How Much Should I Charge? A Guide to Setting Freelance Writing Rates and Contract
“How much should I charge for a 500-word article?”
This is one of the most common questions among those who have just kicked off their freelancing flight.
It is important for you to determine the right rates for all types of writing assignments to protect your rights and the value of your talent and to keep the professional image of the entire industry and its standards.
First, you must understand that there are different factors that affect one’s writing rates:
1. Professional Experience – This includes your credentials, published works, background, companies or individuals you’ve worked with, education, and awards. If you are just starting out, you can do pro bono or contribute articles without payment first so you can build a strong portfolio. But if you believe you have sufficient credentials to assure the clients you will come up with quality work, you can charge higher than the average rate.
2. Expenses (according to your location), such as electric bills, Internet connection, and phone bills.
3. Your genre. Of course, if it is a topic you are very familiar of, the work would be easy. But if it is something new to you, it would require you to go to the library and do some research and interviews. The amount of effort you have to pour into the project is a critical factor here.
4. Case-to-case basis. Usually, every project has its specific requirements. Some ask you to include photos, rigid research, activities such as surveys, and the time period cited in the contract.
5. Your other needs. In this interview , Linda Keppler, traveling entrepreneur and author, said: “You might think $40, $50 or $60 an hour sounds like a lot. But factor in taxes, business expenses, health insurance, retirement savings, vacation days and the fact that you’re hustling for work 5, 10 or however many unpaid hours a week, and you’re lucky if you take home $20, $25 or $30 an hour. If everyone can afford you, your rates are too low. If no one can, your rates are too steep. You know you’ve hit the pricing sweet spot when about 20 percent of your prospects can’t afford your services.”
6. Industry rates. Charging too low might affect the whole freelance writing industry. You need to do your research first and ask around about the standard prices for different writing assignments.
CHARGING A CLIENT: HOURLY RATE VERSUS CONTRACT PRICE
Charging a client based on the number of hours you work or on a project basis depends on the details of the task itself.
For example, if the schedule, the writing tasks, and even the requirements of the whole assignment seem vague or flexible, use your hourly rate. This way, you can charge the hours you will need for the changes. If the client has no solid idea or control of what you are doing or how you do things, you can agree on a contract price that focuses on the results and does not quantify the number of hours you will work on them.
Meanwhile, charging the client on a project basis allows you to be more productive. You can push yourself to finish the tasks earlier than the deadline instead of being paid hourly, which will give you a reason to work on a slow pace. Also, if you are handling multiple projects and have no time to monitor the hours you spend for each of them, you can use the contract price for each client.
HOW TO COMPUTE YOUR RATES: A COMPILATION OF TOP STRATEGIES
Some writers charge per word, some per page, some per hour, some per day, some per project. Again, your deciding factors (your location, expenses, experience, and the industry standards) are critical. We compiled the three best strategies of experienced freelance writers online to help you decide on how to computer your rates.
Rachel Goldstein, Sitepoint. The first step is to determine your hourly rate first so you can easily identify your other types of rates, such as per-page rate and per-word rate.
“Formula 1 – The Basic Method
Follow these steps to figure out what your hourly rate should be.
- Subtract nonproductive time from Annual Hours to get Billable Hours.
- Add Salary and Overhead Together
- Multiply Total By Profit Margin (10% – 20%)
- Add Total (1) and Total (2) Together
- Divide Total (3) by Billable Hours (the amount from #1)
For example, if the following is true:
- Salary = $30,000
- Annual Hours = 2,080
- NonProductive Time = 500 hours
- Profit Margin = 20%
- Overhead = $15,000
Then this is how you figure out the hourly rate:
- 2,080 – 500 = 1,580
- $30,000 + $15,000 = $45,000
- $45,000 X 20% = $9,000
- $45,000 + $9,000 = $54,000
- $54,000 / 1,580 = $34 / hour
Formula 2 – The Easy Method
This formula is the easiest of them all. However, I don’t recommend this formula unless you are a well-established professional. This isn’t the way to start out your freelance business — only very skilled freelancers can get away with this.
Ask yourself the following questions:
- How much money do you want to make on this project?
- How many hours do you want to work?
Now all you need to do is divide 1 by 2. It’s that simple! You now have your hourly rate.
Formula 3 – Annual Costs and Annual Hours
Use this formula if you need to set the rates for your entire business.
Add up all the costs you incur through your business on an annual basis (and don’t forget to factor into these your profit percentage), and divide this by the annual hours you work. This will give to you your pay rate.
- Salaries + Overhead = Annual Costs
- Divide Annual Costs by Annual Hours Worked
So for example, if the following is true:
- Salaries = $60,000
- Overhead = $50,000
- Annual Hours = 2,080
Then this is how you figure out the hourly rate:
200,000 / 2,080 = $52 per hour
Formula 4 – Pricing By Order Form
To price by order form, you’ll need to use an order form to add up the cost of each ingredient in a project. I don’t recommend using this method unless you’re only designing simple sites that all have the same basic ingredients, otherwise, there can be too many variables in the project, which can prevent you using an order form.
