An American Editor

August 7, 2013

Business of Editing: What to Charge (Part II)

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:

13 Comments »

  1. I’m a little confused by the math in the fourth option. The EHR, as defined in Part 1 of this post, is the amount you are earning, net, for all hours you work, billable and nonbillable, for a standard work week of 40 hours. So far, so good. But if you are trying to determine what to charge clients, you need to go by billable hours only, not EHR, because you can’t charge clients for your nonbillable time, like your bookkeeping, professional development (e.g., taking a class), writing and reading blogs, and the like.

    So, if your goal is to have an annual income of $50,000, and you can edit 20 hours per week (these are your billable hours, whether you’re charging by the hour or by the page or another way), then based on a 50-week year (2 weeks off for sick days, personal days, vacation), you have to “bill” at least $50 an hour, whether you are invoicing by the hour, page, word, or project. To that $50, you need to add your utilities and other direct and indirect business expenses, like office and computer supplies, professional fees (tax preparer, association dues, class fees), etc., amortized over all the hours you work during the year. So, you’ve actually got to charge more than $50 per hour in the 20-hour-per-week scenario.

    As Rich wrote, it is much better to charge by the page (or word or project, which all amounts to the same thing when you use a standard page) to increase your hourly rate. But charging $3 a page, and editing a bit more than 8 pages an hour, which comes to $25 per hour, isn’t going to do it if you can edit for only 20 hours per week: 20 X $25 = $500, which is $25,000 annually. You would have to work the full 40 hours doing nothing but editing (billable) to get the $1,000 per week needed to make $50,000 a year annually (and we still haven’t counted your business expenses). Even at 10 pages per hour, or $30 per hour, you’d have to edit for 33 to 34 hours a week to get to $1000 per week, which, as Rich pointed out, if you’re not used to doing would be a big change.

    The thing that has to budge here, from my point of view, is the amount charged per page. If I’m working as efficiently as I can, but still not making my goal income, then I’ve got to raise the amount I charge per page. My goal for the past few years has been to do this, as well as invest in tools that help me to edit more efficiently (meaning not only faster but also better). There are clients out there who pay good page rates.

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    Comment by Teresa Barensfeld — August 7, 2013 @ 11:36 am | Reply

    • Teresa, the net EHR is not just billable hours because if it were, then it would equal the amount you charge per hour. The net EHR represents your hourly rate over the standard workweek, If you only bill 20 hours of a 40-hour workweek, then your EHR is half your hourly rate; if you bill 30 hours, then it is 75% (talking gross EHR; net EHR is the gross EHR minus expenses attributable to doing business, which costs are fixed whether you bill 5 hours or 50 hours).

      The purpose of the EHR is to determine what you need to be charging to make the income you want. Consequently, the hourly rate you are trying to determine does include all hours in the workweek, not just billable hours. Somehow you have to cover the cost of those nonbillable hours.

      If you only bill 20 hours in the workweek, you have to double your hourly rate to make up for all those nonbillable hours.

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      Comment by americaneditor — August 7, 2013 @ 12:27 pm | Reply

      • Yes, you definitely have to cover your nonbillable hours, and I agreed in the first line of my comment that EHR covers billable and nonbillable hours. So your billing charge is always going to be higher than your EHR — you can’t just charge clients your EHR (whether by the hour or page rate). We’re in agreement here.

        My issue is with the example given. The rate calculated to charge the client is based on the EHR, but you can’t charge the EHR; the EHR is derived from the higher, charged amount. At a little more than 8 pages per hour at $3 per page, you’d be charging $25 per hour, which is supposed to be the EHR in the example, not the charged amount. The minimum page count you gave for the week in this example, 167 pages, at $3 per page, gives $501 for the week. At an average of $500 a week for 50 weeks is $25,000 annual gross receipts — not even subtracting for business expenses yet.

        You’d need to edit about 17 pages per hour at $3 per page to arrive at a charge of $50 per hour. That’s an unrealistic page-per-hour rate, so raising the amount charged per page or editing more hours would be the only ways that I can see of increasing income in this case.

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        Comment by Teresa Barensfeld — August 8, 2013 @ 5:40 am | Reply

        • Sorry for the delayed response, but I’m just getting around to reading the comments.

