Money Matters for Editors — Project-Based Pricing Versus Hourly Rates By Kaarina Stiff

 

Money is often a difficult thing to talk about, even when it shouldn’t be. One of the hardest questions for me to answer as a freelancer is, “How much do you charge?” It’s a perfectly reasonable question, but one that always leaves me speechless, at least for a few awkward seconds.

Keeping perspective

“Well, it depends,” is usually how I start. Then I spend a few more seconds reminding myself that it’s actually okay to charge people money for what I do, and I continue with a long-winded explanation that no doubt leaves the impression that I’m afraid to answer the question.

Reality might not be quite that bad, but it is fair to say that money conversations can be challenging, and there is no single right answer to a question about money. However, in most cases, the best response really is, “It depends,” because every job is different.

Breaking it into pieces

The first question I wrestle with is whether to charge on an hourly basis, or to establish a fixed fee per project. Last week, I had a chance to explore the issue with fellow freelancer, Dawn Oosterhoff, by looking at how the concept of project-based pricing can be applied to editors, as an alternative to charging an hourly rate. Here is a snapshot of what we considered:

The project-based approach

Project-based pricing has a number of advantages. It sets a cost ceiling for the client, which many clients appreciate because it’s predictable. It also doesn’t penalize experienced freelancers for being quick at what they do, in the way that an hourly rate does. (Of course, experienced freelancers can command a higher hourly rate, which is explored below.) Project-based pricing is also an excellent way to represent the full spectrum of experience that you, the freelancer, bring to a given project.

However, project-based pricing also has disadvantages. For editing work, it can be hard to accurately assess the level of effort needed for a job based on a preliminary review. And while the same holds true for hourly-rate services, it’s easier to mitigate the risk by providing clients with a range, and communicating with them promptly if you encounter problems. With project-based pricing, the freelancer is at risk of taking a financial hit if the estimate is too far off. On the flip side, if you are too generous to yourself in a project-based estimate, clients might balk at the cost.

Taking it hour-by-hour

Hourly rates, which feel more like the norm in freelance editing circles, also have distinct advantages. For the freelancer, charging on an hourly basis means you get paid for every hour worked, even if you uncover issues that weren’t apparent at the beginning. Hourly rates are also easy for clients to understand, because it’s evident to them exactly what they’re paying for.

On the other hand, hourly rate jobs can also come with pressure to “just work faster” to reduce costs for budget-conscious clients. It also exposes the difficult question about how to set an hourly rate. Less experienced freelancers will take longer to do a high-quality edit than veteran editors. Newer editors can compensate for this by charging a lower hourly rate, but this can present its own challenges by lowering expectations among the client pool, in an industry where we all want to see professional editors fairly compensated. It can also create challenges down the road for the budding freelancer who eventually wants (and deserves) to raise their rates.

Weighing the risks

So what is a freelancer to do? Even after weighing the pros and cons, we agreed on a couple of key points. No matter what the job is, page two deserves as much effort as page 222. An hourly fee felt like the best way to make sure that happens, because it eliminates any temptation, however subliminal it might be, to hurry through the later stages of a job that’s taking longer you bargained for. Of course, most of us would never do that, but it still prevents us from beating ourselves up for underestimating a job.

Project-based pricing seems most advantageous for less mechanical and more creative endeavours, such as in the freelance writing universe or maybe even in the world of substantive or developmental editing. But for folks whose editing work gravitates more towards copyediting, we closed our discussion feeling safer in the hourly rate universe.

Did we miss any big considerations? What do you think? Share your experience in the comments below.

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5 thoughts on “Money Matters for Editors — Project-Based Pricing Versus Hourly Rates By Kaarina Stiff

  1. Having a website with price listings has worked best for me. So rather than have the uncomfortable conversation, I usually give a brief answer and refer them to the page for details.

  2. An interesting perspective, but I must take a different view. I think you have the hourly vs. project fee exactly reversed; that is, copyediting and more mechanical work are best served by a project fee whereas developmental/substantive editing are best served by hourly rates.

    The problem that hourly rates are supposed to solve — the extra time required by unexpected troubles with a manuscript — are usually not solved. The reason is that most clients actually have a budget ceiling; it is the exceedingly rare client who has budgeted to pay for 100 hours of work but is willing to pay for the 150 hours it actually takes. In addition, most editors I know who work on an hourly basis say something like this to the client: “I charge $50 an hour. What is your budget?” The reason for asking about the client’s budget is that experience has taught that to go over the budget by more than a couple of hours (and often even by as little as 1 hour) creates problems with the client. The client, if a publisher, will pay the bill but not hire you again; if an author, will complain all over the internet about you and will refuse to pay beyond the budget. And if the client hasn’t told you what the budget is, the client will pay the bill but complain about your editing and billing to anyone who will listen. Much of the sentiment from authors favoring self-editing arises from overbudget billing.

    Another problem with hourly rates is that if an editor knows the client’s budget, too often the editor bills for that budget amount (or very close to it) even if the actual time spent editing was significantly less. This, too, has been a source of client complaint (at least in the United States).

    I have been editing for 32 years. After my first 6 months of editing I stopped billing by the hour and went to a per-page fee. It is true that I have had projects on which I have lost my shirt, but I prefer to look at the big picture, which reveals that my effective hourly rate is several multiples of the hourly rate I could charge. More importantly, clients are happy because they know how to calculate the fee, which means they can verify it themselves, something that is impossible to do with an hourly fee (I say I worked 32 hours, you say couldn’t have been more than 25 hours — an unsolvable conflict — whereas I say 985 pages and you say 985 pages).

    Many editors prefer the hourly fee for fear that they may encounter a project that takes longer than expected. The answer is not the hourly fee but in establishing a procedure for handling manuscript that automates much of the work. For example, I use EditTools (www.wordsnSync.,com), a collection of macros that I created, to handle references. What would have taken several hours to do now takes minutes. That is how to turn a project fee into a winning method, especially when combined with the big picture view. Properly run companies look at profit over time, not over a single day; editors need to learn to look at profit over multiple projects, not over a single project, for a truer picture of their business.

    Anyway, my vote is for the project-fee/per-page fee every time for copyediting.

  3. Thanks for asking me to flesh out my comment regarding hourly versus per-page/project fees. Unfortunately, I cannot do so at this time. In addition to having several multi-thousand page projects in-house, I am going on vacation and I need to write for my own An American Editor blog.

    However, if your readers are interested, I suggest they do a search through the An American Editor (www.americaneditor.wordpress.com) archives. Over the past 6 years, I have written several articles on this topic.

    I would add that there isn’t a lot more to say than what I wrote, except that when you work on a per-page/project fee basis, you are incentivized to find ways to be more efficient. It was this that caused me to originally create and to continuously improve my EditTools macros (www.wordsnSync.com) – I needed to find ways to increase productivity and thus increase profitability.

  4. I agree with americaneditor that hourly rates are too abstract to deal with for most projects, but per page fees don’t work unless you stipulate the number of words per page. So my calculation is based on number of words and the fact that my first editing boss back in 1989 told me to estimate copy editing at 1500 words per hour for scheduling purposes. So the calculation looks like this [number of words divided by 1500] x [hourly rate]. So a 45,000 word MS should take about 30 hours for copy editing. For proofreading or substantive editing, the number of words per hour would change accordingly. Time yourself and go from there. I also like this estimate because it allows for me to daydream, wander off, stick the laundry in the dryer, and not have to worry about the clock.

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