What Should You Charge for Your Hourly Rate?

This entry will either be extremely useful or no help at all. My apologies in advance.

A friend of a friend wanted to know how I go about setting my hourly rate. That I can do. I will not be sharing my own rate here because a) it varies from client to client and b) that’s not your business unless you plan to hire me. That said, let me see if I can lay down some guidelines that might be of use.

Base your rate on what you’ve made in the past

In my case, I had 30 years in the workforce–half of them spent getting paid to write–before I had to go off on my own. As a result, I knew what full-time employers were willing to pay me. I was also used to budgeting my lifestyle for that rate, so I could use it as a starting point.

Add a percentage for benefits

As a freelancer/1099 worker, you don’t get vacation or health insurance included in your pay. You’re not an employee, so you get no benefits. You have to supply those for yourself. And given how much healthcare premiums are going up (I myself am looking forward to another 26% increase in 2016), you need to make sure that you’re including money in your rate to cover that. You also might want to retire at some point. Or take a vacation. Those are things you might need to factor into your numbers. The guideline I’ve used since I started freelancing is my hourly rate as a full-time employee plus 30-35 percent.

Do the research

Okay, so maybe you’re new to this freelancing thing or you’re fresh out of college or whatever. In that case, a good place to learn about how to set your rate is by using Salary.com or some other site that allows you to find out what the salary ranges are for your particular role, industry, and experience. Salary.com’s primary criteria are job title (e.g. Tech Writer I vs. Tech Writer III), experience/education, and market/city. All of those will be factors in the bell curve of salary ranges. Ideally you want to be in the middle of the curve for your level of experience so that you still have room to grow.

Another good way to figure out what to charge is to look for full-time jobs doing what you want to do on your own and see what an employer is willing to pay for that position.

Be flexible

My rates fluctuate by client because different customers have different needs, budgets, and expectations. I tend to charge less for nonprofit or small business customers, for example, than I do for commercial or government clients. The latter usually can afford to pay more so you’d be foolish not to pursue those rates. Another thing to consider is that different markets will pay different rates. For example, my standard rate for Huntsville, AL–where tech writers are in relatively high demand–is often too high for Orlando, FL and too low for Washington, DC. In fact, most of my bill-paying clients are out of state. The marvelous thing about the internet is that I can work for customers remotely while maintaining my warm-weather lifestyle with only occasional needs to visit the frozen north. In any case, again, do your homework.

One thing about government rates: I have a single rate for government customers (NASA, DoD, whomever) because the General Services Administration–basically the U.S. Government’s in-house procurement department–contracts with business for specific products and services and expects to pay a competitive, consistent rate for a particular type and quality of service. My GSA rate was set when I started working for Zero Point Frontiers, and I’ve more or less stuck with that since then.

Be willing to negotiate

Whenever I get into a hiring situation and someone is serious, eventually they want to know my “number.” I’ve heard it said that whoever gives a number first “loses” the negotiation. I’m not canny enough to play those kind of games, but if you are, you might try asking something like, “I can provide you X level of service and get your product done better/faster/cheaper/with more sprinkles. How much is that worth to you?” and see if you can get them to blink first. One thing I have done is hit someone with my high-end rate to see if they flinch. If they do, I will probably have to come down on my price. If they take it without question, I end up learning the hard way that I lowballed myself.

Know your worth

It doesn’t happen very often, but occasionally I’m asked to do work that, quite frankly, will not pay my bills or is a patently lowball offer. Try asking a plumber with 20 years of experience to come over and fix your drain on a Sunday night for $10 an hour. Said plumber will either hang up on you or laugh at you. Tech writers have a useful and necessary skill as well. It is more challenging and requires more skill than a burger-flipper, and they’re demanding $15/hour. Assuming you have the skills to be a technical writer, you can at least look at that as a price too low.

At the same time, there’s no need to go overboard. Like I said, if someone flinches at your price, you’re either going to have to come down on your rate or walk away if you don’t think it’s worth it. In the end, assuming you can do a good job of putting words together, you should be able to charge–like any other business–whatever the market will bear.

About Bart Leahy

Freelance Technical Writer, Science Cheerleader Event & Membership Director, and an all-around nice guy. Here to help.
This entry was posted in freelancing and tagged , , . Bookmark the permalink.

1 Response to What Should You Charge for Your Hourly Rate?

  1. Larry Kunz says:

    “This entry will either be extremely useful or no help at all.” It’s the former, completely. You covered all of the relevant points, clearly and succinctly. Thank you.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.