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November 2005

From the President's Desk: Know Your Value

By Jack El-Hai

How much is a writer worth?

Many of ASJA's resources are devoted to answering that eternal question. We have PayCheck, in the members-only section of this newsletter, that enables us to benefit from our colleagues' reports of how much money they earn from magazine assignments, book contracts, teaching gigs, and other sources of work. Much of the discussion on our online forum is about rates of pay and contractual terms. Our national meetings and annual conference sessions often address the questions of fees and income potential, as well.

As valuable as we may find these resources, they frequently approach our worth as something to be established by the market. Magazine A pays $1.50 per word; Magazine B pays $2.50. Working with a certain kind of client can fetch $100 per hour. Publisher X gives advances of $30,000 for books in a particular series.

I think about this reliance upon the market to set the value of our work whenever someone asks for “the going rate” for a specific kind of editorial task. The question pops up on our online forum and in conversation all the time. The problem with setting fees based on going rates is that we fall into the trap of earning only what clients comfortably want to pay, which is bound to be too low. It's true that market forces affect our earnings, especially when so many people call themselves freelance writers and are eager to be published. Publishing has always operated in a buyer's market. Even so, it also helps to spend time thinking about how much we must earn, and how much we want to earn from our writing. If we fail to set our fees in accordance with our income goals, we will never reach those goals.

Years ago I attended a workshop that a marketer gave on setting fees. She maintained that all business owners who provide a service, no matter how modest the enterprise, should be certain that their fees provide not the bare minimum of income, but the income that the owner wishes.

Over time I have used this principle to devise my own formula for setting an hourly rate. The formula virtually guarantees that I'll meet my income goal if I stick to that hourly rate. I base my project fees on the hourly rate, and I measure all fees offered to me on the probability that they'll provide at least the hourly rate I need.

Here's how it works in the abstract. Start with the amount of income you want to earn in a year. Add to that your annual expenses and overhead. (Expenses and overhead can include all of your Schedule C deductions, if you're a sole proprietor, plus the cost of health insurance, life insurance, disability insurance and other benefits, and half of the Self-Employment Tax.) Then divide that sum by the number of billable hours you can reasonably expect in a year. This gives you an hourly rate.

Sound complicated? It's not. Let's say you want an annual income of -- think big -- $100,000. If your yearly expenses and overhead amount to $30,000, that means you need an annual gross of $130,000. Few writers can actually bill more than 20 hours a week over the course of a year; multiply 20 by 48 weeks (figuring on two weeks of vacation plus holidays) to get 960 annual billable hours. Then divide $130,000 by 960 to get an hourly rate of $135.

Remember that in this example $135 is the minimum amount of money you need per billable hour to reach your income goal. Charge less, and you'll fall short. If your fees are too high for your clients, consider whether the kind of writing you do is really an activity that will support you. If necessary, find new clients or new work.

Of course earnings are not the only measure of our worth. ASJA can help us become writers with stronger skills, a greater commitment to our craft, and a generosity in sharing what we know with others. But when more writers start realizing how much money they really want, and charge accordingly, we'll all gain.

Jack El-Hai of Minneapolis, Minnesota, is president of ASJA. E-mail the president through www.asja.org/contact.php.