In Business of Editing: What to Charge (Part I), we ended with this question: Is the $30/hour rate you charge sufficient to generate your desired annual gross income based on your EHR? The answer is “no.”
Your current charge of $30/hour is not enough to generate the desired gross annual income of $50,000 because your net EHR is $13.56 (based on 20 billable hours in a 40-hour workweek), not the required minimum EHR of $24.04. Your EHR is $10.48 too little. Based on your EHR, your gross annual earnings will be approximately $28,200, or a little bit more than half of your desired annual gross income.
There are several options for curing this problem. First, increase the number of billable hours you work each week. At the hourly rate of $30, you need to generate at least enough work to bill for 34 hours every week for 52 weeks a year (or its equivalent). That will generate a net EHR of $24.06 ($30 × 34 hours = $1020 ÷ 40-hour workweek = $24.06). That is not impossible to do, but if you haven’t averaged at least 34 hours a week of billable-at-$30-an-hour-work over the course of a year in past years, you will have to devote some time, money, and effort to bring your workload to that level.
Second, you could lower the amount of your desired gross annual income. That would certainly change the calculation, but it would raise other questions, such as: Are you earning enough to meet your bills? Are you earning enough to warrant remaining a freelance editor? Is your annual income sufficient to support the lifestyle you want?
The third option is to raise your hourly rate to $51 an hour and continue to generate an average of 20 hours of work a week for 52 weeks, which would give you a net EHR of $24.06 and meet your income goals.
The fourth — and best — option is to calculate the net EHR you need to meet, which is, in this case, $25 (it really is $24.06, but rounded numbers are easier to deal with and so we round up). Then, instead of trying to charge and collect an hourly rate of $50, charge a per-page or project fee and work to increase your efficiency so that you can generate your necessary EHR. It is more likely that clients will accept a per-page or project fee than an hourly fee that they view as too high or outside their budget.
Also very important to consider when deciding whether to charge by the hour or the page/project is this: If you charge $3 per manuscript page, you need to edit a little more than 8 pages an hour to meet the $25 EHR. If you can edit 10 pages an hour, your EHR will equal $30, which is $5 more than needed. As time passes and that extra $5 adds up, you build a cushion for those times when you have no work, a cushion that may still allow you to maintain the EHR of $25 over the course of the year.
And don’t forget this: The $25 EHR is based on your generating enough work to bill for 20 hours a week on average. Thus, to meet your goal, you need to copyedit approximately 167 pages a week. (A cautionary note: Remember that all of these example calculations are based on our net EHR but that our net EHR is incomplete. You must do your own calculations based on your own business.)
Option 4 is, in my thinking, the best option because, as many freelancers have noted, publishers generally do not offer rates above $25 an hour, and authors aren’t knocking down doors in a scramble to pay editors $50 an hour. Most publishers offer a rate between $18 and $25 an hour; some publishers, to their discredit, I think, offer rates of $12 or less an hour. In addition, we are competing worldwide with editors who do not calculate their EHR needs and will accept work at any price offered. Consequently, the best way to charge is a per-page or project-fee rate because you can compete effectively yet increase your productivity and efficiency and thus raise your EHR to a sum much higher than the offered hourly rates — in other words, by becoming more efficient and speedy, you can make a $20 hourly rate (when converted from a per-page rate) an EHR of $50.
Which brings us to the next matter: calculating a page. There are lots of ways to calculate a page. One of the most common formulas is 250 words = 1 page. But there are other formulas, such as counting characters. It really doesn’t matter what you decide equals one page; what does matter is that you have a definition, that you make it known to clients, and that you apply it before quoting a price.
Regardless of how you ultimately decide to charge — whether by the hour, the page, the word, or the project — it is important to be able to calculate the number of pages because for most people, the number of pages has meaning as a measure. In addition, editors think in terms of how many pages they can edit in an hour, not how many words they can edit in an hour.
In a recent online discussion, someone was looking for an editor to edit a 248,000-word manuscript that they said equaled 450 pages. Before bidding on such a project, you need to have a standard definition of what constitutes a page so that you can rationally determine what to bid. In this instance, the author calculated a page as 550 words, more than double the commonly used 250 words. Were I to bid on this project, I would bid as if the page count were 992 pages, not 450. One page equaling 550 words is not within my lexicon.
If I placed a bid based on the 992-page count, I would be prepared to explain what constitutes a page and how I calculated the manuscript’s true (for editing) size. This count is important to me because I have a pretty good idea of how many pages I can edit in an hour. That number is a range that covers badly written manuscripts through well-written manuscripts. Knowing the correct number of pages by my definition of what constitutes a page and knowing how many of those pages I can edit, on average, in an hour, lets me knowledgeably decide if I can undertake the project and how much I need to charge.
If the author insists that the correct page count is 450, my response would be that it doesn’t matter — this is my bid price for the manuscript as described, whether we call it 450 pages or 992 pages. What matters is that I have a definition for a page that I apply when calculating my fee.
This is important because I charge by the page, not by the hour. I have a high EHR that I want to meet and a key to knowing whether I can meet that EHR is knowing how many pages I can expect to edit in an hour. The more pages I can edit, the higher my EHR.
In contrast, if I charged by the hour, aside from the fact that my true EHR would be significantly lower than my hourly rate, it wouldn’t matter how many pages I could edit in an hour. I am being paid by time, not by productivity — and I will not be rewarded for being efficient or productive; in fact, I will be punished if I am efficient and productive because I will earn less (in gross) on the project. When I charge by the page (or by the project), I am rewarded when I am efficient and productive.
Every time I exceed my required EHR, I am given a bonus. In contrast, if I charge by the hour I can never exceed my required EHR (and usually cannot meet it), thus I can never receive a bonus.
I know the concept of EHR can be confusing, maybe even daunting, but combined with a firm definition of what constitutes one manuscript page, it is really the best way to determine what you should be charging.
In Business of Editing: What to Charge (Part III), we will discuss tracking the EHR.
Links to the other articles in this series: