In a forum discussion today, the issue of a freelance writers' rate per hour came up. To summarize, the potential buyer's thought was this:
They earn $20 per hour in their position (where they wear multiple hats, including the current writing), so in their mind a freelance writer charging more than that is "excessive."
I have a few thoughts on that (not meaning any disrespect to the specific buyer):
- If someone wants to operate a Web-based business that in any way, shape, or form would rely on content (even if just for search engine placement), they need to either be able to afford it or do it themselves. If they're not, they haven't properly planned their business model, and they should start looking for a new line of work or get used to receiving much poorer quality work.
- They're right in saying that paying someone else more than they're making doesn't make sense. The point of hiring freelancers is quite often to free up more of your own time which can then be spent on additional income-generating activities. If it doesn't work out that way, you really can't afford to outsource.
- Having one person wearing multiple hats (especially in an online business) isn't unusual. Sometimes they're a contractor, an employee, or the owner of the business themselves. It's easy to be in those shoes and feel like, since you're doing many different things, you should be able to earn significantly more than someone coming in to do just one of them. But in reality, we find that's a generalist vs. specialist issue, and specialists almost always charge (and make) more.
- The general thought this buyer had touches on a very common misconception among Web buyers of freelance writing... they don't understand the difference between an hourly rate for freelancing vs an hourly rate for employees.
Let's say the potential buyer is an employee of a company and earning $20 / hr for a 40-hour work week. That means they're earning $800 per week before taxes. Let's just take a nice round number of 30% to account for all taxes, and say this employee's take-home pay weekly is $560.
It's very easy for someone used to that pay model to assume the same of potential freelancers they want to hire - they assume that paying them the equivalent of $20 per hour will provide the freelance writer with about the same take-home pay (which they consider livable and adequate) as they're making.
That's not how it works. Here's why:
- Any responsible freelancer or other independent contractor will be spending a large portion of their time on marketing and administrative duties, which obviously can't be billed directly to clients (all of the averages I've ever come across put it at 22-23 billable hours left in a 40 hour work week).
- The hourly rate charged still has to account for the full work week - not just the billable hours.
- Freelancers pay taxes that employees don't - if you're in the US, you still pay the same medicare and social security taxes that employees pay, but you're also responsible for the "other half" (the portion employers usually pay).
- Freelancers have business expenses that don't get reimbursed like an employee's, and they can really add up. Here are just a few off the top of my head:
- Office supplies
- Utilities (even if at home, electric, phone, etc. need to be accounted for)
- Domain name
- Web hosting
- Advertising and other marketing costs (Web design, SEO work, paid advertising, etc.)
- Travel if they meet with clients face to face
- On top of additional taxes and those basic expenses, you have to consider benefits. If you want to compare your $20 per hour as an employee to $20 per hour as a freelancer, you need to account for an equal playing field - getting similar insurance, retirements contributions, etc. Insurance isn't cheap for the self-employed, and it's all out-of-pocket. There's no employer paying a chunk for you. There's also no employer to match your retirement savings contributions, so to get the equivalent benefit, you have to account for the additional match cost.
When it comes down to it, and you've factored all of this in (added expenses, taxes, and billable vs non-billable hours), for a freelance writer to get the same take-home-pay and benefits as someone in a $20 / hr employee / employer relationship, it wouldn't be unusual for them to have to charge $50-60 per hour.
So the next time you think a freelancer's rates are excessive, spend a little bit of time really doing the math before deciding what's "fair" in your mind.
Will you find people willing to work for less? Sure you will. The fact is that there are a lot of freelancers who don't understand these concepts themselves. They look at $10 per hour as being better than the minimum wage jobs in their area, so they take on the work to learn the hard way that they'd be better off in most cases working for the local McDonalds (in a financial sense). These types of writers will almost always end up putting themselves into one of two situations:
- They'll fail as the bulk of freelancers do, because they're not devoting an adequate amount of time to marketing themselves and their administrative responsibilities, or
- They'll have to take on extra hours every week to earn enough to get by at their lower rates, and they'll eventually burn out or learn to hate their work (also usually leading to failure).
So whether you're a potential client of freelance writers or a freelance writer yourself, look into the reality of freelance writing rates before commiting yourself to anything.