Crunching the Numbers: Setting Your Freelance Writing Rates

I came across someone offering a random free e-book on freelancing from home, that perfectly illustrated a common mistake freelance writers make when setting their freelance writing rates. This is a major mistake that most freelancers never realize they made, even though it sets them up with unrealistic expectations, and often leads to failure.

The problem is in crunching the numbers. This ebook presented a very common formula for setting freelancing rates. While the example given was to set an hourly rate to earn a million dollars per year, let's use an example of earning the often coveted "six figure income" as a writer. In order to find out the hourly rate, here's what many freelancers would assume:

a.. Work 8 hours per day
b.. Work 5 days per week
c.. Work 50 weeks per year (assuming 2 weeks for vacation / sick time)

Sounds reasonable for figuring out an hourly rate, right? Wrong! Here's what you would come up with:

$100,000 = 8hrs x 5 days x 50 weeks x X(hourly rate)

It seems like it would be simple enough to solve for X and find out what to charge per hour to reach $100,000 per year (works out to $50 / hr).

This is the point where writers think "Hey! I can do that! $50 / hour isn't too hard!" So they jump head first into a career in freelancing, and are completely shocked when they fail miserably. The sad thing is that it could have been avoided by simply doing the math properly.

Here's why this formula doesn't work:

Freelancers, consultants, and entrepreneurs only work an average of 22-23 BILLABLE HOURS per week - that's out of a 40 hour work week. So even if this person worked 40 hours as planned each week (not even counting taking breaks and such, like you do on most jobs), the reality is that it's not all billable - a lot is spent on self-marketing, bookkeeping, other admin work, planning, etc.

So here's what they'd really have to charge to make $100,000 per year:

$100,000 = 23 hrs per week x 50 weeks x X(hourly rate)

That comes to a rate of about $87 / hr - a bit harder to reach, especially if you don't have an "expert" status in your niche.