Freelance Pricing? Part III: When to offer a discount
Time to read: 3 minutes
Third of three posts from Sam Howard on getting your freelance pricing right: How not to give away your work as a PR freelancer:
The last two posts looked at how to calculate your base rate ( how much do you need to charge to survive) and your ceiling rate (what the market will bear).
Hopefully, the first calculation is lower than the second one. If not, please stop reading this now and use this time to send out your resume. You won’t be able to make it work as a freelancer.This post briefly covers what factors to consider when contemplating discounting your work.
Reasonable reasons to discount
- Do you know the client? Sounds obvious, but if you know them already, then proving you’re the right person for the job, aka pitching and then over-servicing, shouldn’t take too long as your immaculate reputation will precede you. So the time you save by not going OTT in the early months can be passed on in a discounted rate for the same period. (not indefinitely)
- Do you know and like the client? By that, do you know they are really easy to work with? That your judgement is valued, that the client will take risks, that emails can be six words long (and four of those spelled incorrectly), that decisions are made in real-time, and it’s OK to vent rather than labouring over such a delicately worded email, you might as well have crocheted it. (This is my idea of a perfect client; I concede you may have a different selection criteria.) If you have a perfect client, then treasure them. Working with them is a pleasure, and your rate should reflect that.
- Is it something that will help you grow? OK, so moving into an adjacent sector, expanding your skill set, or working with a client that you can learn much from are all reasons to invest in your portfolio and discount ( again, just for a while, say six months, while you ‘come up to speed’).
Just double-check that the sum total of all these discounts isn’t lower than your basement rate. For every client you take on that skims or even dips below that rate, you need to take one with a higher yield. Remember, this always has to be win/win.
Rubbish reasons to discount
- You’re really broke: So you’re staring at your laptop, willing for that one email to arrive, that will put a smile on your face and some cash into your account. But when it comes, (and it will) think carefully about pricing. It’s so tempting to come in really low, ‘cos you’re desperate. But what does it say about the value of your work? As scary as it is, put in the right price, that reflects the skill and effort involved to do a great job. Yes, you may end up negotiating down, but no one ever gets to negotiate up.
- They’re really broke: Whether they’re those sparkly-eyed start-ups or family friends, those customers who really, really want to work with you but have no money… FYI, they’re not customers, they’re window shoppers. So move them along. Freelance pricing has no role here. Find someone to work with that can treat you with the respect you’ve earned. And with the money generated from real work for real customers you can afford to buy the sparkly eyed start-up or the family friend a pint – or three if they really do need your support.
- Discounted trial projects: Not convinced myself. You need to be hanging out with people that know how to be professional in business, after all you have to represent them. If they come across as timid amateurs to you then that’s how thy are going to come across to press.
Forgetting freelance pricing and doing it for free
I hate working on the cheap, feeling like someone has got something over on me, de-valued my contribution – but I love working for free. One of the best bits about working for yourself, is being able to contribute your skills and expertise to a cause you believe in and make a small difference in the world. Maybe it’s providing professional services to a cause, painting fences, or washing out kennels. But if you’ve managed your freelance pricing and time sensibly, then you can afford to give it away and come home with your pockets full of physic income and your conscience having had a spa day.Image courtesy of wallpaper.com
What price freedom? Part II Finding your ‘ceiling’ rate
Time to read: 3 minutes
Second of three posts from Sam Howard on the commercials of freelancing. Following on from my last post, which looked at calculating your bottom line day rate as a freelancer, this one looks at the day ceiling rate.
My child’s first bake sale. He was about seven and asked to make scones.
“How much are you selling them for?” I asked, dispensing with the niceties. He hadn’t given it much thought but guessed 10p each.
“Why?” I asked. He didn’t know. I told him to think harder. “OK, cost of ingredients,” he said.
So how does that help the charity you are making them for? “OK, cost plus 10p,” he said, so we discovered the concept of profit.
“So what about packaging and wastage?” So we got up to 30p. And he hoped that might be the end of it.
“But then,” I said triumphantly, “have you thought of what the market will bear?” He looked pretty annoyed at this point. “No”, he said, he had not.
Part 2 What the market will bear
I explained what people paid for a scone in a nice tea shop at one end of the scale and how much you paid for a pack of scones in a low-end supermarket. We decided that if ours were freshly baked and prettily presented with a winning toothy smile, we could push that up to 50p a scone. It was a pretty successful bake sale by all accounts…
So, what will the market bear for your services? Given that you are not baking muffins, all proceeds are not going to charity, and that you’re probably not as cute as the average seven-year-old salesperson?
Local rate
First stop: what are local freelancers charging? Do they compare to you and your skills? Make sure these are valid, long-term freelancers/independents. It’s a competitive market out there, but if people are offering to work for ‘silly money’ like you see on the bid sites, are you really going to compete with them? What are you competing for? To see who can go bust first?
Agency equivalent
You need to understand what local agencies are charging. If you’re a former agency employee, this is a no-brainer. If you’re not, then you need to research to understand where you map to the agency hierarchy. Don’t go on your old salary (probably higher) but more on your experience and responsibilities. Here’s a very rough guide:
- 1 -3 years PR experience – account exec: Support role – admin, research, supervised outreach, supervised content creation, reports to account manager. I’m not sure this is a good time to go freelance unless you have very low outgoings.
- 3 – 6 years PR experience – account manager: Implementation role, heads up tactics, main outreach person, day-to-day client go-to person, Directly manages juniors and reports to account director. Possibly know the account better than anyone else.
- 6 – 8 years PR experience – account director: Lead role, heads up strategy, leads client relationships, oversees budgeting, heavily involved in pitching, manages account managers, reports to group account director/director. Tasked with making money.
- 8+ years of PR experience – group account director, senior account director, etc. Same as above, but entrusted with more clients, more accounts, bigger budgets, bigger teams, and some development initiatives, reports to the director.
- 10+ years of experience – director, running division, sits on key strategic accounts: Leads new business drives, develops new services/territories, leads team, responsible for the financial health of division, runs P&L, reports to CEO. Tasked with making profit.
Once you can map your role to an agency hierarchy, find out the local day rates for this role. Then, to my mind, you don’t just round your rate down but slash it. You don’t have the group expertise or the combined reach of an agency. Also, you don’t have the overheads. I tend to charge under half as this makes me viable for agency work, too.
The bitter pill
Compare your market research to your notional day ceiling rate. If your notional day rate tops the market rates, you have a problem. Really, why will anyone hire you in this climate if they can tap into the same services and expertise elsewhere for less?
And if you take on a loss leader project, there is only one of you. While you’re not making enough money, no one else can make any money. Every day you work at the ‘wrong rate’ only puts even more pressure on the other days to overprice. You need to think long and hard about making this work.
Possibly, this is not the right time in your career to go freelance. Maybe you need more skills/experience to charge a more substantial ceiling rate. Or do you need to wait until there is a time in your life when you don’t need to earn quite so much (e.g. the mortgage isn’t making your eyes water, the kids’ daycare bills aren’t making you wish you’d got a dog instead.)?
The ceiling rate sweet spot
The sweet spot for a freelancer is having a low-cost base and a high/in-demand skills base. If your notional day rate is at the low end of the market rate scale, you’re looking at win/win. You can round up your notional rate, still be highly competitive, and know you will earn enough to sustain your freelance life over the long term. Perhaps you can develop a sideline in home-baked goods, too…
Next blog looks at the variables that allow you to tweak the day rate.
Freelance pricing Part 1: How to find your base rate
Time to read: 2 minutes
First of three posts from Sam Howard on freelance pricing:
If you are good with words, I’ve noticed that you need to get good at math sooner or later.
A recent survey in PRmoment showed that most freelancers charge between £200 and £500 a day. So, where might you fit in? The next few posts share my ideas on how you decide what to charge.
Hopefully, they’ll be helpful if you’re considering becoming a freelance comms consultant, are just starting out, or sense that your business model might be a bit broken.
Step 1: Calculate your day rate. What do you need to earn to survive?
Did you go freelance to become rich? Really? Most people I know have gone freelance to regain control of their lives. To make their own decisions. To be there for their families and generally to feel like they are living a more balanced, healthier life.
