The Word Wrangler

The rates for your writing services must, first and foremost, be based on your cost of living.

Read that again and take it as gospel because everything else related to your rates is built upon that principle. To use any other method that doesn’t use this as the building block is taking your business down the pathway to failure.

I’ve read countless articles and blog posts from other freelance writers on the topic of rates. Some were great; others were downright asinine. Some advise writers to charge what they think they’re worth, while others say to check out the market and find out where you fit in.

Bad advice. Because unless you have concrete numbers on paper that show exactly what you need to have coming in on a weekly basis to maintain your current state of living, there’s no way you’re going to make it by arbitrarily pulling numbers out of the air and hoping it’ll be enough.

So if you’re just starting your business, or haven’t done this before, I want you to sit down with all of your expenses, and figure out exactly what you need to have coming in on a weekly basis to maintain that lifestyle. It’s a pain in the ass, I know, but if you don’t have the numbers, you can’t possibly know what rate to charge.

Every business that hopes to succeed does this. They figure out all of their operating expenses in order to figure out what to charge the customers. Remember, you’re running a business, so you have to think like a business.

Let’s say that, after you’ve figured out your cost of living, you’ve arrived at a number of $300 per week. Divide that by 5 days and that gives you $60 per day. Divide that by 8 hours and you get an hourly rate of $7.50. You don’t have to charge an hourly rate if you don’t want to, but you do have to know this number when estimating how long it’s going to take to complete a project.

That number is your starting point. Everything else is based on that rate because that’s your bottom line. That’s what you need to make in order to survive. Now you can begin checking out the market to see what others are charging because you’ve got a solid figure to work with.

Now, let’s say that after doing the math you arrive at $100 an hour. Fine. That’s your rate. If you can get that: great. But, if you’re finding that you’ve priced yourself out of the market, you have to either adjust that number, or find another line of work.

If you decide to adjust the number, do so by attacking the externals that cause that number to be what it is. In other words, don’t just start knocking dollars off that figure to bring you in line with what the current market is paying. Your business will fail inside of two months if you do it that way because you won’t be able to meet your financial obligations.

If you’re paying the expenses for owning two vehicles, then cut it down to one vehicle. Do you need satellite TV? A new Blackberry with GPS? How many kids do you really need?

Obviously there are other factors to consider when coming up with your rate. A spouse or partner who works and brings money into the household will have an effect. But the bottom line is for you to know your bottom line. If you don’t know what it costs you to live, there’s no way to successfully choose a rate that’s going keep you living that way.

In the next post, I’m going to talk about why worth and value are BS, and why it’s good business to raise your rates.