Help me calculate a day rate!
November 24, 2010 5:20 AM Subscribe
I'm a freelance copywriter who normally charges hourly. A prospective new client has asked me to give them my day rate. How should I calculate this?
It's for a project that will take a couple of months, so I am happy to cut my rates a bit as I know that there will be ongoing work. Also, my hourly rates are calculated so that I can live comfortably when working 20 or so billable hours per week - they would be astronomical if I charged for 40+ hours per week for an extended period, and I neither need nor want to do that. In any case, it would price me out of the market.
However, I'm totally at a loss as to how much I should charge, and I don't want to short-change myself.
What kind of percentage hit would it be reasonable to take?
I've looked around on the internet and also checked out this question, but can't come up with a calculation that's appropriate to my situation.
If it's relevant, I will be working part of the day on-site and part of the day at home.
(I live and work in the Euro-zone, so US rates are probably not applicable to me, especially as I am employed as a native speaking copywriter of a specific dialect of a foreign language. I'm more interested in finding a general calculation method.)
It's for a project that will take a couple of months, so I am happy to cut my rates a bit as I know that there will be ongoing work. Also, my hourly rates are calculated so that I can live comfortably when working 20 or so billable hours per week - they would be astronomical if I charged for 40+ hours per week for an extended period, and I neither need nor want to do that. In any case, it would price me out of the market.
However, I'm totally at a loss as to how much I should charge, and I don't want to short-change myself.
What kind of percentage hit would it be reasonable to take?
I've looked around on the internet and also checked out this question, but can't come up with a calculation that's appropriate to my situation.
If it's relevant, I will be working part of the day on-site and part of the day at home.
(I live and work in the Euro-zone, so US rates are probably not applicable to me, especially as I am employed as a native speaking copywriter of a specific dialect of a foreign language. I'm more interested in finding a general calculation method.)
This might be a little abstract, but how many non-billable hours of work activity does it typically take to bring in 20 billable hours per week of work? In other words, how many hours do you really work to get paid for 20 billable hours? The difference between your rates for different situations is going to depend on how those different situations affect your bottom line proceeds per work done / time spent, billable or not. (I hope that made sense.)
If the day rate is for only one day, then it's probably the same as your hourly rate times the hours spent in that day. I don't think it makes sense to get into discounting that unless you get a commitment for larger blocks of work which imply that you're doing less non-billable work trying to sell yourself.
posted by jon1270 at 5:52 AM on November 24, 2010
If the day rate is for only one day, then it's probably the same as your hourly rate times the hours spent in that day. I don't think it makes sense to get into discounting that unless you get a commitment for larger blocks of work which imply that you're doing less non-billable work trying to sell yourself.
posted by jon1270 at 5:52 AM on November 24, 2010
Whatever you charge for a 20 hour work week divided by 5 days with, say, a 10% discount on that would be where I'd go.
posted by merocet at 5:53 AM on November 24, 2010 [1 favorite]
posted by merocet at 5:53 AM on November 24, 2010 [1 favorite]
if your hourly is based on a 20 hour week then your daily would be your hourly x4. How much you should offer as a discount depends on your circumstances - eg. if you're already comfortably billing 20 hours per week and foresee being able to do so for at least as long as this new project will last (without the project) then there is no incentive to discount as you'd actually be losing money. If you're not currently billing 20 hours a week, I'd take your average weekly billing and split the difference. (eg. if you're currently averaging 10 hours a week, charge them the equivalent of 15 hours a week at your normal hourly rate).
Of course, you may want to account for the fact that at a daily rate they'll be expecting you to work a full day, assuming you don't normally work a lot of non-billable hours, you're already essentially giving them a 50% discount.
posted by missmagenta at 6:28 AM on November 24, 2010
Of course, you may want to account for the fact that at a daily rate they'll be expecting you to work a full day, assuming you don't normally work a lot of non-billable hours, you're already essentially giving them a 50% discount.
posted by missmagenta at 6:28 AM on November 24, 2010
If you're really tied up with this one client for 8 hours/day for 2 months or more, that will impact your ability to continue generating other work from other sources, which could have a harmful effect on your income stream after the project is over. That kind of commitment of all of your time is certianly worth considering. If you don't think they'll go for 40hr/wk, ask for 30hr/wk and tell them its a discount. They dont need to know that your regular hourly rate is really in expectation of only 20hr/wk, that's your little secret. Dont sell yourself short here unless you really dont have any other paying work lined up, your time is priced where it is for a reason.
posted by T.D. Strange at 6:32 AM on November 24, 2010 [1 favorite]
posted by T.D. Strange at 6:32 AM on November 24, 2010 [1 favorite]
Okay I’m not in Europe, but 2 things to take into consideration.