Formula 5 – Estimation By Project
Most clients are going to want to hear how much the entire project is going to cost. Even if you have an hourly rate, this alone is probably not going to be acceptable to your future clients — you’ll need to justify the number of hours you plan to spend on their job.
Multiply your hourly rate (figured out from one of the above formulas) by the total estimated number of hours for project. The resulting amount forms your bid for the project.
So for example, if the following is true:
- Hourly Rate = $30
- Total Estimated Project Hours = 50
Then this is how you figure out how much to bid on a project:
$30 x 50 = $1,500″
“How to convert your hourly freelance writing rate to:
- Per word rates: Just determine how long it takes you to write 100 words in an average project (or how long it takes you to write a 500 word article if that’s the service you offer for example). Then convert that into hours. If it takes you 60 minutes to write a 500 word blog post (500 words per hour), and your hourly rate is calculated to be $75 per hour, you just divide that $75 by 500 words you can write in an hour and you get a per word rate of $.15 per word.
- Per page rates: Similarly, determine how many pages you can write per hour in an average project (NOT assuming top speeds of cranking things out at a stressful level — based it on how long it takes you to do your best work). Divide your hourly rate by the number of pages you complete per hour. If it takes you 4 hours to write one page of compelling marketing copy (factoring in the research and client consultation), you would divide your $75 hourly rate by .25 pages per hour and get a rate of $300 per page of marketing copy.
- Per project rates: Let’s say you complete projects where hourly, per-word, and per-page rates would be inappropriate. You could charge by the project instead. Through your experience, you should know how long on average a certain type of project takes you. For example, let’s say it takes you 20 hours to complete a 10 page white paper (factoring in client consultations, research, edits, etc. on top of the writing — full project time). You would take those 20 average hours and multiply by your hourly rate of $75 to get a white paper project rate of $1500.”
Tom Ewer, author of Leaving Work Behind, shows how to arrive at your minimum acceptable rate (MAR):
“The first thing you must do as a freelancer is ascertain the lowest equivalent hourly rate you are willing to work for – your Minimum Acceptable Rate (MAR).
If you are already a full-time freelancer (or are planning on being one), your MAR calculation should look something like this:
( (personal overheads + business overheads) / hours worked ) + tax
Let’s look at a practical example. Say your personal overheads (i.e. the total cost of keeping a roof over your head, food on your plate, and so on) are $30,000 p.a., and your business overheads are a projected $5,000 p.a. You plan on doing client work for 6 hours a day for 48 weeks of the year (1,440 hours total). Here’s the calculation for your MAR (gross of tax):
($30,000 + $5,000) / 1,440
Your MAR (gross of tax) is $24.31. Add say 20% for tax, and your MAR (net of tax) is $29.17.
If the above calculation seems a little rough, that’s because it is. Don’t concern yourself with trying to set a precise MAR, because there are far too many variables at play to perfect it anyway. Using the above calculation does the job well enough, as long as you err on the side of conservatism.”
PRICING TOOLS AND RESOURCES
- Editorial Freelancers Association Editorial Rates
- Writer’s Digest “How Much Should I Charge” Pay Rate Chart
- 2012 Freelance Industry Report
HOW TO WRITE A FREELANCE WRITING CONTRACT
You need to set your rates, work hours, and scope of responsibilities in a contract both you and the other party will agree to and sign. A contract, according to the University of Texas at San Diego, a contract “is an agreement between two parties that creates an obligation to perform (or not perform) a particular duty.” It has:
- An Offer (I’ll mow your lawn this weekend if you pay me $30)
- An Acceptance (You’ve got a deal)
- Consideration (the value received and given – the money and the lawn mowed)
Hence, your freelance writing contract should include the following elements:
- Date of the agreement
- Parties involved: the business hiring you and your name
- A description of the project: objectives, format, content, pages, number of edits, frequency of consultation (if there is), and other parts of the project that may matter, such as design.
- Timetable/timeframe for the project (deadline, research days, or revision)
- Payment method (price, payment channels, specific dates)
- A list of terms and conditions (confidentiality, intellectual property, or breach of contract)
Here is a sample freelance writing contract from California State University. Note that creating a contract will:
- Add prestige to your image as a freelance writer
- Make the description and scope of your services more formal
- Protect your rights as a writer
- Help you receive payment on time
- Establish the limit of your client’s expectations and your duties
Looking for clients is not going to be easy, and even if you have found them already, that would just be the first of many firsts. In a Time article, Thursday Bram of Hyper Modern Consulting confessed that “freelancing full-time wasn’t a bed of roses.” She explained: “I had examples of my work — clips, as they say in the business — but nothing that would immediately land me the sort of gigs that would pay my bills. But I worked at it. I followed every freelance writing board, picked up odd projects — including creating organizational rosters — and built up a client list.
The hardest part was not having the security of that job. I’ll admit that I applied for a few full-time jobs while I was looking for clients. I took on work for a couple of content mills. But my big break came when I found a gig blogging for a productivity site. I figured out how to transform that gig into selling myself as an expert in online content creation.
Within eighteen months, I had matched my salary as a writer/researcher — without needing to feel uncomfortable with what I was doing. Within three years, I had other writers working for me. Business today is great, even if the way I really got started came straight out of a situation I felt like I couldn’t even face.”