Flat Fees vs. Hourly Rates

“What’s your hourly rate?”

That’s a question I hear a lot in my business. But an hourly rate isn’t the best way to determine how my costs will coincide with my clients’ budgets. In fact, it can hurt both the writer and the client.

I’m not talking, necessarily, about the kind of writing that’s normally discussed in Writer’s Digest. I’m talking about the “other” writing that many of us already do—print ads, radio and television spots, brochures, billboards, annual reports, newsletters, news releases, websites and the like. That’s my business, and I’ve done it for major corporations like AT&T, SmithKline Beecham and Cigna, in addition to educational, healthcare, environmental and scientific institutions, and their ad agencies.

If that’s what you do—or would like to do—you may think an hourly rate is a solid way to agree on compensation. Actually, it’s one foot in the quicksand of negotiation. It raises the question, “How many hours will this job take?”

An hourly rate always comes with the likelihood of somebody getting hurt. If you’re slow, the client pays too much. If you’re fast—assuming you’re honest about it—you earn less than the slowpoke, which, of course, is absurd. Being a fast, dependable writer usually involves how much experience you bring to the table. The more experience, the faster you’re likely to be. That shouldn’t cost you—it should pay you.

If it takes you only an hour to write a brochure that would take someone else six hours, and your hourly rate is $100, you aren’t going to be crazy enough to bill only $100 for the whole brochure. You’ll decide what you want and figure out how to support it.

Every seller knows this. Every buyer suspects it.

Now consider the flat fee—a guaranteed price the client can depend on instead of one that varies according to the time involved. Psychology instead of economics.

Whatever your hourly rate might be, it will sound like a lot to some people and peanuts to others. Hourly rates cause anxiety, but with a flat fee, that worry is eliminated. If you estimate that a job will take 10 hours at $100 per hour, that’s $1,000—unless it takes you longer. To many clients, that sounds more risky than, say, a guaranteed $1,300 flat fee. It’s like the difference between an adjustable rate mortgage and a fixed-rate mortgage.

For me, hourly rates are too democratic—they treat all writers as equals, which we’re not. Cosmetic surgeons know this. If you inquire about a face lift (don’t take this personally), you’ll hear something like, “Hmm, let’s see, we can fill this in a little here and pull this up and back—you have very young skin, by the way—and add a little Botox around the eyebrows. Uh, $14,000 should do it.”

You don’t ask a cosmetic surgeon how many hours it will take. You don’t really care about the cost. It’s an abstraction, but your face is not, and you want it to be beautiful. As a writer, you’re a sort of surgeon yourself—a word surgeon. But words aren’t what you’re selling. You’re selling solutions.

Flat fees work because business doesn’t like surprises. No matter what else you’re offering, your first priority is to make your clients feel safe. If you can assure them that your invoice won’t change, that’s a value-added benefit.

There will be times when you must provide an hourly rate or lose the project. So provide it. Generally speaking, nobody should pay less than $50 per hour, and you can expect geography, competition and experience to have an impact on the fee.

Whenever I’m asked what my hourly rate is, I answer, “I don’t have an hourly rate. But I’ll give you something better: an exact price.”

I don’t worry about losing out to a lower bidder. There are lots of ways to lose a job, but self-confidence isn’t one of them. When clients negotiate, that usually means they want me. And if the job takes more effort than I anticipated, who cares—I got the job and, in some cases, a new client.

Then again, I’m pretty good at ball-parking my time. If you’re not—or if you haven’t freelanced advertising/marketing copy—the best way to learn the ropes and end up with samples is by working for an ad agency or corporation. If that’s not available, do some investigating. Check the Internet for freelance rates for the kind of writing you want to do. Talk to colleagues. And don’t forget that few assignments are ever as easy as they sound.
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