. Not so in the corporate world (or the worlds of the nonprofits or government agencies who hire writers). There, you almost always get paid either by the project or by the hour. Either way, you’ll need to know what your hourly rate is. A project fee will simply be your hourly rate multiplied by the amount of time you think the project will take. More about that later.
So what’s your hourly rate? Simply put, it’s how much money you intend to spend (and save) in a year, divided by how many hours you plan to bill that year. When calculating your income needs, though, remember that you’re not an employee. You’re a business. Think beyond what salary you want to make. Consider all your additional business expenses: health insurance, business or self-employed taxes, conferences, travel, office supplies and equipment, phone bills, business cards, marketing Web site, and so forth. Tack those on to the salary you want to draw, and you have the total income you need to make.
Next, divide your desired income by the number of hours you expect to be able to bill. Remember: billable hours are a subset of the total hours you work. Non-billable hours are the time you have to put in to grow and maintain your business: Hours you spend pitching stories, discussing potential projects with clients, attending conferences, billing, looking for story ideas, and so forth. Deduct those from your total hours worked. Also deduct the amount of vacation you want to take. And for good measure, the number of days you usually lose to illness or family emergencies. Take all those hours out, and you’ll see that your billable hours fall way short of 40 hours per week.
Divide the total income you need to make by the total number of hours you plan to bill to get the hourly rate you need to charge in order to make a living. You might be surprised to discover the number is higher than you expected. Putting this in black-and-white, though, will give you the confidence to ask your clients for a reasonable rate. “Clients sometimes look at your hourly rate, and say, ‘If you’re charging me $100 an hour, and you’re working 40 hours a week, then that’s $4,000 a week. That’s an awful lot of money. I feel like I’m getting overcharged,'” says Gwen Moran, a freelance writer and author of The Complete Idiot’s Guide to Business Plans. “But what they’re not considering is all the overhead that goes into any business. If you’re charging $100 an hour, you’re only earning a fraction of that.”
Need help working through these calculations? Try the Hourly Rate Calculator at FreelanceSwitch.com. Tip: In the “Anything Else” field at the bottom of the “Calculate Your Business Costs” section, remember to include any and every other expense that the calculator didn’t explicitly ask for (including taxes). Moran suggests that, if you worked as a freelancer last year, check the deductions you took on your taxes for clues to your expenses.
Beware the na_?ve client
A red light should go off if you get approached by someone who knows you’re a writer and asks if you can whip up a press release in an hour or so. “That shows that they don’t really understand what they’re asking me to do,” says Linda Kallman, a freelance writer specializing in PR and marketing writing. Suss out how savvy the client is about what they think they need. If they seem at sea, consider passing at the project — unless you have the chops to help them develop a plan from scratch.
| Experienced writers know that newcomers often lowball their estimates in the beginning. Accept that it’s part of the learning curve. |
Determine the project scope
Not all projects of equal length cost the same to produce. The same tri-fold brochure could take five hours or 15, depending on the complexity of the material and how sophisticated and prepared the client is. To price a project, you’ll need to figure out how much more work, in addition to the writing, you’ll put in. Set up a phone call to go over the project scope with the client, and go through each of the following points. (And no, don’t charge the client for the scoping meeting. This part of the process is called “business development,” and it’s part of your unbilled overhead.)
Once you and your client agree on the project scope, write it down and get your client to sign off on it. Formally, this is called a Letter of Agreement, or a Statement of Work. It specifies the tasks you will complete and often sets deadlines for each stage. It saves everyone a lot of heartache down the line when memories get fuzzy. It is also useful in creating a series of line items that you can estimate individually and show the client, if they want to understand how you arrived at your overall estimate.
Decide on whether you’re going to bill hourly or by the project
Some clients like to pay by the hour. Others prefer to pay by the project. In either case, the client will usually want to have a sense of how much the project is going to cost overall. If you agree to bill by the hour, provide an estimate that details how many hours you expect the project to take and what the total price will be for those hours. Later, when you bill them, however, only bill for hours actually worked. If the amount of time required to complete the project isn’t clear, even after your scoping discussion, include some stopgaps in your agreement to reassure the client that an hourly approach won’t land them with a whopper of a bill. “If I’m not sure how long the project will take, I may give somebody a range,” says Kallman. “I may say I think it will take me 5-10 hours, but I will cap it at 10 hours. I will stop there, we’ll discuss where we are, and you can tell me how much more time you want to put into it.”
If the client prefers to pay a project fee, follow the same process but simply provide the final number. And bill the client that amount, irrespective of whether the project took more or less time than you projected.
Experienced writers know that newcomers often lowball their estimates in the beginning. Accept that it’s part of the learning curve. Over time and with experience, you’ll become increasingly comfortable with your estimates. “In the beginning, we all have a tendency to undersell ourselves,” says Moran. “It’s important not to beat ourselves up about that. Finish the project as gracefully as possible. Maintain the best relationship you can. Learn from the experience and move on.”
E.B. Boyd is a freelance writer based in San Francisco.
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