SO YOU WANNA BE A WRITER…STEP 5: SET YOUR RATES (And Watch Out for S.E.T.)
If you serve value meals, you can count on earning at least minimum wage. When my husband was a teacher, his union helped negotiate contracts that determined his salary and raises. My brother-in-law runs his own moving business, and there are moving company regulations in place that determine what he can and can’t charge his customers.
Isn’t that nice? So many industries offer fairly clear guidelines about the wages for workers in that field. Amounts may vary by state or region, but there’s at least a standard by which employers and employees can decide what is fair.
Guess what? Freelance writing isn’t one of those industries. Sorry.
At least, that’s been my experience. To me, freelance writing seems much more…free. This comes with pros and cons. On the positive side, you can charge what you want. On the negative side, no one has to agree to your rate. Everyone’s free to say no. They can move on and find someone cheaper. Ouch.
Of course, when you first start out, you might be that cheaper person they turn to. As I mentioned in the last step, the price on your writer’s soul might be pretty low as you break into the field.
But, you have to set some standards, right? There’s no official minimum wage, but you have to draw the line somewhere. Working for nearly nothing gets you…nearly nowhere. It also brings the entire profession down with you. If people believe they can get quality writers for bargain basement rates, they’ll never be willing to pay better wages.
Still, you can’t simply charge your dream rate and expect people to line up at your website the moment it goes live. So, where do you start?
I’ve done a lot of online searching for “typical freelance writing rates” over the years and have discovered the answers are all over the map. I finally decided everyone else is just like me – still trying to figure this out.
I did find some good, specific pricing resources, such as the pay-rate chart in the Writer’s Market, which is updated every year. If you search for rates, you’ll also discover the Editorial Freelancer’s Association, which offers a rate guide, and you’ll find tools like the freelance hourly rate calculator that can help you do some quick math to help determine your rates.
Since there are hundreds of sites out there that rehash the same info, I’d just like to offer you 5 tips as you set your rates. Based on my experience, I suggest you…
Yes, I do break this rule from time to time. Typically, though, you’ll severely limit yourself if you charge by the hour. You’re better off if you set a rate per word or quote a flat rate for a project. Why? There are only so many hours in the day. If you charge per hour, you can only make 24 times your rate each day (and that’s if you don’t sleep, eat or play with your cat). If you charge by the word or per project, you will earn more as you get faster. This pay scale also provides clients with more precise pricing. There’s no stress about the amount of time you spend on the piece and what that translates to on the client’s bill. Everyone knows up front what the final total will be.
This one has been incredibly difficult for me. We don’t want to scare anyone off with rate hikes, right? But, the truth is, costs of living increase each year. You gain experience each year. If you provide quality writing and good service, it’s acceptable (and even expected) that your rates will increase over the years. Be reasonable about your increases and notify clients properly, and it’s likely they will remain loyal to the trusted, talented writer they know they can count on to deliver quality work. January 1 is a good time to adjust your rates. Send notices in December that your new rates will go into effect as of the first of the year. Here’s a sample letter:
Dear (client name),
Please accept this email as notification of a slight rate adjustment, effective January 1. The adjustment is a result of general cost-of-living increases over the past year. As of January 1, 2018, my per-word rate will be $0.XX.
I value you as a client and plan to continue serving you with (services you offer). If you have any questions or concerns about this increase, please don’t hesitate to contact me.
Thank you for the continued opportunities with (business name).
3. Don’t get stuck in a rut.
If you’ve “settled” for low rates to get started, don’t stay there! I know, searching for new writing jobs is about as much fun as…well…looking for a job, but so is feeding at the bottom forever. Get your feet wet, then look for fresh waters. Find other opportunities that pay a little bit better, then scale back on the lower paying ones. Slowly devote more time to better paying jobs, and work your way into a profitable writing career. (Yes, that’s easier to type about than to do, but I promise it’s possible!)
4. Be flexibly firm.
Set your rates, then stick to them. If you’re like me, it’s easy to waffle on your wages if you’re feeling desperate or unsure. “I really want this job, so I better low-ball my rate to get it!” If you do this every time, what was the point of setting your rates? Then again, you may be willing to work for less if it’s something you really enjoy or it offers great experience and opportunity for advancement. This is why I recommend a “flexibly firm” stance. Know what you charge. Be confident and firm in that number. Be ready to quote it when asked. Also be ready to consider slight adjustments if necessary.
5. Watch out for S.E.T.
When I first started working for Nenn Pen, Ink (myself), I encountered something I wasn’t expecting. I discovered new taxes! I learned that I now have to pay self-employment tax. Here’s the scoop: When you work for someone else, you and your employer split the required contributions to Medicare and Social Security. When you are your employer…guess what? You get to pay both halves. Lucky you! This portion of your taxes just went from around seven percent to around 15 percent. I suggest keeping this higher tax percentage in mind as you set your rates. Make sure there’s enough left over to live on. Remember, after all the federal taxes, you’ll only get to keep about 75% of what you charge a client, and you’ll have to pay state taxes on top of that.
Did I realize I’d have to pay more taxes when I started working for myself? No.
Do I enjoy paying self-employment tax for the privilege of working for myself? No.
Do I think it’s worth the extra seven or eight percent in taxes to work for myself? Heck yes.
This series will continue with the next logical step – reaping the fruits of your rates.