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.
{ 20 comments… read them below or add one }
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?
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
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.
Amazing, I never charge hourly either but I never put a lot of thought into why. You lay it out perfectly here.
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.
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.
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
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?
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!
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!
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.
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.
I am a graphic designer and I have a couple clients for whom I charge an hourly rate. I do so because they’re don’t generally request “projects” per se, but occasional changes on a website or to change names and contact information on their business cards.
Would anyone recommend a different method of charging for this kind of work. I can’t really imagine how I would charge a “value-based” fee.
Thanks!
Hi Jodi! Welcome to the blog! Great to have you. What you just described makes perfect sense. I, too, have projects that aren’t conducive to a flat fee and force me to do it on an hourly basis. But try and make those the exception.
Even with small projects, I’ll often quote a flat fee. That may mean I take a risk, but most of the time it works in my favor. For instance, I may charge $300 to write a 2- or 3-sentence testimonial. This includes a brief client interview, some email exchanges, etc. Some take longer, depending on the info I get and how hard it is to track down the client’s customer. But overall, I can get it done profitably for $300. So I’m willing to take the risk. Because if I charged hourly, some may take 30 minutes while others take 2 hours total. Which would cause the client to wonder why the variability.
Make sense?
Great topic and one I spend an inordinate amount of time thinking about. One thing I know. I don’t do hourly fees. The problem with an hourly rate for me is that I’ve been practicing law for almost 20 years, so I’ve gotten pretty darn good at certain things. I have templates, and boilerplate that I can quickly pull together for a contract for a client. So, if I charge an hourly rate, I am actually penalized for being very experienced, quick and efficient at doing my work. The hourly rate concept actually doesn’t make sense…the less experienced you are, the more you can make because it takes you longer; and the more experienced you are the less you make. Um, no thank you.
So, I do flat fee pricing based on value to the client AND to me. If I only think of value to the client, then I end up sometimes doing work for a price that I don’t feel good about. So, I look at what is the value to the client AND what amount will motivate me to do the work.
For example, sometimes clients want me to write a letter demanding something, like a refund. Well, the client thinks that’s only going to take 20 or 30 minutes to draft and they might be right. And the client thinks that should only cost about $50-$100. But, it’s not worth my time to even think about it for that little amount of money. So, I’ve decided that I don’t want to write letters for less than $250 each. Period. I don’t care if it takes me only 10 minutes. The value to the client is in getting a very experienced lawyer who is likely to get a better response than the client could on his own.
I could go on, but I think you get the picture. Thanks for an interesting discussion.
We do work in a craft that most people have an extremely hard time valuing, especially by people who have never had to take the time to set a value on their own work. Experience, the endless study of the craft of writing, learning SEO and finding new ways to apply it effectively, and everything else that goes into every sentence we write create tremendous value for our clients. Thinking in terms of value when we price our work should help us see how valuable what we do really is.
Amen, Traci!! I couldn’t have said it better. And what I love about what you said is that you’re in a profession that’s NOT used to charging this way. So I commend you for being courageous enough to try an approach that pays you for your value, not your time!
Reminds me of the story about the consulting engineer who was brought into FedEx’s Memphis hub because the conveyors had unexpectedly stopped running. Millions of dollars were on the line for every minute the hub was down, and this guy was the best at solving such problems quickly. He came in right away, asked 3 questions of the hub manager, took a look at a couple of machines, made some quick calculations on his notepad and adjusted a handful of dials. Three minutes later, the conveyors started running again. The operations VP was ecstatic! Until the consultant handed them an invoice for $10,000.
“$10,000??!!,” asked the operations VP in astonishment. “Are you nuts? You were only here for 10 minutes.”
“That’s right,” replied the consultant. “And I fixed your multi-million-dollar problem in 10 minutes rather than the 10 hours it would have taken one of your guys, making my $10,000 fee the smartest investment you’ve probably made all year.”
Brian – You’re absolutely right. That’s why it’s best to focus on prospects who already “get it” than to waste time trying to convince everyone else of the value you bring to the table.
I prefer to charge by the project. Some clients, however, insist on proposals based on hourly charges. This is especially true for projects presented as RFPs from governmental and nonprofit organizations. In these circumstances I begin by estimating the amount of time required and multiply it by my hourly rate. If the total that results seems unreasonable or unlikely to win me the job I reduce the number of hours required to come up with a fee that will be more competitive (I do not adjust the hourly rate). For large proposals that involve multiple professionals (for example a designer and a web developer in addition to my own writing and consulting time), I may reduce my markup on their time or ask them to charge less. The ultimate goal is to get the job if it’s worthwhile and receive a reasonable return on my investment of time. Another goal is to generate work that will benefit my associates.
How true. In translation, it’s a little different and the billing mode varies.
Many translators quote an hourly rate for proofreading or for review (checking the work of others). I insist on charging by the word because:
What if the proofreading requires an inordinate amount of amendments?
What if the translation is rubbish and would virtually need to be redone?
What if it is of a nature that requires an inordinate amount of research?
Sometimes I work faster. I have no default cruising speed – it’s a fact of life.
What about one of those days when I get constant interruptions? Turn the clock on and off?
And all that said, I still insist on seeing the job to be done first. On that basis, I might refuse the job, or possibly tell the customer what it is that makes we want to negotiate a higher unit price.
Best,
Chris
That a great article. I get the $XX per hour thing all the time too and many clients expect to be able to pick my brain and “brainstorm” for free. Sounds like it’s time to stand up more often and give them a weather report
With design I roll their job in my head at all times of day as I consider this option and that before I ever sit down to work on things. Time to quantify that time also.
Have a great day and thank you for the wonderful thought provoking blogs.
Alison