Consider this scenario:
You are asked to edit a manuscript that, according to the client, will require a “heavy” edit. The prospective client asks how much you will charge. You have three choices: (a) charge by the page; (b) charge by the project; or (c) charge by the hour. You’ve looked at a sample of the manuscript, and tell the client that you will charge $35 per hour to edit the manuscript. The client accepts and tells you that the budget for the project is $3,500. When you receive the complete manuscript, you find that the page count is 550 manuscript pages.
As you edit the manuscript, you discover that some chapters require more time to edit than others but that, on average, you are able to edit 12 pages an hour. Finally, the day has arrived when you have finished editing the manuscript. On finish, you have spent 46 hours editing.
Based on your hourly rate, your bill to the client should be $1,610 (46 hours × $35/hour), but you know that the client is prepared to pay $3,500, which is the budget for the project and represents the equivalent of 100 hours of work at the agreed-upon hourly rate. How much do you bill the client?
To me, this is an open-and-shut case: You bill for the 46 hours you spent, not a penny more. But what I have discovered is that many editors disagree with me, and believe that it is okay to bill for the budgeted $3,500.
These editors take the position that the client expects the editing to take 100 hours, expects to pay $3,500, and should not reap the benefit of having hired a more efficient editor who was able to complete the job in less-than-expected time. These editors go further and say that it is the editor who should reap the benefit of the editor’s efficiency.
Yet that is not quite the end of the discussion. What happens, I have asked, if instead of the editing taking 46 hours, it takes 120 hours? Who absorbs the 20 hours over the expressly stated budget? Here the position shifts and the usual — although not always — response is that the additional hours are billed to the client as well because the agreement is an hourly fee. To be fair, a small minority of the editors who believe it is okay to bill for the budget amount also believe that the budget amount is the upper limit and that if an edit takes longer, it is the editor who absorbs the overage. At least some of the editors who think billing for the budget amount is okay also believe that any hours over the expressed budget should be absorbed by the editor.
Another group of editors think that if it looks like the budget will be exceeded, at the moment of that revelation, the editor needs to contact the client and come to an agreement with the client about how to proceed. To me, this latter group belongs with the group who will bill for the overage because a client will be hard-pressed to say “stop” in the middle of editing.
The question of what to bill is a matter of ethics. Ethics are the rules and standards that govern the conduct of a person or a member of a profession. At least in the latter aspect (member of a profession), editing is not governed by standards of conduct; as a result, ethics decisions (yes, ethics is both singular and plural) are based on one’s personal standards.
Consequently, there is no ethical standard to which one can point and say that billing in the described scenario needs to follow a particular rule or standard of conduct. Regardless of that universal absence, I think there is a fundamental, universally agreed-upon, understood, and expected standard that applies: the keeping of one’s bargain or word; in other words, avoiding deceptive practices.
I think that standard (or expectation) should govern the question of how much to bill in the scenario described. The agreement was for $35/hour of editing with the understanding that the client had $3,500 at most to spend. If the editor could not fulfill that agreement, then the editor should decline the contract or choose an alternate method of billing in which the sum is fixed and not correlated to the number of hours, such as a project fee or a per-page rate.
Yet, as I noted earlier, many editors disagree with me. I recall having this discussion 20 years ago on an editorial forum, and 20 years later, the discussion still arises.
I hesitate to call the “bill-for-all-you-can” approach dishonest, but that is what it seems like to me. To my mind, the idea of a bargain between two parties is that each should be a winner, not that one be a winner and the other a loser. In the case of the scenario described, the editor is the winner in at least two aspects: (a) the $35/hour fee the editor desired has been agreed to, and (b) the editor has been awarded the job at the fee the editor desires. The client is the winner in at least two aspects: (a) in the event that the editor finds the project easier to deal with than the client expects and can do the job in fewer hours, the client expects to pay less money for the editing and save on its budget, and (b) the client expects its potential out-of-pocket costs are limited to the budgeted amount.
Under the ethics standards proposed by the editors who believe they alone should reap the rewards, the editor is the winner (a) because the editor will be paid more than the agreed-upon hourly rate should the editor complete the project more quickly than the client anticipates, and (b) because the editor does not accept the client’s budget as a ceiling, the editor is protected against a project taking longer and will bill for overage. For the reasons that the editor is a winner, only the client is a loser.
