Setting freelance writing rates that work for you - calculate freelance writing fees

The 2012 Freelance Writing Rates post is now live.  Is that what you were looking for?

I've done a lot of research on what makes a freelance writing career successful and what sends it down the drain.

Lightbulb.

One thing I discovered is that people are charging the wrong freelance writing rates.  They're not too cheap or too expensive - the rates they're charging just don't match their goals.

I decided to put my back into it and come up with a tool that'll help you determine what you need to charge to make a profit.

Scribble down the answers to these questions (you're a writer - I know you have a sticky note right there).  I'm putting sample answers in red beside the question just to illustrate.

1. How much do you spend per month on office space (if you're writing from home, and your office takes up 20% of your house, that's about 20% of your rent)? $300

2. How much do you spend per month on office supplies (printer paper, ink, the sticky notes you're writing on)? $25

3. How much is your monthly Internet?  $75

4. How much do you need to stash away each month to cover your bills, gas, groceries and everything else? $1700

Now you've got the most basic of basic necessities covered.  According to this, you need to make at least $2100 a month just to cover your tail.

5. Want to go out to dinner, buy a new pair of jeans or get your hair done?  Tack on another $200 to be on the safe side.  That's a crappy profit, but your goals ought to be reasonable until you're having dinner with Stephen King and Stone Phillips.  (What an odd combination... where did I even get that?)  Now you need $2300.

That's not the figure you want to aim for.  Don't forget, you've got to pay taxes... and those can be up to 1/3 of your money. 

(This calculating is really making my head spin - but Cheri pointed out I originally had an error and outlined how to fix it - she rocks.) 

7. Let's say you've got to pay 1/3 of your money to the government; if we need you to walk away with $2300, you need to make another $1150.

Every extra penny you make is taxed (even the ones you make for the purpose of paying taxes).  If you make $3450 and have to pay 1/3 in taxes, you'll walk away with $2300.

So you need to make $3450/month from writing to pay bills and taxes.

Let's get back to your sticky note.  Circle your total - here it's $3450.

8. How many hours a week can you effectively work?  40

9. How many of those are billable hours (you can't charge a client for the time you spent maintaining your website, blogging about how to make money as a freelance writer or searching for work)?  20

10. How many hours does it take you to come up with a 500-word piece of writing (on average; sometimes you've got to research, sometimes you don't)? 1

Now we've figured out that you're working 40 hours a week but can only charge for half of those (20).  Based on the fact that it takes you 1 hour to write 500 words, you can write 10,000 words a week (20 hours x 500 words = 10,000 words)

In a month (10,000 x 4.2, since there are an average of 4.2 weeks in a month) you can write 42,000 words.

Circle the total number of words you can write in a month.  Here, it's 42,000.

Go back to the other total - the amount of money you need to make.  It was $3450 in my example.

Divide your money total by your word total.

$3450/42,000 = 0.0821 (but let's round it up to 0.09 because we can)

Guess what that means?  You only need to charge $0.09 per word if you want to break even and if your hours and financial numbers are all correct.

For a 500-word piece of web content, you could charge $45 and still make your desired amount of money (and even give the IRS their piece).

Add ten or twenty dollars to that for cushion.

So this little worksheet is all well and good... but you have to be honest with yourself when you're making these figures.  If you aren't, even just a little tiny exaggeration will throw you way off and you won't make the right choice on your pricing.

I think it's best to overestimate taxes - it's a pleasant surprise when you don't owe as much as you think you did, and if you're storing your tax money in an interest-bearing account you could even make a little extra.

In order to pull your freelance writing career off, you have to:

  • have significant experience as a writer
  • be devoted to your job as a freelance writer
  • really work when you're supposed to be working (have self-discipline)
  • have clients willing to pay your prices
Significant experience also includes significant confidence in yourself.  All business owners have a "nut" they have to make each day/week/month to make ends meet - and this is no different.

You have to work when you need to (and set it aside when you need to).

You have to find clients if they're not finding you.

Finding clients is another post. 

How did you determine your freelance writing fees when you started writing?  Did you figure them out like this?  Please share your comments below - and feel free to leave a link to your own website or blog.

2 comments:

Great blog post, but I wanted to let you know that your tax calculation is incorrect. If you make $2100 and assume taxes will be 1/3 of that, you would pay $700, as you mention. But, if you need to make sure you have $2100 left over after taxes, making $2800 won't do it because you'd have to pay about $900 of that to taxes (following the 1/3 estimate), leaving you with $1900. You'd actually need to make about $3200 to be left with $2100 after taxes. And that's before factoring in all the other expenses. It would probably be best to factor in the taxes at the of all the other calculations to come up with a more realistic number.

Cheri - thanks for catching that! I'm on my way to fix it right now.

(Math is not my strong point.)

:)

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