It’s All About the Benjamins! EditTools’ Time Tracker (Part I)

By Richard Adin

In the early years of my freelance editing career, I joined the EFA (Editorial Freelancers Association) as a way to “meet,” via its chat list, other freelance editors. One thing that struck me was how united — except for me and a very few others — EFA members were in their approach to the business of editing. We outliers viewed our chosen career as a business, while most of our colleagues viewed what they did as more like art; that is, they paid as little attention as possible to the business side of freelancing and as much as possible to the skill (editorial) side.

There were many discussions about financial struggles, poor pay, added tasks, multiple passes, and the like. There were few discussions (and very few discussants) regarding advertising, promotion, business practices, calculating what to charge, negotiating — any of the business-side skills. And when business-oriented discussions did start, they often ended quickly because colleagues piled on about how craft was so much more important than something as pedestrian as business and money.

As I said, I was an outlier. For me, it was about the Benjamins (the money). Freelancing was my full-time job — my only source of income. I had a mortgage to pay and two children to feed, clothe, keep healthy, and school. I had no trust fund or wealthy relative who couldn’t wait to send me money on a regular basis. Although how well I edited was very important to both myself and my clients, the money was equally important to me.

I recognized from the start that if I didn’t pay close attention to the business side of freelancing, my family and I would be in trouble. When my son needed $5,000 worth of dental work, it was my job to make sure he got it. It was not my job to tell the dentist, “Sorry, but I am an artisan without sufficient income to pay for your services.” When it came time for college, it was my job to try to get my children through with minimal or no debt for them to deal with upon graduation. And this doesn’t even address such things as providing for my retirement or providing health insurance and auto insurance and the myriad other things that are part of modern life.

In other words, for me, it was all about the Benjamins in the sense that my editorial work could not be viewed through rose-colored glasses as if the only thing that mattered was artisanship.

Which brings me to the point of this essay: EditTools 9 and the project management macros that are part of the just-released EditTools 9 (www.wordsnSync.com).

In Business, Data Drive Success

What seems a lifetime ago, I wrote a series of essays for An American Editor about calculating pricing and why it is important not to look at rate surveys or ask colleagues for guidance (see, for example, the five-part essay “What to Charge,” beginning with Part I, and “The Quest for Rate Charts.” ) Yet, when I go to chat lists like Copyediting-l, it is not unusual to find colleagues asking “What should I charge?” or “What is the going rate?” Nor is it unusual to see a multitude of responses, not one of which is really informative or meaningful for the person who asked the question.

When I meet or speak with colleagues and these questions come up, I usually ask if they have read my essays (some yes, some no) and have ever actually gathered the data from their own experiences and used that data to calculate their personal required Effective Hourly Rate (rEHR) and their actual EHR, both for a project and over the course of many projects. Nearly universally, the answer to the latter questions (about data collection, rEHR, and EHR) is “no.” Why? Because “it is too much effort” or “the XYZ rate chart says to charge X amount” or “I can’t charge more than the going rate.”

But here are the problems: If you don’t collect the data,

• you can’t determine what you are actually earning (as opposed to what you are charging; you can be charging $3 per page but actually earning $45 per hour, or you can be charging $5 per page but actually earning $9.25 per hour);
• you can’t know what is the best way to charge to maximize your EHR for the kind of projects you do;
• you can’t determine whether some types of work are more profitable for you than other types; and
• you can’t easily determine what to bid/quote when asked for a bid/quote for a new project.

Ultimately, if you don’t know your rEHR, you don’t know if you are making money or losing money because you have nothing to compare your EHR against.

