Reader Q&A: Figuring Out Freelance Costs

Kristen King

Figuring Out Freelance Costs

www.inkthinkerblog.com — Q: Why does hiring a freelancer cost so much? I thought the whole point of outsourcing work was to save money, but the quote I just got on a project was a lot higher than I thought it would be. What gives?

A: That’s a great question. Because I don’t know anything about the project or the person who bid on it, I can’t say exactly why there was a disconnect between your expectation and the number the freelancer quoted you. What I can do, though, is explain how a lot of freelancers calculate their rates, and that may give you some insight into why the freelancer quoted the price he or she did, and why it may not be as expensive as it sounded.

The first thing to remember is that freelance writers and editors are independent business professionals, not folks who write and edit as a hobby. The work they do is how they pay their bills, not only for running their office (space, utilities, Internet and phone, computer, fax, copier, paper, pens, etc.) but also for financing their lives (mortgage, groceries, utilities, insurance, braces for Jimmy and Katie, etc.). Translation: Freelancers need to earn a living wage.

A case study: A full-time editor at a middle-of-the-salary-scale nonprofit just outside of Washington, DC, makes about $38,000/year. With sick days, vacation days, and health/vision/dental insurance, total compensation package may be about $51,000. With a 40-hour work week, the total compensation (including benefits) is in the neighborhood of $24/hour. Without benefits, it’s under $20/hour. Factor in commute time (one hour or more in the DC metro region) and expense, it drops to about $12/hour. Minus taxes, employee insurance contributions, etc… That $24/hour “total compensation” barely meets living expenses, even for a minimalist.

Add the cost of doing business (all the overhead I already mentioned, plus marketing and your own, unsubsidized, benefits) onto the cost of living, and even a modest lifestyle requires the majority of freelancers to charge at least $50/hour out of the gate. And that’s before factoring in the value of the work the freelancer is performing.

There’s a lot of experience and training that goes into high-quality writing and editing work. Think of it this way: If just anyone could perform a root canal, would your dentist be able to charge you a couple thousand dollars for it? Probably not. I wish my dental care were less expensive, but I would never try to talk my dentist down in price because I know he’s an experienced professional and is worth every penny. (That, and he’d probably laugh in my face if I said, “Hmm, $2,000 is a little steep for a root canal. How about $250?”)

When your freelancer bid on your project, he or she quoted you a price that factored in the cost of the project (what he or she needs to earn on it to make a reasonable living) plus the value of the project (the expertise that he or she brings to the table).

Assuming that your freelancer is working from his or her own office, the price you pay includes all overhead expenses, all benefits, all training, all liability for injuries on the job, all 401(k) matching contributions, all incidental office supplies – all the expenses you pay for every full-time employee. Not to mention the fact that hiring an already trained, extremely well-qualified freelancer with experience in the type of work you need done mean that you’ll get your finished product much more quickly than someone with no or little experience – saving you more time and money from all of those hidden expenses.

So the bottom line is that although the number your freelancer quoted you may have seemed high at the outset, it covers far more than the final result. It frees you and your staff up to focus on your company or organization’s main task while offering you an outstanding final product at a fraction of what it would have cost you to produce it in house.

– Kristen

Do you have a question you’d like Kristen King to answer in her Notes in the Margin newsletter or award-winning Inkthinker blog? Send an e-mail to kristen@kristenkingfreelancing.com!