How much should I charge for my freelance services?

A freelancer should earn the same income as an equivalent level employee. In this article, I will share my actual income over the last 4 years. I will show my progress as I have transitioned from part-time to full-time freelance technical writing work.

Freelance Writer Rates

When I first started my business I determined how much I should charge for my freelance services by working backward from the cost for an equivalent employee per hour.

See my article, Compare Prices for Copywriting and Technical Writing.

The advantage of using freelancers is that we are not employees. Clients only have to pay for the work completed. There is almost no overhead, no superannuation contributions (retirement fund), and no benefits (no paid vacation leave, no paid holidays).

How much is the talent worth?

I’ve been a freelance writer updating websites, writing proposals, and developing training materials since 2008. The work started as a hobby-job while my child was very young. I was able to dedicate time to larger writing jobs in 2012.

Looking again at the graph that opened this article, I had to figure out how much my talent and experience was worth. I also needed to discover which types of clients most needed my services. I also have to make the business worth running over a total year. Notice the fluctuations from month to month in the income collected?

Monthly fluctuations in income

I started by spreading my marketing and networking efforts across digital marketing agencies, web developers and people I knew in the Perth business community.

My discovery, my talent is most needed in Mining and Engineering. There are two reasons for that need in Perth – mining and engineering is the largest market and my background.

Perth’s primary industries are mining, construction and engineering. Combine the primary industries with my education. I studied architecture and engineering technology (land surveying, and drafting) at university.

Immediately after university, I changed careers. I worked as a software trainer in enterprise IT, aerospace and automotive companies. (This is how I discovered my knack for helping technology people communicate with business people.) My history and my experience match where I am making my best income.

Should My Rates Be Based on Risk?

Time to pay averaged over 4 years

How quickly a client pays me effects how much I charge for my freelance services. I see prompt payment as an approval of my services. I am risk adverse. (I don’t want to be “The Bank of Shauna.”) As a sole trader (and ironically registered as an “Artists and Other Creatives”) – I perceive a slow-to-pay client as not needing and not valuing my services.

Overall, I think I am charging excellent rates based on the majority of on-time payments. (Did I mention I really love my clients, enjoy my projects, and like my boss?)

How much should I charge for an overdue invoice?

A slow-to-pay (or no-pay) client is expensive. I think I should give a discount for early payment, instead of trying to add a penalty for a client who doesn’t pay on time. The costs of collecting from a slow-to-pay client have included additional unpaid administrative time spent:

  • Calling and emailing client for payment
  • Tracking partial payments
  • Potential interest on my ongoing expenses that I pay on-time (with my credit card)

I’ve also found that the same people who don’t pay for my services will often do the same to other freelancers and small businesses in my network. It seems that slow-to-pay is as much an exercise in psychology as it is an exercise in economics.

So, the answer is, I don’t charge extra for an overdue invoice, but if you ask me about a discount for paying early, I will send you the amount.

Who is most likely to pay on time?

  • Agency = digital design, advertising, web development, online marketing
  • Community = sports clubs, charitable groups, churches
  • Engineering = mining, engineering, construction, manufacturing
  • Retail = housewares, apparel, gifts
  • Service = consultants, coaches, bookkeepers

Time to pay by industry over 4 years

Determining which type of client is most likely to pay on time is a stretch. I only have 4 years of data, and those 4 years were filled with changes:

  • Going from hobby-business to 3/4 time freelance hours
  • Building relationships and growing my business network
  • Settling into the technologies and types of projects
  • Developing reputation and repeat business
  • Comparing different size individual invoices and total work by industry

Why were payments delayed?

The data is set to only compare the amount of time clients took to pay invoices (terms are a generous net 30 days from date of invoice). The least likely to pay on time were agencies and community groups (sports clubs, charitable groups). The reasons for delayed were unique:

  1. No PO was issued, so the invoice was not processed
  2. The copy wasn’t generating the number of page hits and visitors were not spending the expected amount of time on the page
  3. The client didn’t like the copy (but it had been published)
  4. The client hadn’t paid the agency, therefore, the agency could not pay me
  5. The invoice had been lost (mentioned during collection calls)
  6. The client could not afford to pay the invoice or went out of business (insolvency)
  7. The client thought they had already paid the invoice

Hourly Rates 2016

So, how much should I charge for my freelance services?

As of 1 July 2016, my rates will be:

what should I charge in 2016?

Why did I change some of my rates since last year? I looked at my best jobs. My happiest clients had me on a longer-term job doing more detailed work. My hardest-to-please clients were in a rush and didn’t want to spend much money. I often discovered undisclosed issues during the handover of a draft. I know some clients are in a rushed situation, but I want to discourage potential clients who are chronically ill-prepared.

Another change you will notice is that I reversed the order that I state my fees. A couple of my clients suggested I start with the lowest number and ideal situation first (a full-day project). I like their advice and am using it. My full-day jobs were also enough to cover my expenses and pay myself at a rate equivalent to an employee with my same experience. Let’s go with this good day-rate for another year!

How much will the rates change? And when?

In the past, I had given web and advertising agencies a “wholesale rate” lower than my advertised rate. As of 1 July 2015, I am quoting agencies at the same “retail rate” as all other clients. (Agencies have proven to be slow to pay even with the discounted wholesale rate.)

I used to not charge for edits. As of 2015, I include 1 hour of editing at no additional charge, as long as the editing is requested within 30 days of delivery. Additional hours of editing are billable. The editing time will include interviews, meetings and research.

I am going to ask for a 50% deposit on jobs under $300 (under 4 hours). Whether a job is 2 hours or 20 hours, there is at least an hour of scoping and administration to get the job started, and finished.

I will keep my terms at net 30-days from the date of the invoice. The invoices will still be issued twice a month mid-month, and end-of-month.

What about that free writing sample?

I will continue to offer a free 1 page (200 to 400 word) writing sample for jobs over 4 hours. The writing sample helps the client decide if my writing style fits their needs. The free sample also helps me scope the job (get a feel for the difficulty of the work).

What do you think? I am open to improvements in my rates, and billing. Share your ideas by email, or let’s book lunch.

 

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Updated on Sun 19 Jul 2016