          It seems that the error is, indeed, in the number of pages you need to edit a week. I wrote “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.” In fact, the error is one of a lack of clarity.

          As you point out, Teresa, the EHR and what you charge a client are not the same. The EHR is simply an informed baseline from which one begins to determine what rate to charge the client. The $25 EHR is the net EHR for a 40-hour workweek. At a per-page rate of $3, it takes a little more than an editing rate of 8 pages an hour to meet the net EHR for a 40-hour week.

          The example in parts I and II were based on one currently having 20 billable hours per week, and thus determining the true EHR and the needed EHR. What I did not make clear is that, as Teresa points out, the ultimate net EHR we calculated is the minimum hourly rate one needs to charge if one has 40 billable hours per week; the amount to charge scales up as the hours scale down.

          However, the advantage to the per-page rate is that one can increase efficiency to increase editing rate per hour and thus needs fewer billable hours in a week to meet goal and thus the net EHR can be closer to the minimum net EHR.

          As to 17 pages per hour being unrealistic, that may be true for some editors, but certainly not for all. A lot depends on how one approaches editing. For example, if your procedures require at least 2 passes, then your pages-per-hour rate declines by half (assuming you are not charging by the hour). On the other hand, the question is: Should a $3 per-page rate include more than one pass?

          Think about this: How long would it take you to verify journal names in a reference list of 600 entries? Picking a number from the air, say it takes you 3 hours. What if you could reduce that 3 hours to 15 minutes? Would that not change your pages-per-hour rate significantly? Or if in that same reference list you had to change Jones, K. J., Smith, E. M. to Jones KJ, Smith EM. If doing that manually would take you 3 hours and you could reduce it to 15 minutes, would that not also affect your pages-per-hour rate? In my business, I can verify journal names and fix author names in minutes rather than hours.

          My point is that depending on what kind of editing you do, what limitations you put on the services you will provide for a particular fee, and how you go about your editing, it is not impossible to edit 17 pages an hour. It may not be (very likely is not) possible to do so for every project; there may be some projects where you can edit more pages per hour and projects where you can edit fewer. What needs to be looked for is the average over the course of time. And what is true about the pages-per-hour rate (i.e., average of time) is also true about meeting the EHR. In my own experience, I have projects that exceed my EHR by a large margin, and a few projects that fail to meet it.

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          Comment by americaneditor — August 9, 2013 @ 5:54 am | Reply

  2. Rich is spot on about using a standard word, page, or character count to determine pricing. Not too long ago, I was asked to submit a bid to a very good client who has given me repeat business, but the catch was that this client wanted prices for each part of a very large job. I did this, but also pointed out that the quoted word count of one of the modules was way off — their count was much too low. I think they understood what I was saying, but the word counts were apparently set in stone on their end. So I based my prices on my (correct) word counts and won the biggest part of the job, but not the part that was way off in word count. I did well on my part, earning my desired hourly rate; I can only hope that the editor who won the bid on the other module did OK on it. I was really glad, in that case, that the client wanted the bid broken down, because if not, I probably would have lost the whole job to a lower bidder who didn’t use the correct word count.

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    Comment by Teresa Barensfeld — August 7, 2013 @ 11:50 am | Reply

  3. There are two factors in this kind of discussion: the definition of a page and the actual word (or character) count of the document. The 248,000-word, supposedly 450-page document that was the subject of the LinkedIn discussion Rich mentions had already been published and the author wanted to clean up errors before reissuing it. To me, that suggested a laid-out page rather than a manuscript page.

    Either way, I would never offer a bid or estimate (for either time or fee) before seeing the document. Several group members did just that, which I found appalling – what a dumb way to do business! – and even seemed to be competing to offer lower rates than other posters. Anytime you compete solely on price, especially without understanding the true scope of the project, you lose.

    FWIW, most of my editing and proofreading clients pay by the hour (at very good hourly rates, although I haven’t figured out my EHR yet). I benefit, in a sense, from being efficient and speedy by having more available hours to do more work, but I’d like to do less work for more money. I can see where charging by the (250-word) page would generate more income and am using that model wherever I can.

    Another advantage of charging by the page is that both client and editor know the dollar amount in advance, which means both can budget for the amount to be paid. That can be used as a way to appeal to clients who might find a per-page model daunting.