I charge a high hourly rate (IMO) and have been asked “how much
would a project for a month, week, etc” cost. To be honest, I still charge the same amount of $ and to this day, no one has balked at this. I have also had the chance to look at what the company does with my invoices on a few occasions, and believe it or not they charged their client for each hour at an even higher rate. Are you paying higher self-employment taxes, business taxes, your own supplies, etc.? When and how are you going to find the time to market for other projects when this one ends? Do you always get 20 hours a week, and what do you do for weeks that you do not? Why did the quality of what you do deteriorate because it is for longer hours?
Also, this is the main reason that I am posting this here – I am actually worried about other freelancers seeing this post and not realizing what could go wrong if no one puts this info out there. If you do charge a daily rate, I would also insert a clause into your contract “for an 8 hour day”—I know quite a few people who were asked what their daily rate was and the client then took the opportunity to have them work 12- to 13-hour days (or more). I also know another freelancer who has been in the business for many more years than me and he actually charges more $ for a daily rate, with the assumption that he will work more hours than normal but at least he will be paid well. The companies that requested these long hours, by the way, were big companies in the US and in Europe (although it may be industry specific, so I don't know). I'm just putting this info here because there are freelancers that need to be careful in regards to this topic.
posted by Wolfster at 6:50 AM on November 24, 2010 [1 favorite]
I charge a high hourly rate (IMO) and have been asked “how much
would a project for a month, week, etc” cost. To be honest, I still charge the same amount of $ and to this day, no one has balked at this. I have also had the chance to look at what the company does with my invoices on a few occasions, and believe it or not they charged their client for each hour at an even higher rate. Are you paying higher self-employment taxes, business taxes, your own supplies, etc.? When and how are you going to find the time to market for other projects when this one ends? Do you always get 20 hours a week, and what do you do for weeks that you do not? Why did the quality of what you do deteriorate because it is for longer hours?
Also, this is the main reason that I am posting this here – I am actually worried about other freelancers seeing this post and not realizing what could go wrong if no one puts this info out there. If you do charge a daily rate, I would also insert a clause into your contract “for an 8 hour day”—I know quite a few people who were asked what their daily rate was and the client then took the opportunity to have them work 12- to 13-hour days (or more). I also know another freelancer who has been in the business for many more years than me and he actually charges more $ for a daily rate, with the assumption that he will work more hours than normal but at least he will be paid well. The companies that requested these long hours, by the way, were big companies in the US and in Europe (although it may be industry specific, so I don't know). I'm just putting this info here because there are freelancers that need to be careful in regards to this topic.
posted by Wolfster at 6:50 AM on November 24, 2010 [1 favorite]
Why would you discount yourself because they are giving you 'steady work'? You are precluding yourself from working with other clients that might give you business in the future. I think it's short-sighted to discount yourself in this or almost any other case.
posted by Geckwoistmeinauto at 6:54 AM on November 24, 2010
posted by Geckwoistmeinauto at 6:54 AM on November 24, 2010
In journalism, day prices can be as low as 250 € a day. Good copywriters may charge up to 450 € per day. Depends on client.
The best way to calculate this - since you'll be working this job fulltime - would be to figure out how much you want to make each month, and divide it by 20 or so (about 20 workdays in a month). So if you want to make 8000/month, you'll need about 400 a day.
posted by NekulturnY at 6:59 AM on November 24, 2010 [2 favorites]
The best way to calculate this - since you'll be working this job fulltime - would be to figure out how much you want to make each month, and divide it by 20 or so (about 20 workdays in a month). So if you want to make 8000/month, you'll need about 400 a day.
posted by NekulturnY at 6:59 AM on November 24, 2010 [2 favorites]
Oh, also, I second Wolfster on this point: a DAY is 8 hours maximum and you should mention this in your terms & conditions. It's not: wake me up at 6 PM and expect me to deliver a gigantic amount of work by 11 PM and pay me for a day.
posted by NekulturnY at 7:01 AM on November 24, 2010
posted by NekulturnY at 7:01 AM on November 24, 2010
I meant: "wake me up at 6 AM" obviously. ("Edit" function needed).
posted by NekulturnY at 7:01 AM on November 24, 2010
posted by NekulturnY at 7:01 AM on November 24, 2010
Keep in mind that while you can make a living on 20 hours a week, they aren't asking you to work 20 hours a week. They're asking you to work 40 or more. Are you going to be happy doing twice as much work for the same amount of money? Probably not. I would suggest that you not commit yourself to a big discount that you might regret further down the line. I would set your day rate at 7.5x your hourly rate. This gives them a small discount, plus a stable dollar figure they can budget with, and it also makes sure you will be adequately compensated for your time.
posted by spilon at 8:44 AM on November 24, 2010
posted by spilon at 8:44 AM on November 24, 2010
Freelance copywriter here. I would discount my hourly rate by 10%, which is what I do for my retainer clients.
posted by ottereroticist at 9:27 AM on November 24, 2010
posted by ottereroticist at 9:27 AM on November 24, 2010
Whatever you charge for a 20 hour work week divided by 5 days with, say, a 10% discount on that would be where I'd go.
