How Writers Set Their Rates

How writers price themselves is often, but not always, related to the amount of time and expertise they put into their work. Most use formulas or industry standards to determine an hourly rate, but other factors come into play, from place of residence to marital status to self-confidence.

Formula 1: How Much Do I Need?

For example, I don’t need office space, but I do need a fast computer with a large display, a laptop, peripheral devices, lots of software, WordPress themes and plugins, cloud storage, web hosting, a mobile phone, a CPA and lawyer, and a potpourri of other incidentals just to do the work. If expenses add up to $8,000 per year, and a writer produces 1040 billable hours per year (20 hours per week), the writer needs to bill $7.69 an hour just to stay in business. This does not include the cost of marketing, which may run another $2,000 annually. In reality, a professional writer needs to bill $9.62 per hour to cover business expenses.

For every billable hour, a writer generally spends three hours doing administrative tasks, keeping up with the industry, writing proposals and estimates, maintaining his own website and social media, and handholding clients. It adds up to working a 60-hour week with 20 hours of pay.

For example, doing a proposal for a foreign company that needs a real estate investment website is not a cut and dry matter of billing $x per page. It means finding and pricing a translator, negotiating with people who could do field research and photography, and figuring out how many pages they would need on their website and what those pages should be about. It can mean doing 12 hours doing work and then not getting hired… so those hours go down the toilet. Writers need to separate out this kind of futile work, which is why so many ask about your budget.

Then, writers have to factor in living expenses. Modest living with a mortgage, health insurance and a small family is $65000 annually in Miami. Or $62.50 per hour.

The bottom line: a writer needs to bill at least $72 per hour BEFORE taxes

Formula 2: What Could I Make Elsewhere?

Formula 1 is based on how much income a writer needs. Formula 2 takes is based on what a writer could be paid for his experience and expertise if he worked a steady job. At the height of the recession in 2009, I was making $80,000 a year in an ad agency plus a bonus. Workers typically cost employers 20% of salary in benefits. So, my actual annual compensation was closer to $100,000. Based on a 40-hour work week with two weeks off, a steady job represents about $50 per hour, but freelancers do not bill 40-hour weeks. So this formula works out to around $87 per hour before taxes just to match full-time employment in an agency. A lot of writers are renegades, so they sacrifice a bit to be their own bosses.

The bottom line: a writer have to bill $87 per hour before taxes as a freelancer to match a senior level job in an ad agency.

Formula 3: Using Industry Standards

Industry standards vary from region to region and industry to industry. While industry standards are good benchmark, they do not provide a reliable method of setting one’s own rates. A writer needs to have a true sense of his own value to his clients. Referring to industry standards cannot provide that. Clients could care less about industry standards, anyway. They care about what a particular writer can or can’t do, and how much they are willing to pay for it.

Factor 1: Place Of Residence

A writer’s place of residence determines the cost of living. The cost of living has an impact upon how much money a writer needs to survive. I could cut my prices by 63% just by moving to Manila, Philippines or by 66%  if I went to Delhi, India. Closer to home, I would to charge 49% more to maintain my modest lifestyle in New York City, or 28% more in Boston. In Atlanta, I could charge you 11% less. You can run your own comparisons using the Bankrate Calculator.

Factor 2: Marital Status

It may be politically incorrect to say so, but marital status is a factor in a writer’s rates. A housewife blogger who wants to supplement the family income is in a better position to write for peanuts than a single-mom attempting to support herself and three kids. The same housewife is also in a better position to hold out for a higher rate, simply because she doesn’t need it as much.

Factor 3: Lifestyle

A writer who is frugal can charge less than a writer who is up to her eyeballs in debt and has two houses (like my friend B.R.). Fortunately for her, my friend B.R. is a smooth talker and can often get her $300 hourly rate. Usually, lifestyle does not translate into cheaper prices. It translates into having the freedom to turn down the wrong type of clients and work.

Factor 4: The Market

Ultimately, writers don’t set rates. Clients do. If the market for blog articles is 2 cents a word, then I am going to make 2 cents a word producing blog articles. Agencies and design firms are the most likely to understand the worth of a writer. Digital agencies tend to have blinders on and are likely to seek out blog writers or SEO writers, not true copywriters. Digital agency writers work as content producers and tend to have a journalism background. They face a grueling journey toward being paid a living wage. Noah Davis wrote a great piece about what blog-style writers get paid in the real world. It’s not a pretty picture. His solution was to position himself as a brand name journalist. That means he earned $12.50 an hour writing great content for highly visible online publishers just to make a name for himself. Then he parlayed his personal brand into demand and higher fees from other clients. This strategy has worked; he bills around $80,000 a year.

Blog writers have nothing in common with copywriters. Copywriters get paid to have ideas not just churn out articles. Large agencies and their clients know this and use it to their advantage on the marketing battlefield.