Why I Don’t Have An Hourly Rate
I don’t have an hourly rate for my freelance copywriting services. Nor do I have a daily rate.
I really don’t.
When I estimate for a job I base my calculations on the value of the work I am going to be doing. Yes, I factor in the amount of time it is likely to take. But I don’t count hours or days and multiply by a particular rate.
Let me give you an example.
Recently I estimated for, won and completed a short online sales page for a large consumer electronics company.
My estimate was for $4,500. In total there were probably about 600 words of copy on the page. The page was about two screens in length on an average monitor.
How long did it take me? I didn’t count the hours, but it probably took about eight hours in total.
That works out to an hourly rate of over $560.
Do you think I would have got that job if I had said to my prospect, “Sure I can do that work for you. I charge $560 an hour.” ?
Highly unlikely. As soon as you quote an hourly rate you are inviting your prospect to compare you with other copywriters.
I don’t want to be compared with other writers.
You also invite your prospects and clients to take out their calculators and start working out how many hours you are spending on their work. “Surely you didn’t spend 7 hours writing that one email?”
Did I meet any resistance when I quoted the price of $4,500? Not at all.
I practice Value Pricing. I look at the value to the client of my doing a good job. I look at the value of my own experience and expertise.
I deliver great value and my clients know it.
The day you find the confidence to charge by value, and not by the hour, is the day you’ll double your freelance income. At least.
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Nick Usborne is a freelance copywriter, speaker, trainer, author and
business coach. Find out how to double your freelance income through his
coaching site at www.AskNickUsborne.com.
Ethan says:
July 25th, 2008 at 6:56 am
That is a great post Nick, thank you! I like this concept of value-quoting. In that particular example you gave, you say you didn’t get any resistance when you value-quoted, however, what about when you DO get resistance?… do you have any suggestions on what you should you say then?
Also, how do you arrive at the right “value” figure to quote?
Nick Usborne says:
July 25th, 2008 at 8:46 am
Ethan, hi
Great questions.
If a prospect pushes back on the price I quote, I move on to the next prospect. In other words, when asked to lower my prices, I say, “Thank you, but no thank you.”
Here’s my rationale for saying no. Instead of spending 12 hours on a job that pays me less than I want, I would rather invest that time in finding another client who gets my value and is ready to pay.
That, by the way, is my target market: Companies which totally get the value of my work.
How do I arrive at my “value”? That’s a much tougher question. First, I have to make sure that my marketing materials and reputation match the fees I ask for. Second, and this can be much harder, I have to recognize my own value and have the self confidence to stand up and say, “Yes, this is what I’m worth.”
Best wishes,
Nick
Eileen Coale says:
July 25th, 2008 at 5:20 pm
I totally agree with this. While I do have a rough - very very rough - estimate of an hourly minimum, and toss it into the mix when calculating what to charge (along with value), I almost always exceed this artificial hourly minimum.
I think hourly rates can be a real obstacle in the client’s mind. And it’s funny, a lot of them think that $30 or $40 an hour is more than enough for a writer … I hear that figure a lot. And yet, the same people have no problem wrapping their minds around paying $750 for a sell sheet. When I started out a few years ago, I let a prospect wheedle my hourly rate out of me, which at the time was $70. After I dropped that bomb, the prospect snapped, “I’m the president of my business, and I don’t make $70 an hour, so I think it’s ridiculous that I would pay you that.” And that was the end of that.
All the client should be looking at is, “Does this meet my needs, and am I willing to pay that price for it?” The client should be looking at his results, not my process. On the rare occasions when a client presses for an hourly rate, I say something like, “An hourly rate is lose-lose for both of us. If I’m slow and stupid that day, you have to pay more. If I’m brilliant and efficient, I’m penalized for it by making less. With a flat fee, you know exactly what you’ll be spending and there will be no surprises.”
I know I’ve lost a few gigs because I refused to quote an hourly rate. I don’t care. If a prospect is more concerned how much I make per hour than the result they get for a fixed price, then clearly we aren’t the right fit.
Alex the Freelance Twin says:
July 25th, 2008 at 7:00 pm
Amazing, I never charge hourly either but I never put a lot of thought into why. You lay it out perfectly here.
Michael Temple says:
July 27th, 2008 at 5:59 pm
I have been applying some value based pricing for a couple of years now and I find it works pretty well. When you do this you will definitely find those prospects that almost pass out when you quote your value based fee, but I have also found, through hard won experience, that I don’t typically want those types of prospects.
For those that are interested in this form of pricing Alan Weiss who wrote the book Million Dollar Consulting wrote an entire book on value based fees. In the book he lays out the argument why you want to do this, how you do it and even how you present it to your clients. I found it one of the best books I ever read on the topic. If you are interested the book is called “Value Based Fees” and is part of his Ultimate Consultant series which you can get off Amazon.