In that sense, we are all very successful, though none of us are ‘rich’. So when you are working out what you need to earn as a freelancer, I doubt if it’s anything like what you used to earn. Do a monthly budget of what you can cope with, (you’ll be surprised freelance currency goes a long way).
This gives you your baseline figure of what you need to clear after tax. For easy maths’ sake, let’s say that’s £1,500 a month, or £18,000 a year. So, how does that convert to a day rate?
Step 2: How many days a year do you have to earn? Answer: It’s not 365
Though this is where you start:
- Days in the year: 365
- Minus main public holidays: 5
- Subtract weekends:104 (don’t schedule to work weekends)
- Remove holidays/family/emergency days: 25
- Factor in sick/jet lag/ hangover days: 12 ( just being realistic)
- Days available to work: 220 ( standard industry figure)
Now assume that 50% of that time you are not doing client work, either because there just isn’t any, or because you are working but not being ‘paid’ for it, eg admin, networking, training, research, marketing, pitching, preparing materials etc. That leaves 110 days to cover your budget, plus tax plus expenses.
Step 3: Not all that money is yours; provision for tax and expenses
Let’s stick with our notional sum of £18,000 a year.
Plus expenses, say 15% £2,700 ( if you work from home, it can be easier than if you are not).
Plus tax, say 25% = £4,500.
Theoretically, you need to earn around £25,200 to give you £18,000 and meet that £1,500 budget.
Step 4: Freelance pricing and calculating the notional day rate
Now, look at how much you need and divide it by client days.
In our model, that’s £25,200 /110 days = £229/day notional day rate.
That’s your freelance pricing sorted. You’re welcome.
Next blog: how does that compare to what the market will bear? Favourably we hope. After that, take a look at when to discount your work so that you find that sweet spot that keeps your clients happy and your finances healthy.
In the world of freelance, is it wrong?
Is it wrong? Sam Howard shares her freelance ethical ponderings:
shh please don’t wake him…
1. If he’s the only person you’ll talk to all day, is it wrong to launch into your 11-year-old with your most perplexing business issues, fears, and brilliant new ideas while he munches his morning porridge?
2. Is it OK to wear leg warmers and fingerless gloves indoors?
3. What about pretending the web camera on your Skype call isn’t working when, in truth, it’s because you look like shit? Or because the bloody dog is jumping around in the background, trying to bury his Kong toy in the sofa.
4. Is it weird to have full-blown conversations with the rabbit, cat, and dog in an effort to recreate those water cooler moments?
5. Can I have the fan heater and the central heating on simultaneously?
6. What’s the etiquette on stuffing dog treats in your brand new £40 sheepskin slippers? The ones that were a Christmas present from your lovely mum, just to keep the dog amused for ten minutes so you can reach your copywriting deadline.
7. Will someone report me to the freelance police if I eat soup straight from the pan and then give the carton and the pan to the dog to keep him quiet for five minutes?
8. Can I hang up on a conference call because I’ve just spotted the dog putting the rabbit’s head in his mouth?
9. Is it a war crime to top up the afternoon coffee with a hefty dose of Tia Maria? And then put its purchase against your tax expenses as ‘office beverages’?
10. Is it unethical to open the door to my child as he comes home from school, starving hungry, freezing cold, and soaked through, with the greeting:
“Can you PLEASE take The Bloody Dog out! I have had him all day and he’s driving me frickin crazy. GO! NOW! GO!”
A day in the life of a PR freelancer
Time to read: 2 minutes
So what’s it like being a PR freelancer? Six months into freelancing Sam Howard on what a calm day looks like (the frenetic days you don’t want to dwell on):
 |
| So you guys with proper jobs have an expense account, gym membership, private healthcare oh and a salary… but I have a dog, and his name is Moby. |
7.15 am:
Alarm goes off, this is really annoying as now I’m my own boss I’m sure I shouldn’t have to get up while it’s virtually dark, it says so in the small print somewhere.
8.00 am:
Lasso the new pup and accompany my son to the bus stop, and then walk our new lab/mastiff puppy, a much longed for addition to the family. He is 18 weeks old and my reward for going solo, my bonus if you like.