If in relationships there is supposed to balance, there is no balance in the situation where the editor always wins and the client always loses. (It also raises the question of what the incentive is for the editor to edit efficiently as the editor will earn more by being as inefficient as possible.)
The argument I have not yet made against the unbalanced approach’s inherent dishonesty, but which is an important argument, is this: The agreement between editor and client was for an hourly fee of $35, an amount that the editor proposed and the client accepted. If the editor finishes the project in 46 hours but charges the client’s budget of $3,500, the editor is really charging $76/hour — more than double the agreed-upon fee, and not the amount that was the basis of the bargain. That another editor might have taken 75 or 90 or 100 or more hours to do the same work with the same level of competency as the editor provided in 46 hours is, to me, a specious justification. Just as I can imagine an editor taking 75 hours to do the editing, I can imagine an editor taking 28 hours, yet none of the “bill-for-all-you-can” editors suggest that the client should be billed for just 28 hours because it is quite possible that another editor would have been even more efficient.
In editing, ethics is a personal matter. However, I do not see any acceptable justification being proposed for abandoning the “golden rule” — do unto others as you would have done unto you — just because an opportunity to do so arises. An agreed-upon bargain is one that should be kept and honored. That is how I conduct my business and how I expect those who do business with me to act.
What do you think? With which view are you aligned? Do you think billing for the budget amount if you take fewer hours to perform the job is ethically justifiable? Do you think it justifiable, especially without the concurrence of the client, to ignore the client’s expressed budget limit and bill for overage?
An American Editor 
My M.O. varies because the business arrangements I have with clients varies. If they set the rate and I agree to the job, then I either perform the job according to that rate or contact them as soon as I realize I may go over. Contrary to the AE’s opinion expressed above, I don’t think that’s unethical just “because a client will be hard-pressed to say ‘stop’ in the middle of editing.” Rather, I think it’s their prerogative to do so. They hired me to do a job; if I discover I will be unable to meet the parameters, then they are entitled to a choice about whether to continue with me, take the work back in-house, or place it with someone else. I, meanwhile, am entitled to take a shot at gaining the extra time and money that it will take to do the job. So we negotiate, always striving for a mutually agreeable solution.
(As one example: Last summer I had four jobs on my desk when I learned that my mother died. I had to drop everything and rush out of state to deal with that. I immediately asked my clients whether they wanted to take back the jobs or adjust their timetables so I could complete the jobs when my family obligation had subsided. Two took the work back and passed it to someone else; two were willing/able to wait. I hate to think of what might have happened if I had not communicated with them — some big relationship-ruining bungle would surely have occurred with at least one project. Instead, I ended up with four intact relationships. Granted, death in the family is a situation that almost everyone will accommodate, but the effect is the same as anything else going afoul, i.e., I was hired and couldn’t deliver. I believe that it’s the paying party’s choice on how to deal with that, for whatever reason, and my ethical obligation is to keep them informed.)
If it goes the other way, and I complete a job below a given ceiling, then I will either bill for my actual time (if the job is hourly) or, if the total comes to within shouting distance of their limit, I will round up to that limit. If I fall far below, then if it’s flat fee I will either contact them before billing and renegotiate or translate the amount into hourly and send them the bill with an explanatory note. If on personal terms with the PE I’ll add celebratory remarks about achieving a desired end economically and ask them to let me know if they feel the work fell short of their expectations as well as their budget. If I get a similar, subsequent project from the same entity, then I will raise the subject of the descrepancy between actual and budgeted in the first job and ask whether we need to adjust scope of work.
In situations where I set the rate, then I try like mad to quote a flat fee that covers my time/expenses plus gives me some profit without blowing their budget. If the client insists on hourly, then I quote my standard rate for the described work; and, if the project is complex, negotiate an agreement that covers different contingencies so we don’t get all crossed up as the project advances.
Recently I badly blew my estimate for two concurrent jobs, one each in which the client set the rate and I did. In the first instance, I communicated promptly with the client and attained their go-ahead to continue at slower pace with higher total bill. In the second instance, I ate the loss, because the difference was so huge it would have been unfair to make the client pay for my mistake. The result was happy campers in both cases.
