I don’t charge hourly anymore.
Let me be more specific: I don’t quote an hourly rate anymore. I don’t really need to.
Neither do you.
Here’s what I do instead:
I quote a per-project rate, or a per-month retainer.
Why is that important? Because sometimes the job you’re doing is much, much more than the hourly rate. Believe it or not, that makes sense.
Let’s say you’re writing a few product descriptions for a consumer-facing company website. It’s going to take two hours of your time. You’re charging $150/hour. Easy.
Then you’re asked to write a brief summary of workers’ compensation based on a 14-page white paper. That takes two hours. Two pretty intense hours.
You still comfortable writing that brief summary for $300?
Why you shouldn’t be:
Which is tougher, creating product descriptions that echo the company’s desired tone, or reading an in-depth technical report on a subject that requires specialized skill to understand and interpret?
That’s why the latter job requires more money.
I won’t say anyone could write product descriptions, but it requires someone who is creative, who enjoys playing with words, and who can stick to the company’s desired voice. Basically, a writer.
It not simple to write about anything with authority, but just try writing a summary about workers’ compensation. The minute you see the words third party payor, subrogation and investigation, or return to work programs, you’re going to wish it was a project writing product descriptions instead.
When I’m working up a price for a client I keep these things in mind:
- The value to the client for that project
- The skills I bring to the table that enhance that project
- What I need to make in order for the job to be worth my effort
- The deadline
Here’s an example of how per-project works better for me:
I charged Company A $1,000 for what amounted to 14 hours of writing product descriptions. The deadline was three weeks. That worked out to $70 per hour, but damn, the job was fun. Plus I could do it almost at my leisure.
I charged Company B $1,000 for a 950-word thought leadership article on why their customers should buy a specific insurance product they were trying to sell. The deadline was eight days, and they needed someone to explain in layman’s terms the insurance coverage options and how the insurance differed from a similar product they offered. That required someone who knew insurance and knew how to read through policies, and ask smart questions as needed. That didn’t take me as long (I believe four hours), but the specialized skills and the technical aspects of the job made it worth more to the client, and worth more money for me.
The value is important to note here. Company A put a specific value on the job. While they needed descriptions, those descriptions weren’t going to impact hugely on their bottom line if they weren’t perfect. Company B was putting that information out as an example of their expertise. Their reputations were directly tied to the result. The project held a good bit of value to them.
That’s sensible pricing.
I can hear you now — but Lori! How can I charge two different rates? Isn’t that unethical?
To answer that question, ask yourself this:
How many of my current clients pay exactly the same rate?
It’s not unethical to charge what your client wants to pay or can pay. It’s not unethical to charge based on the value your skills bring to the client or the value that client places on that project. It’s a place to start in your negotiations. You’d not charge someone the same rate for a blog post as you would for a branding campaign would you? (Hint: no, you wouldn’t.)
Since each client’s needs vary, so will the price you attach to each need. That’s good business.
Writers, do you agree?
How do you determine what price you’ll quote? What goes into your decision?
6 responses to “Why Your Hourly Freelance Rate May Be the Wrong Approach”
I much prefer per project. I think it winds up being better for both of us.
Again, where I live, the local potential clients, the minute you cite “project” rather than “hourly”, they melt down. Because to them, hourly means “minimum wage” or however far they can get you down.
So then I quote a higher hourly and show them how it’s better to use the project quote.
I’d already started building in materials and equipment costs into the project quotes (travel, phone time, etc. are always part of it, when relevant). So I’m not hit as badly by the changes in the tax code as I would have been otherwise.
I’m getting better at figuring general overhead, too, the way any business would.
The good part about knowing how you’re going to price is that it helps sort actual clients from those who are just trying to get the lowest price and don’t really care about quality.
Amen on that last point in particular. Separating the wheat from the chaff. 😉
I can’t remember the last time I charged someone an hourly rate. Of course, the bulk of my work is writing feature articles. Some clients pay a per-word rate, but most are flat fees for articles that fall into a certain price range. So I don’t even focus on per-word rates very much anymore. I look at how much time it will take.
For instance, the article I’ll spend about an hour writing this afternoon is really straight-forward. One interview (less than 15-minutes), a little transcribing, and an hour’s worth of writing. Broken down by the per-word rate it’s far lower than some of my other clients pay, but if I break it down by time the hourly rate might even be higher for this piece that didn’t take much legwork at all. The editor set a flat fee based on their per-word rate, so no worrying about whether they mean the number of words assigned, the number of words delivered, or the number of words published.
I prefer per-project pricing because both sides go in knowing how much it will cost/pay.
I’ve had two different clients (both now ex-clients) who claimed to pay decent hourly rates, when in reality they decided how much work you SHOULD be able to complete in an hour. And of course, their expectations were unreasonable. I’d rather take my time to do my work well than rush something through and miss errors. (Those errors probably make the editors feel more important that when someone turns in clean copy.)
When someone is paying by the hour, they might not trust that you’ve actually put in the time you say you have. That leads to micromanaging. (Like an ex-editor who questioned how hard I was working because they “saw me” on Twitter. Yeah. I retweeted a couple things during my lunch break. Time I wasn’t being paid for. And since I was a freelancer and not an employee, it was none of their business.)
See, that’s why I hate quoting hourly, Paula. It’s difficult for a client to understand how much time it takes for projects, nor should they really be able to understand it.
I had one project blow up as a result of unrealistic expectations. I was “allotted” two hours to conduct three interviews and rewrite a story (the client had made an error which caused the rewrite). When I explained it simply couldn’t be done, the client said just to do my best.
Oh, but when it turned out as badly as I warned it would, I was unprofessional. Why? Because I wasn’t willing to volunteer three more hours of my time to fix the client’s mistake. If it had been a client who hadn’t already left me waiting on several conference calls, had to be pushed to pay, and kept changing the focus, I might have helped one time. But this wasn’t the first time — it was a pattern. And I was jumping off the merry-go-round.
I bet it felt GREAT to jump off that merry-go-round!
Fantastic, actually! Yes. I didn’t even mind being called names. That was just confirmation that it was the right decision.