The $100/Hour Freelancer, Revisted

Posted: March 3rd, 2009

Last week I wrote a post commenting on an article by Peter Bowman, What Makes a $125-an-Hour Writer?

He kindly replied back the same day with the following:

Thanks for the pingback on the piece I wrote for The Wealthy Freelancer. Good piece here, but you’re overlooking one crucial thing. You’re talking about raising your rates, but why does a client even need to KNOW your rates. These days, if someone asks me my rate, I say, “Well, I could tell you my hourly rate, but it wouldn’t mean much to you without the context of a particular job. It’d be far better for both of us if I gave you a quote on a particular job.”

If I told prospects I charged $125 an hour (my current rate), many would head for the hills (though most wouldn’t because I come referred to them and they know roughly what to expect). But if they ask, How much for Project X with these parameters?” and I say $1000 because that’s a fair price for such a project and that’s about what they were thinking, we’re in business. If I said $125, they might be thinking – “Geez, times WHAT? 15-20, 25?” But if I can get that project done in 8 hours when it might take another writer 12-15, I’m doing OK.

It gets even more fun when you’re doing repeat projects of the same kind for a client, You may have charged say $1000 before b.c it took you 8 hours, but maybe now, since you’ve done so many, it only takes you 5. Your true hourly rate just jumped to $200.

And none of that is possible if you tell your prospect/client your hourly rate. You want to start crafting your professional persona as that of someone who charges for their expertise, not by the hour. One sounds infinitely more professional than the other, no? And then you effectively sidestep the “price game” that too many freelancers get into and which can only ever end badly. Why? Because there will always be someone willing to do it for less.

And guess what? Another light bulb went off in my head. I realize that for some of my clients, I follow this principle (without really realizing it) while for others, I stick to a strict dollars-per-hour charge. The problem with having your client know your rate is that they expect you’ve worked the hours you say you did.

In order to increase your income as your experience increases, you either have to pad your hours, which is unethical, or increase your rate which clients could view as a rip-off and cause you to lose them. The solution is therefore to charge by the job and keep your rate in the dark as Peter says.

Sticking to the dollars-per-hour method can also limit your business growth as described in Wendy Piersall’s article in Sparkpluggin.com. Here’s a bit of it that should hit home for you:

… until you can get out of the “Dollars for Hours” mindset, your business is not scalable, is completely vulnerable to the economy and outside forces, and cannot grow beyond the 2,080 units you have to sell. [2,080 refers to the number of working hours per year or 40 hours a week X 52 weeks]

Well, lesson learned, as a typical freelancer’s life should be about.

Many thanks to Peter Bowman for his insight and contribution.

More on the author, Johnny Spence
Johnny is the founder of The Freelance Rant and a freelance web programmer with 8 years in the business. Have a visit at his company Oscarrr!web or see what he's up to on Twitter.

2 Comments. Join In!

  • Tweets that mention The $100/Hour Freelancer, Revisted - The Freelance Rant -- Topsy.com

    October 28th, 2009 at 7:48 am

    [...] This post was mentioned on Twitter by InkwellEditorial, Kathleen. Kathleen said: RT @inkwelleditor The $100/Hour Freelancer (Secret?) . . . charge by the job and keep your rate to your self http://bit.ly/36cQi [...]

  • Andrea @ Consultant Journal

    August 12th, 2010 at 2:16 am

    2080 isn’t even quite right. I mean, honestly, you want to have a few weeks of vacation and a chance to be sick once in a while. If you even slate four weeks for all that, you’re left with 1920. And that isn’t your billable time! Surely you won’t be billing for every last minute of the time you have available. So moving toward solution-based fees that look at the value of your contribution and not at an hourly rate make way more sense.
    Andrea @ Consultant Journal´s last blog post ..Best request for award nomination ever