In sum, I agree that the golden rule applies to ethics, and honesty is the best business policy.
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Comment by Carolyn — April 1, 2013 @ 6:03 am |
I agree with you. If I work 46 hours, I bill for 46 hours.
One thing that is difficult to determine is the level of editing that another editor might do. So much of editing involves judgment. Perhaps what one person calls thorough editing another might call superficial editing. I knew a woman who used to be the head of copy editing at Little, Brown. She said if they were editing a novel in which someone fell down and their raincoat rustled, they’d buy a similar raincoat and make sure it rustled when you fell down. How many people would do that today?
There are many reasons one editor goes faster than another. Sometimes experience makes you faster. Some times it makes you slower. I found I was faster when I began because I wasn’t aware of as many potential problems as I was when I had more experience. Sometimes an editor can speed up a job with clever macros. Sometimes bad macros introduce errors. One editor might simply impose his or her stylistic preferences and another one might spend time trying to infer the writer’s preferences.
One thing an editor could do in the situation you described would be to go back and recheck the editing. We always miss one or two things, and if the publisher has more in the budget, then you can spend a little more time than usual to provide a superior product.
I once had some electrical work done. The electrician gave me an estimate, which I thought was just that, but then he billed for the amount of the estimate even though the job turned out to be easier than expected. I paid the bill, but I’d never hire that electrician again. We’re in a similar position. If we do an excellent job below budget, we’re likely to get more work from that client.
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Comment by Gretchen — April 1, 2013 @ 7:48 am |
Authors should not care how long it takes an editor to edit. We’re talking about expertise and skill, not ditch digging. So why bill at an hourly rate at all? I usually give clients (first-time book authors) an editorial assessment that includes a sample ten-page edit. Then I know what the manuscript looks like at the ground level (and how long that snippet takes me; then I roughly figure my average and expected rate per hour that doesn’t have to be discussed openly at all), and the author knows what I would do. Then I can extrapolate my time from my sample edit and give the author a project price. Sometimes I just want to do a book and will adjust my pricing according to the author’s budget because I can.
It’s not always that simple, but project pricing is a much better place to start the negotiations than per hour or per word or per page, which are naturally imprecise.
I’m presenting on this topic at the Independent Book Publishers Association in Chicago on April 27, so I’ll be watching your comments to this post for further guidance.
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Comment by Sandra Wendel — April 1, 2013 @ 9:30 am |
I happen to agree that a project or per-page fee is better than an hourly fee for many reasons. I also think it is better for the client as well as for the editor. However, the reality is that some editors refuse to accept any work except on an hourly basis (generally, because they fear getting a project or two in which they lose their shirt, a phenomenon that I have experienced more than once over my career, and because they cannot get their minds around my rule of three [see The Business of Editing: The Rule of Three], and many clients also will not accept anything but an hourly relationship for fear that they will overpay. I have one client, for example, who tells me that of the dozens of editors on its approved list, I was for a very long time the only editor who was paid a per-page rate and am now one of a very few.
As between per-page and project pricing, the reality is that there is no difference assuming that before you quote a project fee, you verify the page count. If you simply take the client’s estimated page count and base your project fee on that, then you are gambling that you and the client (a) count pages the same and (b) that the client has the complete manuscript and is able to do a complete page count. My experience has been that (a) is rarely true and (b) is too often true. I prefer the per-page rate because on the types of projects I work, the client rarely has the complete manuscript in house and a per-page rate serves the same ultimate goal as a project rate: It limits the client’s exposure and assures me of an acceptable fee.
The other problem with an hourly rate is one that has been discussed before on American Editor: If the hourly rate is $25 then all you can ever earn is $25 an hour; in fact, however, your effective hourly rate, which is a truer indication of an editor’s rate of return, is always less than the stated hourly rate. For that discussion, see Thinking About Money: What Freelancers Need to Understand.
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Comment by americaneditor — April 1, 2013 @ 10:09 am |
If I take on an editing job at an hourly rate, I bill for the actual number of hours I spend on that job, even if it means being paid less (in this scenario, a lot less!) than the client may have budgeted. If I’m aware of the budget and realize I’m not going to reach that amount, I might go back over the ms. another time, both to make sure I didn’t miss anything and to earn as much of the budgeted fee as possible, but I wouldn’t bill for time I didn’t use. Too many years as a Girl Scout to take money I haven’t really earned.
