Freelancing Mini-Series – 2 Simple Ways to Pinpoint the Value of Your Freelance Work
Welcome back to another article in this series on freelancing. So far, we’ve covered:
1) How you can find ongoing work as a freelance writer - Discussing some actionable steps you can take to make sure you’re getting quality gigs from quality clients.
In today’s article, I’d like to dig a little deeper into how you can extract the exact monetary value your work is worth.
As you know, there are so many factors to consider when deciding what to charge your clients. You don’t want to overcharge them, but then again, you don’t want to feel exploited… it’s a tough balance to strike.
It can be difficult to decide on the value of your work, especially because it’s your work, and you invest so much of yourself into making it something special.
In university, the “value” of a paper is derived from a list of criteria your teacher had sitting in front of her or him while grading your paper. The real world isn’t so cut and dry.
So how do you know what to charge? And what about the more obscure jobs like writing an obituary, an online dating profile, or the opening paragraph to a speech at an SEO seminar?
First off, you’ve got to decide what you’re pricing specifically
Above, we looked at several different types of writing. But, the truth is, to get paid the most amount of money and have the highest success rate with your applications, it’s best to specialize.
For example, do you want to be a direct response copywriter? Do you want to be a blogger or content marketer? Or, do you want to be a speechwriter for politicians and business people? Don’t be a jack of all trades and a master of none. You’ll get burned out.
Make a decision and stick with it, because only as your expertise grows can you justify increasing prices later. For now though, let’s look at how to determine your value.
Method 1: The Salary Approach
The first method to figuring things out is a fairly mathematical one. Let’s say you’ve decided to strike out alone as a freelance writer and you want to work seven hours per day, 1 hour per day less than when you were in full-time employment. You also want 5 weeks holiday per year, 1 more week per year than you used to have.
Let’s say you’ve calculated that you need $65,000 per year, before taxes to pay for your rent and generally live the lifestyle you’ve deemed appropriate or acceptable for you. For ease, we’ll use this sum before taxes. But if you want to calculate your take-home after taxes, check out this article from the IRS or the equivalent for your nationality.
The equation looks like this:
(Working weeks per year) 47 x (Working days per week) 5 = (Working days per year) 235
Okay, so 235 working days per year. Now, let’s see how many working hours that is per year.
(Working days per year) 235 x (Working hours per day) 7 = (Working hours per year) 1,645
Okay, how much should we charge per hour for our freelancing? Let’s take a look.
(Working hours per year) 1,645 / (Target annual salary) $65,000 = (Minimum fee $40/hr)
Naturally, some of your day will be spent prospecting for new clients, writing proposals and doing invoices. A good rule of thumb is to estimate that 20% of your time will be spent doing this kind of task, so we can add another 20% to the $40/hr minimum which brings us just shy of $50.
Now, it’s a simple matter of estimating the amount of hours each job will take you, multiplying it by at least $50/hr and bidding that amount of money to each job.
Whatever you calculate your minimum necessary fee, if you’re not confident you can charge that amount of money, check out this article on how to better position yourself as a specialist.
Otherwise, let’s continue.
Method 2: The Results Approach
Okay, so you’ve figured out the amount of money you need as an annual salary, how many hours per week you want to work and used that as a basis. But there’s another metric to consider when calculating how much money you should charge.
Put quite simply - how much money are you making for your clients? Figure out that number and you’ll be more easily able to extract a figure that works for both of you. We call that a win win situation.
Let’s take a look at this in a business context because, let’s face it, if you’re writing obituaries, you’re probably not directly generating a monetized result for a client. But for direct response copywriters, bloggers, website copywriters and many others, this is relevant.
So let’s say you’re negotiating with a client about how much the work will cost. It’s a medical website with a business that specializes in plastic surgery. Each sale has an average value to the client of around $12,000. Your specialization is in website copywriting with an intimate understanding of on-page conversions and you know how to pull the emotional heartstrings of visitors and to maximize those conversion rates. Awesome.
The work will take you approximately 15 hours which, on a basic $50/hr rate means $750 to meet your minimum target salary of $65,000 per year. However, the value of a single sale to the client is over 10 times that amount.
This is where you start bidding based on the results. And remember, the results that a corporate client will produce when compared to a sole trader or small business “mom & pop shop” are two very different ballgames. Your rates should reflect this fact.
Each client and each freelancing profession will vary, but it’s important to come up with some kind of realistic calculation. For example, you could ask the client how many sales the current outdated website you’re revamping makes each month. Then, take that number, multiply it by 10%.
(Sales produced by old website) 5 x (Months in a year) 12 = (Annual sales) 60
Based on the fact that you’re an experienced specialist, it’s more than reasonable to assume that the new and improved website will increase conversions by at least 10%.
(Annual sales) 60 x (10% increase) 0.1 = (Minimum target sales for new website 66)
Okay, you’re aiming to gain this company an additional 6 sales per year. To say that’s a conservative estimate is an understatement. But, it’s more than enough to justify a significantly higher rate.
(Minimum new sales for new website) 6 x (Average value per sale) $12,000 = (Target annual income increase) $72,000
Heck, even if you make them a measly 1 additional sale per year, are you really going to charge just $750 for the website copy? Not a chance.
Whatever type of writing you do, or even whatever type of freelancing you do, by illustrating to your client a monetized quantity of results on offer, you can easily justify considerably higher prices.
Note to Self: The Relationship Between Experience, Self-Worth and Rates
Finally, there’s a school of thought in business that states “you get paid in direct proportion to the value you bring to the market.”
Put another way, whether you want to know how much to charge, feel like you’re undercharging or just want to justify higher rates, you should increase your knowledge of the type of freelance writing in which you specialize.
By continuing to improve your understanding and expertise, continuing to impress clients, by producing the kind of work that gets killer testimonials and social proof, you’ll continually to bring greater and greater value to the market. As for your rates? They’ll follow suit.