10:00 am:
Team commute to office.
10:01 am:
Team settles in for the day: I fire up my shiny new laptop, (last one died without warning, great week that was) cat settles on desk, giant rabbit flops by french window, new pup flakes out on sofa. Drink coffee, review mails. The days of 200-plus mails every morning are thankfully no more.There’s a mail from a head hunter, ‘do I want to go permanent in a super high-profile new role?’ No thank you. Another mail from a journo friend, ‘would I like to do some PR consultancy for a small tech company he’s just met?’ Yes please. Check out Facebook, Twitter and my LinkedIn groups.
11:00 am:
Start with some essential admin, this takes easily an hour a day. Enter my receipts and raise a modest invoice. This still makes me ridiculously proud, as if I baked it myself or something.
11.30 am:
Okay, so now the day is free for actual work. What luxury! When I was agency side, in the end, I was lucky if I could find 20 minutes to sit still and ‘do’ anything at all. I enjoy being able to focus, turns out I am a starter finisher, who knew? This morning I write some client content. I like writing good job too there is alot of it when you go freelance. Then spend some time preparing a workshop I’m giving at the Taylor Bennett Foundation, tomorrow. After all if your time is your own, it’s quite nice to give some of it away I think.
1.30 pm:
Boy do I miss Pret, Itsu, Eat, Tossed. Stand by the fridge and finish last night’s leftovers, then take the pup out, he chases leaves, I laugh.
2.10 pm:
Spend afternoon reaching out to contacts in search of internship opportunities for my USC Annenberg post grad students. I love working with my Californian crew, hopefully I’m teaching them the gentle art of self deprecation while they’re teaching me to be nice – won’t kill me will it?
5.20 pm:
Welcome my son home. I had to return to full time work when he was only tiny, now he is 11 and this is the first time that I can open the door to him pretty much every day. The novelty has yet to wear off. Manage to fix my printer after a week of glaring at it, feel really rather smug.
6.30 pm:
Shut down office but brain is still ticking, it’s hard to switch off just like that, so take pup for a quick stroll, he rolls on the grass and i have to drag him on his back for 50 yards.
7.00 pm:
Hit the kitchen and prepare something gorgeous. Tonight we’re having smoked haddock on puy lentils with hollandaise and an apple crumble. Not bad for a school night.
This article first appeared in PRMoment http://www.prmoment.com/.
The fallible PR & Marketing freelancer: A cautionary tale
turns out life is not a rehearsal, shame becasue this month has been a shambles
Time to read: 3 minutes
Sam Howard shares some fall out from being a PR & Marketing freelancer…
Everyone who’s their own boss bemoans the roller coaster ride of being solo. Secretly I have always thought this could be avoided if one was just a little bit more organised and realistic. I believe I may have even posted helpful advice on the subject. But it feels like September has gone out of its way to prove I knew nothing. Nada. Zip…
Week 1
Spend week in US to kick off big project, been looking forward to this since May. I’ve kept things ticking over in the summer but made sure the decks were completely clear for this big kick off. I’m sensible like that.
Week 2
Return all geared up, spend a week organizing myself and putting systems and processes into place. File every last mail both ‘in’ and ‘sent’ so I can access everything easily once project is live.
Week 3
Monday: News from the US. Project cancelled for internal reasons, no notice, no warning. Spend day feeling a bit numb… I have no work. I check contract, there is no provision for cancellation at this level. Christmas is cancelled.
Rest of week: Tempted to spend rest of week navel gazing. But navel gazing doesn’t pay the bills, so tell myself to buck up and see this as an opportunity to work with new people doing new things. Spend rest of week reaching out to industry contacts and worthy causes to see if I can earn my keep or at least be useful. Submit super competitive quotes, agree some freebies. Garner enough interest to keep myself busy for the next month or so.
Week 4
Monday: News from the US. There’s been a rethink, Project resurrected! Tra la la Christmas is back on. But now diary looks a bit messy what with the other commitments I’ve taken on and what if those not so super competitive quotes come through now? Tempted to go for a long walk, it’s all been a bit emotional. But realise I’m now effectively a week behind schedule on the big US project, so better just get my head down and stay focused.
