How I Price My Copywriting Services to Avoid Losses (And Earn A Little More)
This is one aspect of side-hustling where working smart is smart (It applies to all side-hustles, by the way).
“Aldric, let me ask you one question. I love my copywriting hustle and putting a smile on my client’s face. Recently, however, I keep having this nagging feeling that I am not earning enough from the work I love. What can I do?”
Ah. The how-to-price plus am-I-incurring-losses double-barrelled question.
Many copywriters, or freelancers of all types, have this question at the back of their heads. They ask if they are making losses on their chosen hustles. I went through this phase during my first 2 years of freelance copywriting.
Let me share how I confront and overcome it.
Start by Knowing Your Cost
Do you know your cost of service?
Let me confess. I never failed to get annoyed looks at this juncture of the conversation. People are either curious to find out or frustrated that they must find out.
I am used to it. So, I aim to keep things simple. After all, this is not my battle to fight. My battle was over 3 years ago.
“Our life is frittered away by detail. Simplify, simplify.”
― Henry David Thoreau, Walden and Other Writings
There are 2 types of costs freelancers or side-hustlers must know.
- Cost of your time — How much are you worth per hour?
- Cost of your materials — How much does it cost you to be ready to serve your clients?
How do you find out what you are worth per hour? Again, there are 2 ways.
The 1st method is to benchmark against your monthly salary. Take monthly salary, divide it by 22 workdays in a month, and then 8 hours a day. Double box that number on your coffee napkin.
The 2nd method involves benchmarking. Find out how much copywriters (or the side-hustles of your choice) are charging per hour. Fiver, Upwork, or a simple Google search will tell you what you need. Scribble that number of the same coffee napkin and circle it.
These 2 numbers form the lowest and highest point of your freelancing charge-out rate. Your mission, should you choose to accept, is to price your services as close to your highest point as much as possible.
Author’s Note: Repeat the same exercise to find out to derive your cost of materials. If you do incur cost of materials, then your Total Cost of Service = Your per-hour income benchmark + Cost of Materials.When we understand our numbers, we can effectively push our freelance rates closer to our day job per hour earnings. That is… if we know the numbers, to begin with.
The Name of the Game is Incentive-Based Pricing
According to Burak and Smith,
“An incentive scheme is a plan or program to motivate individuals for good performance. An incentive is most frequently built on monetary rewards but includes a variety of non-monetary rewards or prizes.”
Many people have a narrow interpretation of incentives. Think broader. Incentives increase our monetary returns and reduce the probability of implied penalties.
Enter incentive-based pricing.
In brief, incentive-based pricing is analogous to the annual bonus we receive on top of our monthly income. It is an incentive for rewarding outstanding contributions beyond our standard job description.
This is how I explained it to people who seek my opinion(s).
- Find out what you value. Is it time? Is it dollar-amount earnings per project? Or both?
- For me, I value time. I do not want to spend time with clients arguing whether I should redo the draft for the 5th time or write 500 more words to receive the final payment.
- So, I share my thoughts with the client in front of me.
The conversation, though different across clients, is structured in this manner. You might be surprised. 90% of my clients accept my proposal.
“Mr. Client, let us proceed with a fixed-plus-incentive contract. I will price you $600 for this project, and if I finish it 2 weeks before the contract due date, you pay me an incentive of $100. This way, we avoid the problems of the $0.10-per-word model where you suspect I write more for more money. What do you say?”
Of course, Mr. Client must accept my final submission. Above all, I love this pricing arrangement.
There are 2 apparent advantages. First, we do not spend excessive time cranking out more words for higher income. Or deliberately balloon our word count for more money. Second, we avoid future confrontations during final delivery, especially when the client feels short-changed.
The best part, in my opinion, is this. You are paid more to finish early.
Would you be happier to know such optionality exists?
I bet.
Summary
There are 2 rules to freelance hustling success.
- Rule 1 — Make no losses.
- Rule 2 — See above.
I believe that we need not make losses working on our chosen side-hustles. Having our cake and eating it is smart.
All it takes is a coffee napkin to work out our per-hour cost. When we have that number, we can think of ways to cover that, and then some.
The best way to become profitable from the work we love is by applying incentive-based pricing. It has worked for me for the past 3 years.
If you are running out of ideas to price your work for profitability (or simply, not incurring losses), go ahead and steal my method.
All the best!
As a content contributor, I write my observations from daily life and my business exposure. Because our life experience is the bedrock of our unique perspectives.