In other words, your hourly rate times twenty, less maybe 10%.
Key point. As a writer myself, I know how much real writing can get done in a day. I would never pay someone to write for 8 hours, because I know (in most cases anyway) that at least half of that time wouldn't actually be spent writing. The brain just isn't up to it; not unless you're snorting meth or putting back an espresso every hour.
posted by philip-random at 10:01 AM on November 24, 2010
In other words, your hourly rate times twenty, less maybe 10%.
Key point. As a writer myself, I know how much real writing can get done in a day. I would never pay someone to write for 8 hours, because I know (in most cases anyway) that at least half of that time wouldn't actually be spent writing. The brain just isn't up to it; not unless you're snorting meth or putting back an espresso every hour.
posted by philip-random at 10:01 AM on November 24, 2010
Just ask them their daily rate. It really is that simple.
posted by flexiverse at 12:05 PM on November 24, 2010
posted by flexiverse at 12:05 PM on November 24, 2010
Oops. I wrote a brilliant answer and then clicked away and closed the wrong darn tab.
Anyway, maybe you already looked at my site when you were researching, but I think it's okay to just charge 6 or 8x your hourly rate, unless you've got a deposit, guaranteed work time, protection from scope creep & unpaid overtime and so on. You also have to consider travel time and that you will still have admin resulting from this work. Work all that out and see how much time you're really having to put in and also consider the opportunity cost of not being able to pursue other work -- be sure to keep marketing yourself when you're at the position!
However, it depends on just how long the work will be going on and the market rates in your area. If possible, it's better to position yourself around the value of the solution(s) you offer. Of course, you need to take steps to do that and it may not be immediately possible to increase your rate.
Many consultants and freelancers, especially copywriters, seem to charge lower rates than they could. When I was a 23yo copywriter, I was getting about $500 an hour. However, I priced myself by the project, so the client (a Fortune 100 company) was looking at the price for the solution, not for my time.
You may want to shift the client away from looking at your time. Look at whether you can make this about the value of the solution and deliverables. Also, if you want a long term relationship & referrals from this, you want to be able to charge a live-able rate later on -- and you don't want them going, "Well, they charged us $300 a day before and pumped out two brochures and an ad in that time!"
If you have to downgrade your rate substantially, you might look at whether it is better to be a temporary employee, so that you can qualify for government benefits and so on.
posted by acoutu at 2:03 PM on November 24, 2010
Anyway, maybe you already looked at my site when you were researching, but I think it's okay to just charge 6 or 8x your hourly rate, unless you've got a deposit, guaranteed work time, protection from scope creep & unpaid overtime and so on. You also have to consider travel time and that you will still have admin resulting from this work. Work all that out and see how much time you're really having to put in and also consider the opportunity cost of not being able to pursue other work -- be sure to keep marketing yourself when you're at the position!
However, it depends on just how long the work will be going on and the market rates in your area. If possible, it's better to position yourself around the value of the solution(s) you offer. Of course, you need to take steps to do that and it may not be immediately possible to increase your rate.
Many consultants and freelancers, especially copywriters, seem to charge lower rates than they could. When I was a 23yo copywriter, I was getting about $500 an hour. However, I priced myself by the project, so the client (a Fortune 100 company) was looking at the price for the solution, not for my time.
You may want to shift the client away from looking at your time. Look at whether you can make this about the value of the solution and deliverables. Also, if you want a long term relationship & referrals from this, you want to be able to charge a live-able rate later on -- and you don't want them going, "Well, they charged us $300 a day before and pumped out two brochures and an ad in that time!"
If you have to downgrade your rate substantially, you might look at whether it is better to be a temporary employee, so that you can qualify for government benefits and so on.
posted by acoutu at 2:03 PM on November 24, 2010
To clarify, the 6 or 8x your hourly rate would depend on how much time you're working, as some people take 2 15 minute breaks and 60 min for lunch....
posted by acoutu at 2:05 PM on November 24, 2010
posted by acoutu at 2:05 PM on November 24, 2010
This thread is closed to new comments.
But try not to base this on a percentage of your hourly rate. Rather, concentrate on finding out the typical day-rate for people at your level in your region. Price yourself competitively, but remember that there's little point in pricing yourself below the rest of the market; people will question your ability.
posted by le morte de bea arthur at 5:50 AM on November 24, 2010