For the next job with the same client, I might increase the hourly rate so I’m more likely to get all of the budgeted amount. Of course, my efficiency might mean that the budget for the next project will be less than it was for the first one, but such is life.
And I’m in the camp of “notify the client ASAP if the job is more time-intensive than expected.” I don’t like to do a less-than-my-best job, but I also don’t like to lose money on a job. Most of my clients will find a way to up the budget if the project needs more time/money than originally planned. The trick is to notify someone early in the process, not when you’re almost at the budgeted time or amount. Clients don’t like surprises that will cost them time or money; they do like the “Wow, this took a lot less time than we thought it would; I just saved you some money” type.
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Comment by Ruth E. Thaler-Carter — April 1, 2013 @ 9:58 am |
This is an easy one: If I’m billing by the hour, I can only bill for the hours I worked. Besides being fair to the client and being honest (a motive in and of itself, I would have thought), it will also please the client if I come in under budget (fairly; I want to be paid for the hours I work). It’s a great case of over-delivering on your promise and could lead to future work and positive reviews from the client.
If I know I’m going to go over budget, I’m obligated to apprise my client as soon as I know. This allows the client to decide how to proceed, whether it’s to find the extra money, ask me to scale back the work to meet the budget, or have me stop work right there. It’s up to me to explain why the work is taking longer and why paying for me to finish will produce the best result. It’s also up to me to coach the client through how to triage the edit if the client simply can’t afford to pay to have the project done right.
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Comment by Erin Brenner (@ebrenner) — April 1, 2013 @ 10:38 am |
Great post, Rich. If the editor in your example charges the full $3,500, that’s really charging by the project, not by the hour. But the agreement was to charge by the hour. So I see no justification for charging the budgeted amount of $3,500. Your cogent arguments make the point very well.
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Comment by EditorJack — April 1, 2013 @ 12:10 pm |
I have had jobs that have taken less time to complete than the publisher expected. When I turn those in early and bill lower than expected, the publisher believes I haven’t done a thorough job. My work is as thorough as always, the publisher has just overcalculated the difficulty of the project.
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Comment by Ruth — April 1, 2013 @ 12:42 pm |
Most clients want to know an hourly rate, even if you prefer to use a flat fee or per-page rate. I’ll give them a range of hourly rates based on different services (structural editing, copy editing, fact checking, proofreading, ghost writing, etc.). But I also ask them for a page count (taking line spacing, margins, graphics, and font size into account), and I verify it before I start, and I *always* ask them for a budget ceiling–how much are they prepared to spend, in total. If the project comes in under their budget, I bill them based on my time and they can enjoy their “savings.” It is, after all, their money. If my hours start to run up toward their ceiling, I let them know and we discuss our options, *before* it becomes a problem. This way, I never run over budget. I never accept an assignment without knowing the ceiling.
To avoid reluctance over divulging the budget, I ask about the ceiling only after I’ve given an estimate. That way, they know I’m basing my estimate on the actual work, not on the size of their treasure chest.
I have had cases where the client expands the scope of work when they realize I can provide more value for the available money. I’ve also had cases where the material needed more help than the client could afford–their ceiling is too low. I sometimes still take those jobs, either because I have open time and (within reason) some income is better than no income, or I really like the project and want to be a part of it. In either situation, I make sure the client understands that I’m making an exception to my usual fees, not to induce guilt, but just to be completely transparent.
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Comment by Will Harmon — April 1, 2013 @ 12:44 pm |
I’ll add that sometimes a client blurts out, “I have $1,500. Can you edit this manuscript for that amount of money?” I still go through the steps of getting a page count and explaining my rates so they know my fee is based on that, not on their wallet.
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Comment by Will Harmon — April 1, 2013 @ 1:03 pm |
To reply to the original post, of course I bill for only the hours I worked. I rarely work by the hour anymore, though, because it means I can only make what the stated hourly rate is, and I do a lot better with project, page, or word rates. Also, almost all my clients prefer flat fees over hourly, and the rest don’t care. (Well, of course, they care what the final bill will be, but they don’t care in the sense that these clients asked me to quote an hourly rate or a flat fee, and I gave a flat fee rate and they accepted it.)
