freelancer roundtable: we tackled your money questions

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When people ask me how long I’ll stick with this freelancing thing, I tell them I’ll play this hand until I’m forced to fold. Until I have $0 in my bank account and all my credit cards are maxed and I’m facing eviction. I’ll keep at this because setting my own hours, having control over which clients I’ll take on, and the freedom to write short stories, is the greatest gift I’ve given myself. It’s been over two years and I’m still at it, and even though I’m going through a dry spell right now, I’m turning my attention to writing as much as I can and sharing all the knowledge I’ve gained so far.

Money is such a sensitive topic for some, and I think that’s bananas. We, especially women, NEED to talk about money so we can level the playing field. Talking about money helps us create and fight for our worth. I hope you enjoy our responses, and if you find these panels helpful, let me know in the comments (along with suggestions for future roundtables). Now on to the questions!

Harper Spero writes: For as long as I can remember, I’ve been a connector. I’ve connected people with friends, jobs, apartments, business opportunities, sponsorship/partnership opportunities and the list goes on. I get completely jazzed from making these connections. As a new entrepreneur, I’ve realized how much time I’ve put into doing this pro bono and have FINALLY realized how valuable my resources and connections are. I’m in the process of building out an affiliate program in order to be compensated for making connections but am stuck on the challenge of….how much do I charge? What are my contacts worth? So much of what makes a publicist successful are the relationships they’ve established. I welcome your thoughts regarding pricing and structure. Thanks ladies!!!

Meghan Cleary: Dear Harper, you sound amazing first of all. Without knowing exactly what types of connections you are interested in monetizing it’s hard to say as I have found there are so many different structures and so many different ways it can go. For example someone doing business development at a startup might get a fee of 3-5% for introducing to the startup to a VC that then comes through with funding. For securing a strategic partnership or sponsorship, it could be as high as 15% depending. And then in some industries, connecting people is considered part of the job and doesn’t bring in the revenue in and of itself, but instead drives a business pipeline of potential deals. Saying all of that, my main advice if you want to monetize your connections, is to create some type of ballpark deal structure for yourself based on how much value the connection will yield on both sides.

Leah Singer: Good for you for realizing your time and expertise has value! I’d do some research to find out what the standard rates are for publicists and communications experts in your city/state. Then determine how much money you need to live on, and then come up with a formula based on that. Your time IS valuable. So don’t undercut yourself.

Aly Walansky: While I know nothing of doing something like this via an affiliate program model (though it’s a very interesting concept), my going response when asked for coffee to “pick my brain” is along the lines of “Thanks so much for thinking of me, my rate for an hour of consulting is…” – and that rate can change based on what we are discussing (and how in-depth you expect me to get), but I guarantee you it’s more than the cost of a latte.

Felicia Sullivan: Harper, congratulations! This sounds like a fascinating venture, and I’m hoping you might educate us down the road on what you’ve learned from it? In terms of monetizing your contacts, I’m going to agree with Meghan on this one. I don’t see this endeavor functioning purely in binary terms. Depending on the situation, you can benefit through remuneration, experience, goodwill or through additional connections/relationships. If your referral brings a tangible financial benefit between the two introducing parties, then I’d take, at minimum, a 10% commission. For example, I’ve referred a client to a friend who has an agency, and my friend paid me 15% of the first year’s retainer income. Sometimes, I make connections where there isn’t an explicit, expressed objective, but I think the karma I’ll get in bringing together two smart people is invaluable. I also think it puts me in someone’s mindset. In that way, I’ve gotten business because of this good karma. It’s not an A+B=C relationship, but the goodwill comes back to me at some point.

In short, it really depends on the situation, your motivations, and the desired outcome. Do you think the person can you offer you up something in terms of contact barter? Are you doing it because you’re being altruistic? Or is this a pure financial benefit? One thing I would stress–don’t make your contacts purely about financial gain. That fosters greed and it never bodes well for anyone.

Joy Bennett writes: This will be such a good series! I’m totally with you on being more transparent about money.

I find myself struggling to make the jump from charging per hour to charging by value. I hear over and over that this is a better way to do it, but I don’t know how. Time is at least measurable, so it’s easier to wrap my head around.

But some projects have a start and end, while others (especially social media management) are ongoing and can become time sucks if you let them.

I currently have different hourly rates for different kinds of work, which is my first go at value-based pricing. I do want to build in time for some things – especially limits on how much time I will devote to monitoring social or limits to numbers of revisions. I usually start with a rough estimate of hours X an hourly rate to get to an amount per project. But I also factor in how much I want to do a given project and the client’s budget, which means sometimes I lowball myself and take work on for love, not money. Other times charging what I believe I’m worth will cost me work and makes me think I’ve overpriced myself. It ends up feeling so subjective. Is this lack of a set estimating process normal? Or is there a better more objective way to do it?

