Freelance Writers: How to Set Your Hourly Rate

What’s the going hourly rate for freelance writers? That’s the wrong question. A better one: What’s the hourly rate you need to reach your income goals?

Getting what you want

All too often, freelance writers approach their worth as something to be established by the market. Magazine A pays $1 per word; Company X pays $400 per blog post. Client Z offers $100 per hour.

I think about this reliance on the market to set the value of our work whenever someone asks for “the going rate” for a specific kind of writing job. The question pops up on online writing forums 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.

But we are not defenseless against those forces. It helps to consider 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 targets.

The process of setting an hourly rate

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 just the bare minimum of income, but the income that the owner wants. Over time I have used this principle to devise my own formula for setting an hourly rate. The formula guarantees that I’ll meet my income goal if I stick to that hourly rate and find work in sufficient quantity. I base my project fees on that hourly rate, and I measure all fees offered to me on the likelihood that they’ll provide at least the hourly rate I need.

Here’s how it works in the abstract.

Determine the amount of income you want to earn in a year. Add to that your annual expenses and overhead. Expenses and overhead include all your business expenses; the cost of health insurance, life insurance, disability insurance and other benefits you provide yourself; and Self-Employment Tax, if you are a U.S. Schedule C tax filer.

Divide the total sum produced by the first two steps by the number of billable hours you can reasonably expect in a year. Now you have an hourly rate that isn’t arbitrarily set and will let you achieve your income goals.

Using real numbers

Does it sound complicated? It’s not. Let’s say you want an annual income of $100,000. If your yearly expenses, benefits, and overhead total $40,000, that means you need an annual gross of $140,000 to meet your goal. Few writers can bill anything approaching 40 hours a week over the course of a year. We need working time to market our work, find new clients, write proposals, do the necessary bookkeeping, communicate with others, learn new skills, empty the office trash, attend conferences, and organize our records. A realistic number of billable hours per week is 20, although by tracking billable hours you can determine your own number. Multiply 20 by 48 weeks per year (figuring on two weeks of vacation plus ten paid holidays) to get 960 annual billable hours. Then divide $140,000 by 960 to produce an hourly rate of $146. That’s it!

Using your hourly rate

Remember, in this example $146 is the minimum amount of money you need to charge per billable hour to reach your income goal. Charge less or bill fewer hours, and you’ll fall short. You do not have to disclose this hourly rate to clients unless you are invoicing them on a per-hour basis. Instead, use the hourly rate to figure out fees for entire projects — multiply the expected number of hours by the hourly rate to get a project fee that you can propose to the client. In addition, you can measure fees that clients offer against the hours required to see if your hourly fee is met. 

If clients consistently tell you that your fees are too high, think about what that means. Maybe you need new clients. Consider whether the kind of writing you’re doing will give you the income you want. If necessary, find a different writing niche that rewards you better. 

Of course, annual earnings are not the only measure of our worth. It’s also important to enjoy our work, be good at what we do, and generously share our talents with others. Many of us have pet writing projects that we do more for love than for money. (Allocate those hours to the part of your workweek that isn’t billable.)

But when more writers understand how much money they really want and charge accordingly, we’ll all gain.

Jack El-Hai, a past president of ASJA, writes about medicine, science, crime, and history. His book “Face in the Mirror: A Surgeon, a Patient, and the Remarkable Story of the First Face Transplant at Mayo Clinic,” will be published on May 20. You can read and subscribe to his free monthly newsletter Damn History, for readers and writers of popular history, at https://damn-history-16d93f.beehiiv.com/subscribe.