What to Charge
Photo by Karolina Grabowska from Pexels
Figure out what you’re worth — then ask for it!
One of the biggest hurdles of working independently is figuring out what and how to charge? Do you charge by the piece, by the hour, by the month or by the project? There are a million formulas that promise a way to figure it out.
Of course, it depends on your business. For example, as a freelance journalist my rates are set by the budgets of the magazines I write for (and are usually based on a per word fee). When I’m considering shouldering a project outside of that — someone’s bio, their website copy, their proposal or a series of blog posts — the figure I quote is based on a combination of factors: my relationship with the client; how much work will be involved (for a bio, for example, I might have to conduct an interview and either transcribe it myself or have it outsourced); how many revisions they’re expecting; how challenging they are to work with; and, importantly, whether this project will be a one-off or a recurring assignment.
Gregory Han, who writes regularly for Wirecutter, Dwell and Design/Milk, also takes this approach. “Everybody's a different story with regards to rates,” he says, “I’ve been surprised at some of the rates I’ve been given.” He notes that it’s important to look at the big picture, especially as a freelancer, where a monthly retainer or the knowledge that there will be regular, recurring pieces can be worth a lower fee. “I also look at the long-term benefits of establishing and maintaining a relationship with somebody who can consistently give you work,” he says, “The long-term ones are always the best as a freelancer.”
If you’re asked to quote an hourly or daily rate, consider the advice a business coach gave organizer Shannon Driskill. “I had been in business only a few years,” Driskill shares, “She wanted me to establish myself as a luxury service with superior customer service because those are two things people value enough to pay for.” The suggestion, to set her rate at $5 to $10 an hour higher than her most expensive competitor, hoisted Driskill to the next level.
Figuring out your hourly rate: a formula
Business schools suggest considering a target figure for the year as your starting point. For example, if I’m aiming to make a yearly salary of $100,000 then, on the assumption that a workweek consists of 40 hours and there are 52 weeks in a year, divide 100,000 by 2,080 hours. My hourly rate would be $40. However that doesn’t take into account my overhead (the time I spend on running my business doing non-billable activities like tweaking my website, answering emails, following up on invoices, transcribing interviews or pitching). I could figure this figure out myself using my very dusty algebra skills. But, thankfully, in the 21st century, there are websites that can do the math for me. I’m a big fan of TRUESTED. Inputting my targeted yearly income, my weekly billable hours and how much vacation I’m planning to allot myself each year., it calculates my hourly rate. Armed with this knowledge, I can figure out my weekly and project fees.
Negotiation tactic: The Pause
When babies start crying, often the first instinct is to run in and comfort them. While that’s great in theory, it doesn’t teach them the art of self-soothing. In France, mothers are taught to handle these outbursts by waiting a moment before picking them up. It’s called “le pause” and often, in those few seconds, a child will calm themselves down. Taking a pause in negotiating similarly acts to alleviate the inevitable anxiety. It’s a technique I learned as a young talent agent, embarking on my first salary negotiation for a client. The role was for a series regular on a tv series. The moment I got on the phone I started panicking. The casting director tossed a number at me. It felt low but what did I know? Unsure of what to do next, I told her I had to discuss it with my client and hung up, racing into my mentor’s office. “Now what do I do?. My advisor, who agreed that I’d been lowballed, loved the fact that I’d bought time by getting off the phone to take a moment to think. “Keep doing that,” he urged. But, I asked, what if she got frustrated and went on to the next person on the list? “Don’t worry about that,” he counseled, “Trust me, she won’t.” I spent the rest of the day jumping off the phone each time she lobbed a number at me, telling her I needed to discuss it with my client. To my surprise, each time I called her back, she upped the number. As the day wore on, my anxiety lessened. It’s a lesson that’s stuck with me ever since. That and similar phrases — “I’ll get back to you,” “Let me think about it,” or, when the negotiations are getting down to the wire, “Are you sure that’s the best you can do?” — buy you the time to manage your unease and leave the other party off balance, unsure of what you’ll do next. And my client? Well let’s just say the result allowed him to be able to purchase a house that year.