Tuesday: Beloved vntagelaptop crashes, no notice, no warning. I take it to local repair shop, “All the docs are backed up,” I say with a touch of swagger, I am after all a sensible freelancer. “I just need you to restore mail.” How hard can that be? My IT team at the agency could fix things like this in ten minutes. “I’ll wait.” I say, casually flicking open a copy of PR Week that I’ve had the foresight to bring with me.
The repair man slowly and carefully explains that Outlook does not live in the ether like Gmail or Hotmail it lives on the laptop, the very dead laptop.
I was aghast!
He went on to explain the raw data from the mail service provider will come through on to a new PC, not this one, obvs, but my profile is gone and with it, sent mails, appointments and contacts…
I gather up my traitorous laptop, my tattered dignity and slink out of the shop.
Wednesday: OK, still no need to panic I’m a sensible freelancer and I have gadget insurance bought especially for such an eventuality. Nice gadget insurance man says of course they can and will help me. They’ll post me a claim form, I must post it back, once they have that they will arrange collection of my laptop and try to repair it, if they conclude it cannot be repaired then they will go about sourcing a replacement to the value of a whopping £300.
Wow and in that time I could make myself a chocolate tea pot too, I’m sure that will be equally bloody helpful.
Thursday: Don’t have time to source an on line bargain, go to high street and pay lots and lots for a new laptop, whose price doubles by the time I’ve bought all the stuff I need to make it ‘go’. I can pick it up tomorrow.
Friday: Pick up sexy new laptop, and fire up Outlook – there in one very bulging ‘in box’ are all the emails I have ever received since going solo. But I have been severely humbled and for this unwieldy mercy I am truly grateful. Spend my birthday weekend working through ‘inbox ’reclaiming contacts and filing so I can have a clean start for Monday. Don’t sleep so good, as now two weeks behind on several projects. ( Er yes the stupid priced job did come in.)
Week 5
Monday: Printer breaks. Is it my aura?
Tuesday: New mail – Would I like to head up a big, new and exciting project, already a month behind, very labour intensive with very tight deadlines oh and it’s really rather lucrative? Hell YES!
This morning: Smart phone implodes. I fear I may be heading same way.
Ten tips for going freelance
Time to read: 3 minutes
It’s been six months since Sam Howard turned freelance. If you’re contemplating ‘the big leap,’ here are her early days’ tips, while the pain of learning them is still fresh:
the cat can stay but the table and the chair are going to have to go
1) Take a break before you begin
Contrary to what I was advised, I recommend you do not quit your day job on a Thursday and start your first contract on the Friday. I think I would have been more able to absorb the culture shock if I had allowed a month in between. Ideally, a couple of weeks of doing NOTHING. After 22-plus years of ‘real’ work, I guess I could have cut myself some slack there. Then, the next few weeks can be spent sorting out behind-the-scenes stuff. Not just the paperwork but the basics like a comfy chair, stationary, etc.
2) Apply some discipline to the financials
To quote Jessie J, ‘it’s not about the money’. I knew that from the get-go, but it’s quite tricky to unhook your actual worth from your ‘take home’. Let it go; you are not your agency day rate or your old job title. You are so much more; being a freelancer gives you space to explore it.
To avoid the feast or famine syndrome, set up a separate bank account and tip some cash into it to ease yourself in three months of a notional wage. You’ll have enough to adjust to without worrying about money from day one. Keep all your business outgoings and income in this one account. From this, you can transfer an appropriate amount for tax into a savings account and pull a regular wage so you can continue to budget as you did when you were employed.
3) Don’t underestimate how long tasks will take
One of the biggest shockers I found was that there was no one to whom I could delegate. I was so delighted that the decision-making process was now instantaneous. However, the implementation process swallowed up all the time savings on that side, and now it was just me to execute. I had to relearn skills I’d abandoned years ago, like formatting, attention to detail, spelling…
4) Get out and talk to people
My first project was initially difficult and intense, compounded with no team support or general water cooler chitchat, which meant I initially felt overwhelmed. I quickly met an industry mate at least a couple of times a week to help keep my trials and tribulations in context.
