During Open Office Hours, a common question I’ve been getting is how much one should charge for a specific task, such as writing or editing. There are several approaches for determining this, and I thought I’d run down a few. (These options should be applicable for any type of service.)
Option 1: The Elusive Going Rate. This is when you try to figure out a range of what others are charging, and then determine your prices on the higher or lower end of that, based on your experience and various other relevant factors. There’s usually more than one going rate. Kelly James-Enger at Dollars and Deadlines has a list. The Writer’s Market has a list (though you do have to pay for the book or an electronic subscription.) International Freelancers Academy has a report. Various professional groups list rates for specific publications.
Pros: You know that what you’re charging is within a certain ballpark, which makes the conversations easier.
Cons: You may find yourself competing with people who are far less experienced (or who live in countries where the cost of living is much lower). Extenuating factors (such as additional work) may be difficult to adjust for if you’re very determined to charge the going rate.
Option 2: Figure Out What You Need. Determine how much you need to earn per year, and how many hours you want to work. Then, divide. This is your hourly rate. You’ll need to estimate how long a per-word project will take when deciding whether or not to accept it, and adjust accordingly if it ends up falling below your hourly rate.
Pros: Charging a higher rate than the going rate can weed out many bad clients. You’ll get good at what you do really quickly if you feel you need to justify a higher rate by providing greater value.
Cons: You’ll have to be very careful with pricing per project. That quick post you thought would only take a half hour could end up taking three times as long. (One quick way I determine how long a project may take is to look at how long meetings to discuss working with someone takes. If I think we should be able to discuss something and get started in 2 hours, and it takes 6, I triple my rate as a starting point for negotiations.) Also, be prepared for people to walk away if your rate is outside of their budget.
Option 3: Letting Other People Decide. They tell you their pay rate. You work with them (for now). Then, after a project or two or a set period of time, you determine whether the amount they are offering meets your needs.
Pros: Less stress. This option puts you in the driver’s seat with just a yes/no decision.
Cons: Having to tell someone their price doesn’t meet your needs can be socially awkward. (Sometimes you can just stop pitching ideas, or give another project higher priority if it’s not an ongoing project.)
Option 4: The Combination. This is the messiest way to go about things, but it’s the mish-mash approach I choose to take. I know what I’d like my hourly rate to be. I’m also aware of what the going project rates are, and how both my hourly and project rates compare to others with similar levels of experience. I sometimes propose and negotiate a rate, and sometimes let others determine a pay rate. I spend as much time as humanly possible improving my craft, so I can justify the higher prices I charge. And if a specific situation isn’t working for me, I move on.
Pros: Lots of choices means you have a lot of freedom, and a lot of information to make your decisions.
Cons: This approach gets confusing and complicated compared to the clear-cut ones.
How about you? Which option do you prefer, and why?