Wednesday, January 16, 2008

Five Things To Know Before Setting Your Prices

Setting prices is one of the most stressful aspects of freelancing for beginners. In my first few months of work, I used to get a bit panicked every time somebody asked me how much I'd charge for something. I'd run to my copy of Writer's Market to look up the average price for similar work; do Google searches for the going rates, and post questions on writers' forums about how much to charge. I'd gather it all together, pick an arbitrary figure somewhere in the middle of what seemed to me to be the range, let the client know, and hold my breath. Sometimes I'd be right on the money; sometimes I'd guess wrong.

My first year and a half taught me a lot about pricing. I'm still perfecting my skills in this area, but now I know that I need to pick prices that work for me as much as for my clients. Here are five things you should know before quoting a price on any project.

What other people are charging. It's not necessarily a good idea to charge a certain price just because others are charging it. But knowing what your competitors charge can give you a good idea of what clients generally expect to pay, and for beginners, it's a good benchmark. I remember being acutely worried that if I quoted too low, clients would think I was no good--and if I quoted too high, they'd think I was some kind of evil price-gouger.

When I was starting, Peter Bowerman's The Well Fed Writer was my bible. Peter suggested calling other freelancers and asking about their price range. I tried that, and it didn't work so well--the people I called were generally unwilling to talk specific prices, saying that every project is different and they couldn't possibly give me an idea of their range. I tried posting the question on Craigslist, however, and I got a very different response. I had about ten very helpful pros email me back with their own price ranges and advice on setting prices. I definitely recommend going that route.

What your particular market expects to pay. Some markets just pay more than others. You might write an article for one publication and get $.25 per word; sell the same article to a different publication, and you'll get $1 per word. If you start out on lower-paying clients, you could shoot yourself in the foot by offering the bottom-barrel price to a company that regularly pays many times that amount. Knowing what a certain type of client expects to pay for writing work will keep you from doing that.

The value of your work. An e-book, marketed correctly, can make its owner thousands of dollars. If you wrote that e-book for $250, that's all you get for it--don't expect royalties. A sales letter or landing page can also pull in big money--even though I've seen writers write these for $50 or even less. When pricing something like this, I don't just ask how much work will go into it--I also ask myself how much the client can stand to earn from my work, and try to price accordingly. A $2500 sales letter will definitely do a better job than a $25 one--the writer will be able to afford to put more time, energy, and research into it, and is likely pricing higher because experience tells him his work is worth it.

The amount of time it takes you to do the work. I charge very different prices for articles that require different amounts of research. Some articles are simple how-tos or overviews of a topic, written from research gathered from reputable written sources. Others require finding interviewees and conducting interviews in addition--and this can be much more time-consuming. A short how-to article based only on written source material can take as little as an hour to write, while a feature article that includes expert interviews might take days or even weeks. These articles could (and should) cost hundreds of dollars more depending on how much research is involved.

The least amount you need to make to meet your goals. Unfortunately (for me, anyway), setting your prices does involve working with numbers. Write up your monthly budget and figure out the minimum amount you need to make per month to meet your financial goals. From there, you can compute how much you need to make per week and even per hour. Bear in mind that you probably won't work every hour of a forty-hour work week, since freelancing can be a feast-or-famine business. To play it safe, I use 25 hours per week as my baseline. Once you know how much you need to make per hour, you can figure out how much to charge for each project based on an estimate of how many hours it will take you to complete. This will give you a solid figure, and in negotiation, you'll know the job just isn't worth it if the price goes below that point.

Setting the right price isn't just about finding out what clients expect to pay. It also involves knowing how much you need to earn, and how much your work is worth. Learning these things takes time and experience--but once you do, you'll feel much more comfortable quoting and negotiating prices.


Unknown said...

It's interesting that a web-quality article requires less due dilligance than a print-quality article. What does that imply about the quality of the source material we find on the web? I'm not saying I disagree with your aseement. It just gave me pause.

Jennifer Williamson said...

It's more about the time it takes to read written sources and synthesize something from that vs. the time it takes to locate sources and conduct interviews in addition to other research. For web quality articles, I always make sure I'm using reputable sources (.gov websites and well-known online news and educational sources vs. random blogs and Wikipedia entries, for example) and always look at a range of sources rather than just one. Not everyone does that, unfortunately, which is probably how some writers can get away with charging so little.

Now that you mention it, it might be a bit misleading for me to call one "print quality" and the other "web quality." I've written detailed articles including multiple expert interviews for websites before, and I've done simple how-tos for offline newsletters and things like that as well. I might just think of them that way because one is often seen in magazines and newspapers offline, while the other is commonly submitted to online article directories and things like that.

Anonymous said...

Barring the prejudice of print writing being a higher quality than web writing (I have to beg to differ, though I agree, print publishing commands much higher rates), I think you did a great job with this.

Well written, and well deserving of the Stumble I just gave it. Bravo.

Jennifer Williamson said...

Thanks, James! I appreciate it.

I thought it over and decided to change this post to eliminate the issue of print vs. web articles. What I meant to say was simply that some projects take much more research than others, even if they're the same length. The whole "print vs. web" thing wasn't really a direction I intended to go in--at least not in this post. I'm thinking it deserves a post of its own.

Anonymous said...

I actually just read this fabulous book -- What to Charge: Pricing Strategies for Freelancers and Consultants -- and you've managed to distill the entire book into one incredibly helpful post.

Still, it's a good book to check out if you're ever still struggling with the question of what to charge.

Here's a link to its Amazon page.

Jesse Hines said...

Quick thought on rates quoting:

When you first begin, take whatever rates you can get, especially if you're writing journalistically-inclined articles--they usually pay a set rate per words, often not a whole lot; it's still worth it to get the clips, put the clients on your resume, and make connections.

Once you move into business copywriting, charge $50 an hour minimum--I got that straight from the WFW by Bowerman as well. If you've built a solid portfolio of clips and clients (even if they're more journalism type stuff), just start off with a solid copywriting rate to prosprective businesses. In fact, $50 an hour appears to be the low end of the range Bowerman talks about.

Businesses will expect you to be a professional who charges professional rates if you're a published writer who has contacted them for serious work.

Besides, they won't know that you've built your clips by writing for 17.5 cents a word. They only know what you tell them. Tell them $50 an hour to start with.

My thoughts.

Jennifer Williamson said...

@Stephanerd: that's funny--I never read the book, but the author must know his stuff :-)

@Jesse: that's great advice. If you start out in copywriting, though, most of the time you're expected to give a price rather than the client offering one. In general I think you should get what you can when you're a beginner, but it still helps to know what types of ranges are generally expected.

Anonymous said...

That 25 hour a week baseline is really sane. I've been trying to figure a baseline for the past few months, because I write in so many arenas that the rates fluctuate a bit.

And one also has to build admin time into the mix. I was shocked at the beginning at how much time administration, record-keeping, and follow-up takes. I'm managing to streamline it now, but it was quite a learning curve!

Great info -- thanks!

Anonymous said...

Asking for a high fee doesn't make you a "price gouger." It just means you're asking for a higher fee.