I have a question about this passage in Carolyn’s post (comment #1 above): “If I fall far below, then if it’s flat fee I will either contact them before billing and renegotiate or translate the amount into hourly and send them the bill with an explanatory note.”
OK, I may be totally misunderstanding this, but it sounds like what Carolyn is saying is that if she’s working on a flat-fee job and comes in under the estimated hours, that she will renegotiate the fee downwards? Or am I completely off here?
I’m asking because I have actually heard of freelancers essentially doing this: setting or accepting a maximum fee and taking less if they work faster (billing for fewer hours than the max fee covers), but not billing for more if they work more hours than the max fee covers. This sounds completely nuts to me, but I did actually read it on a LinkedIn discussion board. My reply to that was that it only makes sense to bill either of two ways, but not a hybrid: for the total number of hours you worked or for the agreed-upon project, page, or word rate. Doing a hybrid of these puts someone at a disadvantage, either the freelancer or the client.
When you bill by the hour, you are assured of a certain hourly rate, and the client is taking a chance that you will come in at or below the budget, but they accepting the risk that you may go over budget. OTOH, if you bill by the project, page, or word, you are taking the chance that you will come in at or below your desired number of hours, but the risk is that you will work more hours than you thought. Whoever is taking the risk should also receive the gain if they “win” the bet.
Balancing out either billing method is the quality of work. Some people criticize using flat rates because they say it gives the freelancer an incentive to cut corners and do lower quality work in order to reduce hours. Balancing that concern is the fact that if you do high-quality work, you’ll get repeat business; if your work is substandard, you will lose clients. So it’s really a no-brainer that freelancers would not want to turn in poor work just to shave off a few hours when that would put their entire livelihood at stake.
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Comment by Teresa Barensfeld — April 1, 2013 @ 2:35 pm |
I think saving a relationship with the client is much more valuable than an extra few thousands of cash. Positive long-term business relationships and recommendations go a long way in our line of work.
I edit literary works, charge per word which is how most of my current clients prefer, but I also inform them of my hourly rate, and in the end often give them a better deal by charging an hourly rate. They save some cash, but come back for another project later. It happened several times and I ended up earning more.
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Comment by Camilla Stein — April 1, 2013 @ 3:01 pm |
In response to Teresa’s question (“OK, I may be totally misunderstanding this, but it sounds like what Carolyn is saying is that if she’s working on a flat-fee job and comes in under the estimated hours, that she will renegotiate the fee downwards? Or am I completely off here?”) —
I can’t say it’s ever happened to me, at least on the scale of the example provided in AE’s original posting. But yes, if I had a job the client budgeted for 100 hours and I brought it in at 50, I sure would question them about how to proceed, because that’s a really big miss. After making sure I had taken the time to do the job right (which rarely is allowed; it’s a luxury to put something aside then go back and proofread, catch all the little nitnits and escapees), I would ask whether they wanted me to do another pass or extra step or something, since there was still room in the budget, or would they prefer that I just bill for time spent and send the job along?
I wouldn’t do this for a small difference, say a few hours, but for the equivalent of double the allotted time and dollars? Oh yes, I would play it absolutely straight. It’s parallel to the experience of accidentally handing a store clerk a $20 when you meant to give them a $10, and they bring the error to your attention. It’s the right thing to do, and everyone wins.