How do you approach this?

MC: Dear Joy, Here is my number best resource and tool to go to value-based pricing. It is free and a true gem: http://www.freshbooks.com/blog/breakingthetimebarrier/

LS: I prefer to charge by project than hour too. The worst thing you can do is get into a situation where a client wants to nickel and dime the minutes you spend on a project. So for larger projects that are more one-time based, then I do a project rate. I detail to the client what that amount includes (e.g. meeting, phone calls, research, drafting document, two revisions/edits, and delivery date).

That being said, I do have some clients that want monthly, ongoing work. There are two ways to approach this. One is an hourly rate, which I tend to do if I know it’s monthly work. You can also do a retainer amount. Similar to the project scope, you charge $XX per month that includes all the work you do. I think if the work you do is writing, this is the best way to do that because it’s sometimes impossible to know if an article will take you two hours or 20 minutes. And you don’t want to get short-changed because something may take you less time.

AW: It’s totally normal. I absolutely have some projects that I take at “love” rates and others I ask for more money. There’s a quality of life issue. Will I be miserable this whole project? Or is it something super fun and interesting that I will enjoy and feel fulfilled at the end of?

FS: Joy, I have several models based on the project, timeline, and sanity level of the client–all meant to protect my time and hours. If the deliverable is a packaged product (i.e. a brand guideline, a strategy, copywriting for a website), I charge a flat project fee and that fee is based on a calculation of a number of hours I think the project will take, giving a little cushion for veering off the road, emails, and the like. That project fee has an hourly cap attached to it, and I’ll often say, this costs $5000 for X amount of hours, and anything over that hourly costs Y in terms of hourly rate. Some clients fear hourly because costs can get out of control, while a flat fee + hourly gives both of an assurance that the price is contained but the value of the work gets rightful compensation. Make sense?

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Lena writes: Should you price your services differently when you’re first starting out doing freelance work? I always feel uncomfortable quoting people a price that is “standard” among graphic design or editorial professionals when I just graduated from college so recently. But it could go both ways – either discredit the work that I do and make people think my services are actually worth less, or help me build a portfolio by attracting clients who would otherwise not be able to afford my work even if that means shortchanging my income.

MC: Dear Lena, This is a question everyone grapples with at every stage of their career. The most important thing is to determine the value in it for you – and your desire or passion for the project. Even if a publication cannot pay you what you want will that piece work for you in other ways? Will it introduce you to new sources of editors to pitch or get in front of? Will it allow you to monetize your writing or graphic work in other ways? If they can’t give the rate, can they give promo – marketing your article or work in their emails or social media? In the end, you need to decide how much you desire the project – does it light you up? Would it be fun to work on? Do you love it? And then determine if it would for you to take a hit monetarily because you love it so much or because it will work for you and elevate you in other ways. This is different than just doing whatever work comes your way for whatever rate when you are building your name in your field. Determine and evaluate what will work on a case-by-case basis for you.

LS: There are several things that you should consider with this. You need to charge the amount you need to earn a livable wage. Don’t undersell yourself just because you’re new to freelancing. If you were in the same line of work prior to freelancing – or were in college and received the training – then you’re not new to the business. For many people, money equals value. If you don’t charge the standard, a client may not think you do the same quality work that others do. Also, your clients aren’t going to know how many other clients and work projects you have. Just because you may only have one or two clients to start, you’re a business and that’s what you’re selling to others that need your services. This is not to say that it’s bad to take on one or two pro bono clients when you’re first starting out. But don’t make that a continued practice. Charge what you’re worth!

AW: Yes. There’s absolutely instances when I accepted a lower rate when I was “new” –and in some cases, I simply didn’t know how to fight for myself or respect my work yet, but I also was building a portfolio and they were giving me that opportunity.

FS: This is a GREAT question. While I have a set hourly, day and project rate, I’ll often adjust those based on the client, considerations of my portfolio mix (i.e. I really want to do X kind of work to bring some more diversity), or pro bono work because it makes me feel like a decent human. If you came from a set salary and years of experience, why take a pay cut? Your talent and experience didn’t change, your job did.

Think about it in terms of how you’d negotiate your salary for your next job. Are you taking a role that’s a stretch, where you’ll have something to add to your professional toolbox (this is bullshit jargon, but I like it) so maybe the pay cut pays dividends in the end. And once you prove value and indispensability, you can negotiate up pretty quickly. If you’re moving laterally or a promotion up, I’d keep my rate or raise it.

