As a professional blogger (or any type of freelancer), try to avoid working for an hourly rate.
I've had three experiences recently that really drive home my service pricing model.
First, I had a client of mine ask me if I could do work for his “day job” company. He said that the company was looking for a freelancer to do some editing and other communication-related jobs. Unfortunately, they wanted an hourly rate. I quoted the rate that I felt was most likely to be worth my time. Even as I quoted it, I knew that the company probably wouldn't go for it. And the company didn't.
Second, I applied for a couple of gigs and was asked to be considered for another. These are potentially high end gigs (with cool companies). I'm still at the “let's arrange an interview over Skype” phase, and not at the “let's negotiate pay” phase, but I'm already trying to think about what to charge. While the temptation is there to go hourly, I'm pretty sure I don't want to.
Finally, I had an email conversation with the awesome Carrie from Careful Cents. She said, “I'm trying to get away from exchanging hours for money.”
Carrie's words eloquently expressed what I've felt for a long time. Hourly work as a freelancer sucks. I was so inspired, and it fit so well with exactly where I was at in my book, that I wrote for two hours.
Why Setting Rates on a Per-Project Basis is Better
Whether you are a professional blogger, graphic designer, technical writer, coder, editor, or web developer, it's best to stay away from hourly rates whenever possible.
While it can be a little tricky to set a per-project rate, the reality is that you will get so much more value for your time when you avoid working hourly. Here are some of the problems associated with an hourly rate:
- It's harder to increase your rates.
- You have to make sure you are doing something productive the entire time you are charging your client.
- You have to keep track of which hours are for which client.
- A value is placed on something — time — with almost incalculable value, and it's rarely a high enough value.
- It's impossible to improve your efficiency at making money.
Working on a per-project basis allows you to increase the efficiency of your earning time. Earlier this week, I did work for a very high paying client. It took an hour, and I ended up with a high enough pay out that I'm embarrassed to share the amount here. (Thanks, Contently!)
When I convert the number of posts I can complete in an hour to an actual hourly rate, it makes me think that I shouldn't be complaining that I don't have high-paying freelance jobs. Because my “hourly rate” is pretty damn good, when I think about it.
Professional Blogger Pro Tip: Never, Ever Quote an Hourly Rate
However, once you lock yourself into an hourly rate, you're kind of stuck there. If you charge $35 an hour, you will always only make $35 an hour. On the other hand, if you charge $35 a post, you might be able to improve your ability to write faster, and after a few months, instead of taking an hour to write a post, you might be able to do one and a half posts in an hour. Now your “hourly rate” has jumped to $52.50. Get to the point where you can do two or three posts an hour, and suddenly you're earning much more efficiently. Even if you undercut all the competition (please don't!) and charge $25 a post, if you can crank out three in an hour, you're still making $75 each hour that you work. Not bad.
Trap yourself in an hourly rate as a freelancer, though, and you're stuck. No matter how many posts you write or pages you edit or ads you design, you still make the same amount of money.
Stop basing your freelancer income on hours worked, and start basing it on results. Stop, as Carrie said, trading your hours for dollars. Instead, focus on what you're accomplishing and the value you bring — unconnected with how much time you spend on the project. You'll make more money and have more time.
Excellent advice! I recently quoted an hourly price because the person was firm that they wanted an hourly quote, and I haven’t heard back. My guess is that the amount was just too high. You’re right, per project is much better.
I agree. It can be more of shock when you say, “I’ll charge you $75 an hour.” But if you say, “I charge $50 a post” it’s a bit less of sticker shock. Plus, you can play up the PRODUCT, which is almost always more valuable to a client than the time you spent.
I can see how hourly rates would be tricky. Part of the point in hiring you is because you are good and efficient in what you do. For someone else to write excellent content it could be a long process. That’s why you’re the expert. But since you are more efficient you can knock out your writing quicker but that doesn’t mean you shouldn’t get paid for your expertise. I guess you have to make sure if you use an hourly rate that it’s high enough that if you finish a project fast you still get properly compensated.
I don’t know if it’s just me but I don’t entirely trust hourly rates anyway. Not that you would do it but what’s to say someone doesn’t stuff the hours anyway?
Aw, thanks 🙂 I appreciate the kind words. I think it’s a good point about being paid for expertise. It’s hard to put a price on the knowledge and abilities you have. I like that you point out that you don’t trust the hourly rate, too. You never really know if a freelancer is padding the hours. At least with the per-project rate, you can see that you have 700 words worth of writing. Right there. It’s a little more quantifiable.
In terms of padding hours, I frequently use time tracking software like the kind you find in Basecamp. That sort of thing eases concerns from client with regards to time padding.
It seems like the client would just care about the end result anyway, not how long it takes you to produce it. They need something (a post of a certain quality, for example), and they probably have an idea of what they’re willing to pay for it. And of course you know how much you need to make it worth your while. It seems like it’d be easier for everyone involved to just pay for posts, not hours.