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Comment by Carolyn — April 1, 2013 @ 3:26 pm |
I’m not suggesting anything but playing it absolutely straight. My question was about what I understood to be a hypothetical job that had a project fee with an estimated number of hours, not about a job that is billed by the hour. Again, I might be confused, but the answer didn’t help me! If you meant an hourly job that you were able to do in fewer hours, I already answered what my policy is — I bill for the number of hours I worked, no more, no less — so we agree here. But if you mean a flat-fee job that the client estimated would take X hours, and it actually takes fewer than X hours, why would one charge less or feel that it would be ethical to do so? I suppose that if there’s a huge discrepancy, like an estimated 100-hour job done in 50 hours, it makes sense to find out if there was some other task that should be done or maybe another editing round was expected, but I’ve never seen that kind of discrepancy. Here’s a more realistic scenario: Client presents a job that client thinks will take 100 hours. You know from experience this client will gladly pay $50 an hour, and so you bid $5,000. Your bid is accepted and you sign a contract (or your email notes back and forth serve as a contract) for a project rate of $5,000. However, because of your experience, skill level, investment in professional development, investment in software and reference books, and so forth, you are able to finish the job in 80 hours — and it’s been done at your usual high standard and has met or exceeded client expectations. Now you are earning $62.50 an hour. Do you bill the original contract amount of $5,000 or do you bill for $4,000 and explain to the client that the job only took you 80 hours? Conversely, if the job took you 120 hours, would you try to renegotiate and bill for the extra 20 hours, or would you stick to the original contract amount of $5,000, eat the difference, and use what you learned to plan better for the next job? Is the fact that the client asked for a flat fee enter into the decision? That is, can we assume that the client does not want to dicker over price at the end of the job, but wants to receive an invoice for the contract amount and pay it without further discussion?
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Comment by Teresa Barensfeld — April 1, 2013 @ 4:42 pm |
If you can offer that rare combination of quick turnaround times and accuracy and thoroughness, you’re an efficient editor. The situation described in the OP suggests that some editors would leverage that efficiency by overcharging their clients. I think that’s unethical, and also bad business sense. Far better, I think, to use your efficiency to offer competitive pricing and service. If you want to earn more, and you’re happy with your rates, schedule more assignments.
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Comment by Will Harmon — April 1, 2013 @ 5:34 pm |
This is an odd hypothetical. In more than 20 years of freelancing, I’ve never been told a project’s editing budget after agreeing to an hourly rate. At most, a client will set an estimated or maximum number of hours. If there’s a genuine surprise in the manuscript that makes that projection unrealistic, clients are almost always willing to pay more. Bottom line: If it takes 46 hours, I bill 46 hours. As long as I maintain the quality my clients expect, coming in under budget and ahead of schedule is just good business, and it allows me to negotiate higher rates in the future with clients who pay by the hour.
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Comment by Carol Anne Peschke — April 2, 2013 @ 4:53 am |
“In more than 20 years of freelancing, I’ve never been told a project’s editing budget after agreeing to an hourly rate.”
This shows how anecdotal our individual experiences are. In 28 years of editing, I’ve never accepted a project without knowing the client’s fee ceiling for my services. I’ve already outlined what I see as the advantages of that, but that’s based on nothing more than my personal experience. What suits me may not work as well for you or someone else.
That said, it would be interesting to see a broad group of experienced, business savvy editors come up with a set of recommended “best practices” for rate setting, project bidding, client billing, etc., specific to editing. (I’ve adapted my own business plan and best practices from models developed by and for business consultants.)
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Comment by Will Harmon — April 2, 2013 @ 1:56 pm |
[…] came across this intriguing post at the American Editor blog: The Business of Editing: The Ethics of Billing, and it got us […]
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Pingback by Carpenter Document Consulting » A look at hourly billing — April 2, 2013 @ 2:45 pm |
[…] However, there are two problems that must be addressed. Both stem from how the editor is paid. If an editor is on an hourly rate, the client often sets a budget based on the expected churn rate (i.e., manuscript size ÷ churn rate = number of hours; number of hours × hourly rate = budget). However, an editor may not be aware of the budget and thus expect that every hour spent editing will be compensated. If there is an upper limit, a budget amount, the editor needs to determine the maximum number of hours for which the client will pay and scale the editorial services accordingly. If the client is not forthcoming about the compensation limitations, then the editor needs to make it clear upfront that the editor expects to be paid for the time spent regardless of whether or not it exceeds the client’s budget (subject, of course, to the ethical constraints discussed in The Business of Editing: The Ethics of Billing). […]
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Pingback by The Business of Editing: Expectations | An American Editor — April 8, 2013 @ 4:01 am |
[…] “Trolleyology and the Ethics of Editing”, “The Ethics of Editing“, “The Business of Editing: The Ethics of Billing“, “Ethics in a World of Cheap“, “The Business of […]
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Pingback by Business of Editing: Certification & Ethics | An American Editor — July 9, 2014 @ 4:03 am |