An American Editor

October 2, 2017

The Business of Editing: Do You Know Your Business’ Health?

Discussions in online forums are fascinating. Pick an editorial forum and you are bound to find that sometime in the forum’s recent history, at least one, and even more than one, editor has asked “What should I charge?” or “What’s the going rate?” Both persons new to editing and experienced editors ask that question.

There are a lot of things wrong with the answers that are usually given, and we have discussed any number of times how to calculate what you, individually, should charge for your services. Yet there is another aspect to why the answers are generally wrong and why the question should not be asked of colleagues — your business’ health.

Let us assume that you ask “What should I charge?” and that the consensus responses are $25/hour. That is the extent of the online exchange. No analysis of the response is made that goes beyond “This is what I charge” or “The XYZ survey says” or “This is what seems to be what most responders to such questions give.” It is the lack of analysis that will hurt your business the most.

When someone responds $25/hour, what do you know about the responder’s business? For example, do you know

  • how many hours of editing they do a year
  • how many clients they have
  • how many years of experience they have
  • what types of manuscripts they edit (e.g., fiction or nonfiction, romance or biography, academic or nonacademic, STEM or medical)
  • who their clients are (e.g., independent authors, bestselling novelists or barely selling novelists, doctoral students, well-known publishers, small presses, academic presses, packagers, law firms, pharmaceutical companies, journals, English-as-a-second-language authors)
  • among their client types, the percentages of each type
  • their annual gross income solely from editing for the past year; the past 5 years
  • whether editing is their full-time occupation
  • whether they have another, primary source of income so that the household is not dependent on their earnings or if they are the sole income source for their household
  • whether their editorial business is profitable year after year
  • what their local cost of living is in comparison to yours
  • what debts, if any, they have that would affect the amount they charge

The list can go on but you get the picture. You are taking advice for your business from someone whose circumstances you do not know.

General advice about how to calculate what you should charge doesn’t require in-depth knowledge of the person offering the advice — but advice on precisely what to charge does. It matters greatly whether the person offering the advice runs a business that loses money year after year or turns a large profit. It matters greatly whether they work 25 hours a week for 40 weeks a year or 35 hours a week for 50 weeks a year. And it matters greatly whether what they earn is supplemental income on which the household is not dependent for survival or their income is the only household income and its absence would jeopardize survival.

In other words, you need to know your business’ health and their business’ health.

A healthy business is one that is satisfactorily profitable. The profit may be $1 or $100,000 — the number that satisfies you is personal to you. But profitable it must be; it cannot be costing you money to be in business.

So we come back to the fundamentals of the required Effective Hourly Rate (rEHR) and the desired Effective Hourly Rate (dEHR). You need to know your rEHR before you can accept advice to charge $x/hour or that $x/hour is the “going rate.” Even if $x is truly the going rate, what does it matter if by charging $x/hour you do not earn enough to be profitable?

When assessing your business’ health, you need to have all your data at hand. You need to know, for example:

  • how many hours and weeks of work have you averaged over the past few years
  • the likelihood of your being able to maintain that amount of work over the coming year
  • how much you owe others
  • your living expenses
  • how much you need for a rainy day fund
  • your costs of doing business (e.g., marketing, internet access, computer hardware and software)

With this information, you can calculate your rEHR, which represents the minimum amount you can earn per hour to support your lifestyle. This number is fundamental to many business decisions you need to make, starting with whether you can afford to continue editing space opera novels for independent authors and ending with figuring out how to expand your business through marketing.

If your rEHR is high, that is, higher than you think or know the market will bear, then it will also act as an impetus for you to devise ways to make your workflow more efficient. I’ve told the story before about the origins of my EditTools macros, but I’ll repeat it here. I found that to earn my dEHR (not my rEHR) I had to either work longer hours every day or become more efficient in my workflow. The smarter way for me was to become increasingly efficient. As my efficiency grew, my work hours became fewer but my EHR grew. Eventually, I found that I could reduce my working hours by 25% yet raise my EHR so that it approached my dEHR. I was able to do this by creating EditTools macros. I invested upfront time, money, and effort so that I could repeatedly, over the long term, increase efficiency.

The dEHR is the hourly rate I would like to earn. It is not an hourly rate I can charge my clients, few would be willing to pay it. It is an EHR that is greater than my rEHR, which represents the minimum EHR I can earn to meet the costs of lifestyle. When I earn more than my rEHR, my business is healthy and profitable; when I earn just my rEHR, my business is healthy but not profitable; and when I earn less than my rEHR, my business is unhealthy and unprofitable — it is losing money and thus costing me money.

When someone online tells you that the going rate for copyediting is $25/hour and you do not know your rEHR, you do not know whether your business will be healthy, healthy and profitable, or unhealthy and losing if you charge that $25/hour. If you know your rEHR, then there is no need to ask others what to charge because you will know what you need to earn. Instead, you will need to focus on determining how to calculate your fee — hourly, page, project, word, character — to meet your rEHR and to work toward your dEHR.

It is important to think in terms of efficiency and EHR. And it is important to remember that if you charge your client by the hour, whatever you charge as your hourly rate does not change — $25/hour remains $25/hour — whereas if you charge by the page, project, word, or character, your EHR can fluctuate up and down so that the more efficient you are the higher your EHR can be.

Regardless of how you calculate your fee, the bottom line is that your business being healthy relies on your knowing your rEHR, not on what someone responds in response to “What should I charge?” or “What is the going rate?”

Richard Adin, An American Editor

1 Comment »

  1. The question of what the going rate is for copyediting with a given genre, field, or type of client is a valid one; knowing the going rate can help a freelancer to determine whether she has a reasonable shot at landing jobs at their desired rate (I am assuming the freelancer is as efficient as she can be at the time and continuing efforts to increase efficiency).

    However, I have never seen a reliable answer to that question. In discussion groups, usually only a small subset of the whole group answers, and this number is an even smaller subset of all editors working with that genre, field, or type of client. My own experience with going rate is what I came to see as a more reliable number. Changing markets may be a more realistic way to raise rates, assuming the freelancer has increased efficiency (and continues to do so) and still has not been able to charge desired rates. I found that gradually changing my client base enabled me to raise my rates, and I periodically continue to raise them.

    Like

    Comment by Teresa Barensfeld — October 3, 2017 @ 10:40 am | Reply


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