Sometimes you’ll charge less because you believe in the project, you love the people, you’ll get something true and meaningful out of it (the non-tangibles), but for the most part don’t discount yourself.

Amanda writes: I’m in the food writing, recipe development, and food photography field as a freelancer. Status quo in the industry is to have a rate sheet that depicts different services available, as that is what the brands or PR agencies ask to see. What I hate about this is it feels like I am pigeon hole-ing myself. It can totally depend on the project, the timing, the urgency, the rights to the images/copy, and most of all, then the rates are set for some time. It doesn’t feel like I have much wiggle room. Do you have any advice on how to handle that?

I’m also wondering how to negotiate, rather than back down after 1 exchange of “my rate is this” “we only have this for budget”. It seems that I always want to make something work and end up undercharging.

Thanks so much for your help!
Amanda ~ heartbeetkitchen.com

MC: Dear Amanda, This is bummer but certain industries have a cost of entry and sounds like that’s what this is for yours. You want to be considered so you need the rate sheet but the reality we all know is it always depends on the project what the rate comes down to. My advice would be to create a very specific rate sheet with clear parameters around additional fees – like you mention for rights, etc. Don’t asterisk them in small type, be up front and clear. Use the rate card as a discussion starter to get your foot in the door for the gig, and then ask a lot of questions about the project to get a better sense of what it would cost. Give an estimate based on what they tell you. Then put together a very detailed scope document when you get ready to sign with the client. Include the scope of work you will perform, rates and clear parameters about additional fees for over time, rights, etc. That way you will give yourself some padding. In terms of they have x to work with and it will cost y, see my answer to Lena. You have to decide if you want it and it will work for you. But saying that, I’d always say to their first number, can you do z? Z being 30 percent more than what they are offering. If not, you asked and you can determine from there if you want to do it.

General thoughts about $:

To everyone, be aware that there is always price perception in the market – a very huge tool in the marketing world. Many times people will not perceive the value of something if it is priced too cheaply, so marking up your fees can actually help in some cases. Obviously you don’t want to mark yourself up and out of the market or charge exorbitantly high rates – but be aware that often if you are priced too low the person hiring you might think well this person doesn’t value their work, why should i?

General advice to every woman working, in business for themselves or in the world in general – always, always ask for 30% more than you think you can get. You will get it. And you will also be correcting our wage gap one deal at a time.

Also no one work for free, please and thank you.

LS: Developing a draft of a rate sheet is important because it will help you get an idea of what you want to charge for certain services. But just because you have a rate sheet doesn’t mean it’s published and set in stone. You are right that the project scope will be different for each client. I say develop the rate sheet, and then tailor it toward to the client and project.

With respect to negotiation, you should only do what you’re comfortable. So if the company wants a different rate – and you really want the project – maybe it’s worth negotiating your rate down a bit. But if you get the sense the project won’t be worth it or you’re not excited about it, hold firm with your rate and leave it at that. If they don’t accept your rate, it’s not the right fit.

AW: I have been guilty of under selling myself, too. But I always find negotiation is fine. Not all projects can be fit into neat little rate sheet categories. It’s OK to have a discussion and see what they need and what you can do for that.

FS: I second Meghan’s answer, and I would also check out my response to Lena’s question, which allows for some flexibility in holding to a base rate, with wiggle room for negotiation. I’ve also tackled projects with phases (you deliver a portion of the work) so the client has budget flexibility and you get paid for your work. And honestly, most brands have the budget they’re just allocating it to different people. I shouldn’t have to reduce my rate or take less money because the client doesn’t have the budget? It makes me think of this Oatmeal comic and this write-up of the recent HuffPo/Wil Wheaton kerfluffle. They’re valued at $50MM but they can’t pay their writers? PLEASE.

3 thoughts on “freelancer roundtable: we tackled your money questions

  1. For years I taught school. Finally retired and being bored went to work at a amusement partk They built a resort and I was given a job where I made tips. A new world opened up. A smile created a five dollar bill. A little information of what to do or see was a tenner. And for the most part tax free. I made a salary plus tips. Then I heard of the big resorts. Some people average five hundred dollars a day. That is more than a teacher makes. No education necessary. Just communication skills. An industry for those who can be physical and hate school.

    Liked by 2 people

  2. This post has some great information and tips that I really loved reading this morning!! Very motivating to me as I am starting out in the blogging world. Love hearing all the different perspectives and the encouragement of other women! 🙂 -Flavorfulfitfare

    Like

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