It is also important to remember that there are basically two ways to charge: by the hour or not by the hour (per word, per page, per project). Although many editors like to charge by the hour, that is the worst choice because whatever hourly rate you set, that is the most you can earn. In addition, it is not unusual to start a project and suddenly find that it is taking you less time — or more — to work than originally expected. If you charge by the hour and it takes less time than originally thought, you lose some of the revenue you were expecting to earn; if it takes more time, and assuming nothing has changed, such as the client making additional demands, you run up against the client’s budget. I have yet to meet a client with an unlimited budget and who doesn’t rebel against the idea that you quoted 100 hours of work but now say it will take 150 hours and expect the client to pay for the additional 50 hours.

However, to charge by something other than the hour requires past data so you can have some certainty, based on that past experience, that you can earn at least your rEHR and preferably a much-higher EHR. The way it works is this:

If you charge $3 per page for a 500-page project, you know you will be paid $1,500. If your rEHR is $30, you also know that you have to complete the job in no more than 50 hours. If you can complete the job in 40 hours, the client still pays $1,500 because the fee is not tied to the time spent but to the page count, and your EHR is $37.50. If you were charging by the hour and charged your rEHR of $30, you would be paid $1,200 — a $300 revenue loss.

All of this is based on knowing your data. During my years as a freelancer, I accumulated reams of data. The data were not always well-organized or easy to access until I got smarter about how track the information, but it was always valuable. Within months of first collecting data, I learned some valuable things about my business. I learned, among many other things, that for me (I emphasize that this applies solely to me and my experience):

• medical textbooks earned a higher EHR than any other type of project;
• charging by the page was better than charging hourly;
• calculating a page by number of characters rather than words was better;
• high-page-count projects that took months to complete were better than low-page-count projects (I rarely edited books of fewer than 3,000 manuscript pages and usually edited texts ranging between 5,000 and 7,500 manuscript pages; I often edited books that ran between 15,000 and 20,000+ manuscript pages);
• working directly with an author was highly problematic and to be avoided;
• limiting my services to copyediting was best (I phased out proofreading and other services);
• working only with clients who would meet my payment schedule was best;
• saying no, even to a regular, long-time client, was better for business than saying yes and not doing a topnotch job because I hated the work.

I also learned that investing in my business, such as spending many thousands of dollars to create and improve EditTools, paid dividends over the long term (the more-important term).

And I learned a lesson that many editors don’t want to accept: that sometimes you lose money on a project, but that is no reason not to try again. Too many editors have told me that when they have charged by a non-hourly method, they lost money, so they returned to hourly charging. How they know they lost money, I do not know, because they had no idea what their rEHR was, but their assumption was that if they earned less than they would have had they charged by the hour, they lost money. This is not only incorrect thinking, it is short-term thinking.

Such decisions have to be made based on data. Because collecting and analyzing accurate data is a stumbling block for many editors, EditTools 9 includes the Time Tracker project management macro, discussion of which will begin in Part 2 of this essay.

Richard (Rich) Adin is the founder of the An American Editor blog, author of The Business of Editing, owner of wordsnSync, and creator/owner of EditTools.

Business of Editing: Getting Ready for the New Year

In a matter of hours, the new year will arrive. Are you prepared?

Preparation for the new year involves mundane tasks like getting your “books” (accounts receivable and payable) ready for the new fiscal year and esoteric tasks, such as analyzing the past year’s business and trying to predict (and prepare for) the trends of the new year.

Getting my fiscal books in order is pretty easy. I use QuickBooks Pro because of all the analytical tools it offers. Using QuickBooks means that I have nothing to do to prepare for the new year, at least as far as that program is concerned. An advantage to QuickBooks is that it is easy to compare time periods. Knowing how the ending fiscal year stacked up against the prior year gives me an idea of how accurate my predictions for the now-ending year were and how successful my efforts at self-promotion were.

I also use Excel. I have found Excel to be the best (for me) method of tracking project information that QuickBooks doesn’t in the absence of expensive customization, such as the number of hours a project took and the pages-per-hour rate. (QuickBooks will let me input the information, but there isn’t a built-in analytical tool that will make use of the information or make it readily accessible.) For me, this information is very valuable because it allows me to track my actual performance against my required Effective Hourly Rate (EHR) and my desired EHR.