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    Comment by Ruth E. Thaler-Carter — August 7, 2013 @ 12:26 pm | Reply

  4. If I start charging per page, what fee should I charge to get an EHR of $25?

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    Comment by Jeff Smith — August 7, 2013 @ 2:05 pm | Reply

  5. There is another factor that affects how one might charge. Think of it this way — when you do your editing, you are an employee of your business hence, what would your business (not you but your business) pay you to do the work.

    In any business, especially a service business, an hourly fee has to be marked up to cover the other expenses of the business. That means that your business has to charge your clients a multiple of what the business pay you to do the work.

    Example, If your business’s fees are $50/hr, this means that your business is paying you approximately $12.50/hr. That’s the most difficult attitude I have in getting people to understand that what the busines charges is no what the business owner gets as there are expenses that come into play in running a businedss.

    This is why a creating a business plan is so important if for no other reason to see how many hours it will take using the suggested ratio above in order to make a profit after one’s salary and other expenses are paid.

    If any of you are living in the US, there is FREE business help with SCORE for helping you come up with fee schedule and a business plan.

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    Comment by Alan J. Zell — August 7, 2013 @ 10:23 pm | Reply

    • If your business charges $50 per hour, you may or may not be getting paid $12.50; it depends on the nature of your business and the expenses that the business bears. That’s a quarter of the charged amount, which may be a useful rule of thumb in some businesses, but not others. For example, in my editorial services business, I have very little overhead (yes, I do calculate it), and my expenses are also low compared to a business that produces goods that involve cost of materials.

      OTOH, the few times I’ve consulted a lawyer, I’ve always gotten sticker shock at the charge per hour. But then I realize that there’s office rent, staff salary (& benefits, insurance, etc.), and other expenses that, all together, are much higher than my business expenses, such that perhaps the attorney is only being paid a quarter or maybe less than what I’m being charged (still a good living!).

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      Comment by Teresa Barensfeld — August 8, 2013 @ 5:54 am | Reply

  6. All these calculations seem unnecessarily complicated to me and based on a fallacy.

    In reality, only about one-third of a freelancer’s time is billable. One third of your time will be spent on administration/management and another third will be spent on marketing unless you farm out these tasks–unlikely for the independent freelancer. To me, talk of 30 or 40 billable hours/per week is patently absurd.

    If you’re producing 30-40 hours/week, then when do you do the billing, talk to potential clients, strategize for marketing, do budgeting and track expenses, or any of the other numerous tasks it takes to build and maintain a business?

    Any calculation to establish an hourly rate has to start with a realistic view of how many billable hours actually exist in a week. (To be more correct, figure the number of billable hours over a year’s period. You want to take a vacation and other days off, don’t you?)

    After you have a realistic idea of the number of billable hours in a year, then determine (in reality, not fantasy) the funds you need to cover your business and life expenses and make a profit. Then it’s easy to make a calculation of hourly rate you need to charge without this complicated EHR business. Sure you take into account “what the market will bear,” but then at least you know if you lower your hourly rate to below what you NEED to make, you’ve got to make it up elsewhere, either by charging more or working more longer hours. But don’t be thinking you can consistently bill a full-weeks worth of hours. That’s a fantasy.

    Don’t fantasize. Figure your rate based on the reality of billable hours and how much money you need to make to survive–and thrive.

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    Comment by Lauren — August 11, 2013 @ 8:30 am | Reply

  7. […] parts I and II of Business of Editing: What to Charge, we discussed the effective hourly rate (EHR), how to […]

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    Pingback by Business of Editing: What to Charge (Part III) | An American Editor — August 12, 2013 @ 4:02 am | Reply

  8. […] effective hourly rate (EHR) discussed in parts I, II, and III, is based on a 40-hour work week. The calculated EHR is what is needed to be earned each […]

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    Pingback by Business of Editing: What to Charge (IV) | An American Editor — August 14, 2013 @ 4:03 am | Reply

  9. […] previous four parts of this series (I, II, III, and IV) discussed the effective hourly rate, how to calculate it, and how track it. The […]

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    Pingback by Business of Editing: What to Charge (Part V) | An American Editor — August 19, 2013 @ 4:00 am | Reply


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