I have two clients who both pay me a dollar a word.
On paper, they look the same. In fact, one of them pays me more than the other – and it’s not what you think.
That’s what I mean.
Client A is in a place I know very well. Research is minimal, no expert interviews are needed, and I can research, compile, and edit 800 blog post in about three hours. At $1 a word, that’s $800, and my effective hourly rate works out to about $265 an hour.
Client B pays the same rate, but the work is more involved. A 1,500-word piece that requires two expert interviews, more in-depth research, and more back-and-forth. This project takes ten hours (sometimes more). At $1 per word, that’s $1,500, but my effective hourly rate drops to $150 at best.
The same degree. A very different story.
That’s the problem with cost per word. It treats all content the same unless it is completely absent. And once I started my own account effective hourly rate I could not see him in every project.
The Number You Actually Need to Track
Most freelance writers follow their per-word rates. Very few people keep track of their effective hourly rate, and that’s the number that really tells you if a project is worth taking on.
Take what the project paid for and divide it by how many hours it actually took you. I want to say all hoursnot just writing. Researchexpert interviews, transcription, editing, client calls and any admin that goes along with it.
This is your effective hourly rate.
When I started doing this on my client list, the gaps opened my eyes. Some of the projects that seemed like my highest paying jobs turned out to be my lowest paying hourly projects. Some of the smaller projects that I didn’t rate were actually some of my strongest gainers.
I was working backwards, working harder jobs that paid me less. wow!
Therefore, the rate per word is a superficial number. An effective hourly rate is what you need to focus on.
Why Project-Based Pricing Fixes It
Once you know your effective hourly rate, you can start pricing projects based on what they actually cost you in time, not how many words end up on the page.
This is where it gets interesting.
A project that pays less than $1 per word can actually make more money per hour than a project that pays $1 per word.
If a free client offers you $400 for a 500 word piece on a topic you know well and it takes you two hours, that’s $200 an hour. Meanwhile, a $1,500 piece that requires expert interviews and 10 hours of work costs you $150 an hour.
In this respect, the small gig wins.
That’s why rate per word is the wrong thing to track. What matters is the time it takes to do the work. Because once you know that, you can rate it accordingly.
A project that pays $0.50 a word can get you done in more hours than a project that pays $1 a word, depending on how long it takes you to complete.
So one lesson I learned from this exercise is that I should charge more for projects that take longer. This dollar a word 1500 word article with all the research? It really should be $2,000 (or more).
And instead of sticking to a per-word rate, I have to ask the client to switch to a per-project price.
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How to start transitioning
You don’t have to convert everything overnight or anything fire customers. The easiest place to start is with new customers.
Before quoting anything, consider the actual scope.
- What does this project involve?
- How many hours will the study take?
- Are there expert interviews?
- How many rounds of inspection are typical for this type of customer?
Add these up, multiply by your target hourly rate (and buffer at least an hour or two for any additional research or interviews you may need to do), and that’s your starting point for a quote, not per word.
You can gradually make this change by renewing contracts for existing clients or entering new projects. You don’t owe anyone a constant pay per word.
Every new project is an opportunity to evaluate it properly.
Another thing to do is go back to your recent projects and calculate the effective hourly rate on each one. Even if you don’t change anything right away, it’s a useful exercise because it shows you where your time is going and which customers are really worth your presence.
Some of the answers will be obvious. Others will really surprise you.
Underlying it all is a change in mindset
When writing was purely an exit game, per-word grades made sense. The more you write, the more you earn.
But this is not the most work experienced freelance writers they run away. You don’t sell words. You sell experience, judgment, and the ability to take something complex and make it clear.
It doesn’t fit neatly into every word pattern, and trying to rate it that way will keep you working less than you should.
Project-based pricing places value on work, not word count.
Math doesn’t lie.
Pull up your last ten projects, calculate the effective hourly rate for each one, and I’d bet that at least a few of them look a lot different than you expected.
This is where you start. Pricing decisions become much easier once you know your actual numbers.
Liz Froment
Liz Froment is a full-time freelance writer and the one who keeps Location Rebel running like a well-oiled machine. If he doesn’t write something informative or witty for his clients, he can probably be found reading a good book.
Learn how to make your first $1,000 in freelance writing (in 30 days or less)
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