Excel also lets me see at a glance the projects and the rates I have received from clients. Because Excel is intended for customization, I have been able to create data sheets that provide me with valuable business information. And because I created a master version of the forms, it is easy to set up the spreadsheets for the new year.

Those are the mundane tasks; they require little creativity or speculation to set up each year. Most of my time, however, is devoted to the esoteric tasks — trying to determine trends for the upcoming year and how I can improve my business.

The esoteric begins with an analysis of the closing year. For example, was my business up or down or neutral? Did I generate, more, less, or the same revenue as the prior fiscal year from more, fewer, or the same number of projects as the prior year? The answer to this latter question is particularly important in my year-ending analysis. What I do not want to discover is that I generated the same income but from more projects; what I do want to discover is that I generated more income from fewer projects.

I also want to know whether clients have changed over the year. I also want to know if the types of projects changed. And I want to know whether any (and how many) projects were unique and unlikely to be replicated in the new year. By this, I do not mean subject matter or title; rather, I mean, for example, was a project’s size unique and not likely to be replicated or were a larger number of projects on shorter schedules, which results in a higher fee, than usual.

With your sharp editorial eye, you will have noticed that I am a great believer in data and the data-driven business, and the planning that the data lets me do. Planning is important for lots of reasons, not least of which are taxes and investment. I have learned over my now 31 years in the business that I can fairly closely predict what my business will be like in the new year if I follow a plan. I have also learned the importance of creating a plan for the new year.

When I analyze the data of the ending fiscal year and the data of past years, I can see what steps I took that brought me new and “improved” business and what steps did nothing and what steps cost me time, money, and effort for no reward and perhaps even a loss. No plan is perfect and no plan is guaranteed to succeed, but having a plan is like having a compass in the woods.

Consider just one element: advertising. At the end of the fiscal year I carefully analyze what I spent advertising, how I spent it, and on whom I spent it. I compare that information to the same information from past years. What I learn is that dollars spent on method x generated little to no business, whereas dollars spent on y generated a significant increase in business. But I also learn whether the dollar amount spent on y is excessive for the amount of business generated — it makes little sense in my business plan to spend $1,000 to generate $1,200 worth of business: the ratio is wrong. However, it does make sense to spend $250 to generate $1,200 in business: the ratio is right.

And because I track my time carefully, I can also discover whether the time required by a particular advertising campaign is worth spending: sometimes one is better off spending the time “regenerating” oneself by reading a book than spending it on promotion efforts that bring little reward.

This analysis is particularly important when much of the “advertising” that is done to day amounts to participation on social media. Does the time spent on LinkedIn, for example, bring in sufficient business to justify the spending of the time? A common mistake that is made in making such a determination is not assigning the time spent a dollar equivalent; that is, each hour spent on social media should be “charged” at least at your required EHR (and better yet, at your desired EHR). If you spent 100 hours on social media in 2014 and your required EHR is $50, then the time should be valued at $5,000. If, as a result of your spent time you brought in $2,000 in revenue you would not otherwise have had, then social media is a losing proposition. (The value of social media is not just in new revenue, and those other values should be factored in if important to you. For some people, those other factors are more important than revenue; for others, only revenue matters.)

However, as part of that analysis, you also need to analyze the $2,000 in revenue. Was the work you did to earn that amount at, above, or below your required EHR?

The point is that with the change of years, it is time to prepare for the new year and make a plan to tackle the challenges you can expect. If your business was not where you wanted it to be in the ending fiscal year, then it is time to set it on the correct course. Analyzing the ending fiscal year and past fiscal years is the start, but it is not the end. You also need to try to analyze and predict industry trends. (See Are Boom Times Coming? for an example of trying to trend spot.) If you can identify a trend for your niche, you can try to exploit it in the upcoming year.

Get prepared for the new year now!

Richard Adin, An American Editor