Based on popular demand, I’ve been working on the first draft of a mini ebook for freelance writers, mainly beginners, that will be titled “The Freelance Writer Success Starter Guide” (that’s if nothing changes).
I had to address the topic of how to charge clients.
While I had recently written about how to charge clients, I realized that many freelance writers are innocently making a foundational mistake, in how they determine how to charge their clients, that is keeping them broke.
The Pricing Mistake You’re Making that is Keeping You Broke
As a freelance writer, exactly how do you decide how much to charge your first client? How do you decide how much to charge other clients after that?
- Some freelance writers simply come up with a rate, often the most basic rate they can come up with, charge their first client this rate, see success doing this, and then make it their permanent rate.
- Some freelance writers look at what other “successful” freelance writers are charging, compare themselves with these “successful” freelance writers and then charge their clients more, less or the same amount; if it works, they keep up that rate. If it doesn’t, they keep revising until they find something that works.
- Some freelance writers take a somewhat different approach; they decide on a price based on their skills, how many hours they are willing to work, their needs and how confident they are that clients will pay their rates.
- Perhaps the most common approach is that of freelance writers who decide on the “right” hourly rate, and then use this hourly rate to determine how much to charge their clients; whether they will be quoting their clients per article, per project or per word, it is often influenced by this hourly rate.
While the last approach is the closest to the best, it is often flawed and is essentially what is keeping majority of freelance writers broke.
The Flaw With Your “Hourly Rates”
It’s easy to overlook the point raised in this article if you don’t give your clients exact hourly rates. However, if how you charge your clients is remotely connected to what you feel is a fair “hourly rate” for you, you should pay attention.
The flaw with this approach, with how you decide on your “hourly rates”, is that many variables are often ignored.
Most freelance writers simply decide on their hourly rate by calculating how many hours they need to work in a month to meet certain income goals, and that’s it.
This is where the problem comes in. Yes, you’ll pay the bills but that’s just it. For the most part, you’ll remain broke.
To decide on how much you are really worth, and how much you should really charge, per hour, you need to first view yourself as an employee.
If you were to be working for an organization, you have to assume that, depending on your part of the world, the following will be taken care of:
- Your office space/rent
- The computer you will be using
- Your internet access
- Some of your taxes
- Health or some other insurance
- Leave bonuses/payments; maternity leave or some other kind of leave you can choose to take
- Courses and programs that can help you improve
- Other benefits
You get to enjoy NONE of the above benefits as a freelance writer.
- Nobody will pay your office rent; most freelance writers just “wing” this since their office is inside their home… but still.
- You’ll be paying for your computer/computers; this includes maintenance, upgrades, software etc.
- You’ll be paying for your internet access.
- You’ll be paying ALL your taxes, and this is often the scariest part for a lot of freelance writers.
- You’ll be handling your health insurance; God forbid you should suddenly break down, you’re on your own. Not only will your freelance work be affected, but you’ve got no money to use to take care of yourself since you’ve spent the little you made paying the bills.
- Leaves? Do freelance writers even take leaves?
- Courses, programs, events, etc. Most organizations will organize and pay for courses and programs that will help you improve so that you can better contribute to their business; I believe it’s safe to assume that you have probably never even considered expenses spent on courses and programs aimed at improving your freelance writing career as work-related expenses. More like a “personal” expense? Towards making you a “better freelance writer”?
This is where the problem comes for most freelance writers; they come up with an hourly rate without considering all the above benefits and more, that they would have automatically enjoyed in a job without their salary being cut in half, and then they wonder where all the money they earned went at the end of the day.
If you feel that you’re earning $50 per hour as a freelance writer, then you are most likely earning much less; when you calculate taxes, office needs, computer and internet access, healthcare and insurance, etc. you’ll find that what you’re really earning is in the neighborhood of $20 – $25 per hour.
Getting Clients to Pay Your Rates
Once you’ve decided on a fair rate for yourself, the next step is to get clients.
Your aim should then be to get clients that can pay your rates; you shouldn’t fear that your rate is too high. If you were charging $50 per hour before and had to reach out to 40 clients to close a deal, and then you find out that what you really should be charging is $80 per hour, you should expect to reach out to at least 60 more clients to close a deal.
Your mindset needs to change; instead of thinking “will they pay?” you should start thinking “This is my minimum hourly rate, and I have to find clients that will pay it!”
This is not necessarily “more work”, because the effort to get a client is fixed while the income is compounding; if you realize that your real hourly rate should be $80 per hour, instead of $50, and a client requires 20 hours of work, that’s $30 extra on each hour or $600 extra on the 20 hours of work you did. If the client eventually had you do 200 hours of work in the span of one year, that’s $6,000 extra at the end of the year.
Calculate this not just for one client, but for 2, 3 and 10+ clients and you see the real power of this; everything adds up, and not only can you comfortably take care of the essentials but you are no longer a broke freelance writer.
Clients will pay your rates; instead of worrying about whether they will pay or not, you just have to decide on your new, correct rate and look for those clients who will pay those rates, wherever they are.
This isn’t as difficult as most people see it; it’s just a small mindset change.