Paul Lima says:
July 27th, 2008 at 7:16 pm
I am enjoying this thread, and want to take a slightly contrary position (notice only ’slightly’). I have an hourly rate and I use it to calculate the price of a great deal of the writing I do. When I’m asked to quote on creating a slogan or tag line, a one-page advertisement, or a 30-second broadcast commercial, my rate goes out the window and I think ‘value’. However, most of the writing I do does not have high marketing value. (It is important to the client, but it does not have a direct impact on the bottom line.) If I quoted $4000 to write a 600-word product brochure that would be used on a website, or a media release that will be sent to a number of journalist, I’d not land the gig. When I quote $1,250 to write the brochure and $750 to write the release, I tend to land the gig and feel I’ve earned a decent fee for the work. But how do I come up with the quote? Before I issue my quote, I define the scope of the project: how many meetings (if any), how many interviews and background reading, how long to write, what’s the approval process like, how many revisions. If I can can earn $125 to $150 per hour, I feel like I am generating a decent fee for myself and giving the client fair value. Again, if the client asked for a 30-second TV commercial script, I engage in value quoting. But for most of the work I do, I need to know how much I charge per hour and approximately how many hours it will take to do the work. Then I issue my quote — without telling the client my hourly rate or my estimated hours. In other words, I give the client what he or she wants: a bottom line price on the gig. And if the client says, “That’s too much” I too move on, because my price is my price is my price.
Nick Usborne says:
July 29th, 2008 at 9:18 am
Paul hi
Great feedback. While my post was taking a “position” on pricing, you have provided balance by looking at both sides. You’re right. Value pricing is the way to go whenever it’s possible. But certain types of work do have a “recognized value”. Like you say, if you’re writing a brochure and know that your competitors will estimate $1,250 for that job, you’re unlikely to get the gig if you think, “I deliver more value” and estimate at $3,500.
Nick
Bob McCarthy says:
August 20th, 2008 at 12:11 pm
Great blog -
Pricing is by far the most difficult part of being a freelancer. I’ve changed my pricing structure so many times over the years.
I agree value pricing is the way to go, but to be honest, when business is slow and I am scrambling for work, hourly rates and negotiated fees are in play.
But let me ask this - projects are one thing, but many of my clients also ask me to handle smaller tasks - develop some new headlines, write a few paragraphs for an existing piece, rework a short transactional email. Sometimes no more than hour to do.
I find it awkward to stop and estimate these smaller assignments - especially when I also get larger project work. I usually just bill this out an hourly basis without an estimate.
Any thoughts?
Adam Hill says:
August 21st, 2008 at 10:09 pm
I’ve always quoted work with a max price, but always shown my hours I think it will take as a matter of transparency… however I’m never going to get rich that way and this is an interesting concept. I’ve recently tried to go back to hourly rate with a substantially higher rate so I can work on my pricing structure.
Not dropping your price on pricing by value I believe is only OK if you do have the demand to be able to do so!
Sarah Webb says:
August 28th, 2008 at 7:58 pm
Value pricing makes sense to me.
I’m just starting out and am trying to figure out how to present my fees to potential clients. Does anybody have any thoughts on whether it’s a good idea to have a fee schedule stating my fees (probably given as a range) for each type of job I will handle?
Thanks for your advice!
Paul Lima says:
August 29th, 2008 at 9:17 am
I never tell clients my hourly rate unless asked. And if a client balks, I tell them I am more effective and efficient than other writers - so they will get great copy from me and pay about the same as they would pay a writer who charges less. In other words, I don’t have a fee schedule. There are good reasons for not having one. If Company A wants me to write a media release and they want to chat on the phone a bit and send me background reading from which to pull the material, the job will take ‘x’ hours. If Company B wants me to write a media release and they want me to come in for meetings and interview a client or two as well as chat on the phone and do background reading, that will take ‘y’ hours. So before I issue any quotes, I define the scope of the project, calculate how many hours the job should take, build in a contingency, multiply the hours times my rate and round up.
Michelle Rosen says:
August 30th, 2008 at 3:15 am
I’ve done both the hourly pricing (when I started out) and the value pricing. As Nick says, sometimes there is a maximum that someone is willing to pay based on the perceived value of the piece. However, I have learned that regardless of situation, I always prefer to work on a “value basis.” One of the reasons for this is that whether at the end of the day I’ve made $500/hour or $100/hour, I knew going in how much I was going to get paid. If I kill myself and go above and beyond, or if I don’t need to, I still know I’m going to make $xx. That’s worth money to me (even when I go way over on the hours).
Some things write themselves more easily than others. And if you happen to get lucky often on the hours, you won’t on the payout if you charge an hourly rate. I have a rate that I will tell clients when forced, but I almost never accept a project on an hourly rate anymore.