Sadly, I’ve rarely encountered a client that had even a remotely reasonable idea of what something like a well-written blog post should cost. I’ve been offered as little as $15 for a 750 word SEO optimized blog post- something I’d normally charge $75-150 for.
Miranda,
I completely agree with your train of thought here. After years of freelancing in a number of different writing contexts, I found that creating a menu of hourly pricing that varies by type of project was, for me at least, the sweet spot.
Project rates were dangerous. Once you quote something, it’s very difficult to change that price, even if you find yourself having to do more research, contact SME’s, or other time-consuming tasks.
Hourly rates are problematic for exactly the reasons you state. But I felt confident in quoting different hourly rates for different types of writing projects because, let’s face it, not all writing tasks are created equal. Something else that was effective was quoting an hourly rate, then saying, “This task typically takes between 3 and 5 hours. If it’s any longer, then you’ll receive a change-order before being billed additional hours.”
I found that once I got away from hourly rates, I was answering lots of emails, dealing with lots of change orders, and other things like that because the person I was working for didn’t have a monetary value attached to my time. It doesn’t cost them anything to make more work for me, as long as they get the end product they ordered to begin with.
Sounds like you’re talking about ‘scope creep’, Josh. When quoting on a per-project basis it’s critical to have a clearly identified scope of work so you and your client know exactly what is, and what ISN’T, included in the project fee.
That way if they start to ask for ‘extras’ that haven’t been allowed for, you can refer them to the scope of work and advise that additional requests will need to be quoted separately.
And while there will occasionally be some jobs you don’t allow enough time for, on balance, they tend to even out. On some jobs you fall short – on others you have a win. I use time-tracking software on all my projects and find I usually fall pretty close to what I’ve allowed for in my quotes.
I can’t remember where I saw it, but I bumped into someone who wrote that working for an hourly wage is pricing out how much that amount of your life is worth. So, if you work for $8 an hour, you’ve just said that an hour of your life that you will never regain is worth that much. It’s stuck with me.
I really like that. It’s a good point. How much is an hour of your life worth? What could have done with that hour? Was it worth it to trade it for so little?
Great advice for freelance writers. Hourly rates feel just like another job to me with the same lack of flexibility. Per-project pricing gives you much more freedom as to how, when and how much you work.
You got it! When a company is looking to hire an hourly worker they’re looking for low-wage work. They’ll rarely pay what quality freelancers require.
I’ve been freelance for over 8 years and I flat-out refuse to even try to calculate an hourly rate. Either you want what I produce (and how long that takes is up to me), or you don’t.
If I wanted a metered workday, I’d go get a job with benefits!
That’s a good point. Hourly often = low wage. I agree about the metered workday. One of the reasons to get into freelance work is to avoid that sort of metered workday and have more freedom.
I was already very against hourly rates whenever possible, and I’m even more so after reading “Breaking the Time Barrier” by Mike McDerment. There’s still a ton to learn from this book (free!) even for writers who’ve already moved on from hourly rates. http://www.freshbooks.com/blog/2013/06/12/breakingthetimebarrier/
Thanks for the recommendation! I’ll have to check it out.
Really great post, Miranda. Your title is what lured me in.
Now that I’ve read your post, it totally makes since and you give some great reasons as to why. Hourly charging is rather hard to scale up and it’s tedious to keep track of. A per project model is much easier and you can easily increase your income by increasing your efficiency and the time in which you do the work.
Thanks for sharing your insights and tips with us. I’m glad to have found your post over on BizSugar.
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I’m a translator and I also charge per project. I’ve been looking for some sort of project manager app to keep track of all my past projects, but I’ve been unable to do so. Do you happen to have any suggestions on that? Even on what to look for would be helpful, since everything I find is time-tracking-oriented…
Thanks!
I know a lot of people like to use Trello and Asana. I’m not really into the project management stuff, but I know people who swear by these management tools.
Great comments here and a great article. I’m a musician and there are areas of music technology now that are freelance and fall into this “hour vs project” quandary. I’ve actually done both based on the client or the project. For example, if it’s a professional client that knows how much work is involved, they usually won’t bat an eye if I give the “project” rate. But a newer client, who doesn’t understand, might flip. Sometimes what has happened in the past is I gave a prospective client a quote. I might say “it’s $500 for the project.” They would flip out and say “it just takes a couple hours and hardly any supplies, I’ll just do it myself.” Four hours into the project they call me panicked and say “can you get us out of this, we aren’t even half way done!”. To avoid that, I say “it’s approximately a 10 hour project at x per hour.” Then we can have the “it really takes that long?” dialogue right up front. As I work more I get better at time estimates. I’m usually pretty close but the over/under estimates average out.