5) Dress the part:
After a few months of looking like Bridget Jones in the throes of a messy divorce, I smartened up. For me, the best standard is to dress as if you have a mild crush on the postman. Oh, and you’ll have to schedule some regular exercise, too, if you’re gonna have a chance with that postman.
6) Don’t be mean to yourself
I wish now I hadn’t bought a basic printer, trotting off to newsagents to pay for photocopies or coloured printouts, pains me man, it pains me. Also, my dining room table is not the right height for a desk, and sooner or later, I am going to have to come to terms with this.
7) Find your natural rhythm
After so many years working Monday to Friday 9- 5 it’s natural to feel obliged to keep it up, but being a freelancer you can set your own rhythm. Mine follows the sun, if it’s sunny I do less, if it’s not I do more. Family commitments notwithstanding, I’m happy to work in the evenings or weekends if it means that when the sun comes out, I can potter in the garden, keeping a squinty eye on the emails. Let go of the guilt. As long as you get the work done and it delivers above, beyond and ahead of your client’s expectations, you can really please yourself when and how you do it.
8) Stay in the loop
Now you’re not part of the company chatter, you need to put extra effort into keeping up with what the industry is talking about and what’s trending. Make time in your daily schedule to read, comment and connect. Also, go to conferences, training seminars, etc, not just to network but to learn and assimilate.
9) Try to hold out for interesting projects
This has to be a massive plus of going freelance, working for people you like, and taking remits you enjoy. This is payback for all those years of doing tasks you were painfully unsuited to and working with people you’d normally cross the street to avoid. You’ll end up doing such a great job you can easily widen the remit, and referrals will surely follow.
10) Finally, enjoy being nice to people!
When you go freelance, there are no power battles to win, no points to prove, and no office politics to survive. You can just hang up your battered old ego and be nice. It feels great! And who knew people could be so responsive when you show some genuine consideration for their day and their challenges? Certainly not me.
Fledgling and and freelance PR support
Time to read: 1 minute
A month into offering freelance PR support. Each day, I lurch from dismay to delight – here’s a taster:
oh that chair looks really comfy..
High: Dancing
The first day, dancing around in my kitchen to Katy Perry’s ‘Fireworks’, deciding that it was me, that was a freelance firework.
Low: No fireworks
On the second day, there were no fireworks, just housework, which I never do, but now I don’t think I can afford anyone else to do it.
Low: Emails
During the first week, I emailed myself to see if the email was working (it was).
High: Retweets
First blog, getting comments and being retweeted.
High: Cake
The first client meeting was held in a cake shop, and henceforth, all client meetings will be held in cake shops.
Low: Notes
First follow-up: I realized that I had to action notes taken in said cake shop, and they take AGES!
High: Rabbits
The office view looks out onto a snowdrop-littered garden with a giant rabbit hopping around in it. His name is Maximus.
High: Cushion
Office colleague, my desk has a cushion with a small cat on it. Her name is Lily. She looks at me with purry pride.
Low: War and Freelance
Office: It turns out giant rabbits and small cats are not that great at office banter. Or at working freelance.
Low: Self-employed Quasimodo
Office comfort, I just can’t get warm, and the chair is wildly uncomfortable; I finish the day looking like a frozen Quasimodo.
High: Printer
Office economies, my new printer was super cheap.
Low: Printer
False economies, my cheapo printer doesn’t photocopy I have to walk half a mile and pay 10p pay for one, so takes about 30 mins out of my day.
Low: Technology
Office technology – I still can’t get my Outlook to talk nicely to my HTC phone.
High:L Food
Food, munching lunch while following the Archers (it’s all going on).
Low: Food
Food, my sandwiches are just not as nice as Prêt, nor is my coffee, I haven’t had a muffin in a month. I don’t know how to make sushi and don’t even mention Burritos.
High: Food
Food, I lost two pounds in weight, so go figure.
High: Decisions
Making decisions, making my own decisions and implementing them in the same 10 minutes is truly liberating.
Low: Decisions
Making mistakes two hours later, realizing that half the time they are making the wrong decisions is somewhat disconcerting.
