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

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So, How Much Am I Worth?

I recently wrote about rate charts and how I think it is a disservice to professional editors for an organization like the Editorial Freelancers Association (EFA) to publish such charts publicly (see “Business of Editing: The Quest for Rate Charts“). That got me wondering: How much am I worth as an editor?

In my essay, “The Makings of an Unprofessional Editor,” I discussed inflexibility as a key sign of an unprofessional editor. That essay, combined with the rate charts essay, got me wondering: If I am inflexible about my fees, am I on the road to unprofessionalism?

Why the sudden philosophical thinking? This morning (i.e., Saturday morning my designated/scheduled time to write my AAE essay) I had planned to write on a different topic, one I was struggling with, when my e-mail box started chiming — ding! ding! ding! ding! ding! — alerting me to five incoming emails. I glanced over to my inbox and there they were: five offers for (relatively) small editing jobs (range: 700 to 1500 manuscript pages).

(Those are small jobs for me. This past week, for example, I began working on a chapter that runs nearly 500 manuscript pages and has 1,827 references — not a single one of which was in the correct format/style for this book. [The book has more than 130 chapters.] That’s 219 pages of incorrect references. EditTools came to the rescue. The Wildcard macro let me reformat the author names and the cite information [year, volume, pages] in less than 15 minutes [see “The Business of Editing: Wildcarding for Dollars“]; the Journals macro took a bit longer, a little more than 3 hours, to correct all but a handful of references [see “The Business of Editing: Journals, References, & Dollars“]. The Journals macro took so long because the dataset contains more than 78,000 entries. I guesstimate that the two macros saved me about 25 hours of drudgery of removing periods from author names, reversing author names, etc.)

Each of the five jobs had problems. One, for example, was authored by a group of scientists who are not native English speakers/writers and it required a 14-day turnaround. Another required reformatting of hundreds of references in a 10-day schedule. A third required a “light” edit but had a 23-day schedule. And so it went.

The question I needed to answer for each project was: How much am I worth as an editor? (I can make the calculation because I know what my required effective hourly rate is. Not knowing that would make any calculation nothing more than a wild guess. To calculate your required effective hourly rate, see the “What to Charge” series.) Once I answered that question, I had to decide whether there was any flexibility in my worth. In other words, if I quote the client $5 per manuscript page and the client counters with $2 per page, do I stand firm or do I negotiate down? That’s really the rub, the “down.”

If I have decided I am worth $5 per page, but am willing to negotiate down to $3, am I really worth $5? Was I ever worth $5 if I am willing to accept $3. Of course, this is project specific because for one project I may only be worth $3 whereas for another project I may well be worth $5, but that doesn’t really distract from the idea that if I ask for $5 on a particular project and negotiate down to $3, perhaps I was never worth the $5 I originally asked for.

Some would respond that you are worth whatever the market will bear and you will accept, an amount that can change daily or even hourly. But that makes me a commodity, which is the effect of bidding. Besides, how smart is it to bid against one’s self, which is the problem with websites that ask you to bid on editing work. Do I really want to be seen as a commodity?

If I remain firm on my price — telling the client this is my nonnegotiable price for editing project X — does that move me down the road toward unprofessionalism? Or is unprofessionalism limited to editing, excluding pricing? Does price firmness send a message? If it does, is it a meaningful message in the sense that it will be recognized by the recipient and affect the recipient’s behavior?

In the end, I think firm pricing is the sign of professionalism rather than unprofessionalism. Editors fool themselves when they believe that negotiating downward has any positive side for them; it certainly does have a positive side for the client, but not for the editor.

If I was worth $5 a page initially, I will never be worth less than $5. My price reflects the demands of the client, my required effective hourly rate, my experience, my expertise, my skills. None of those things change downward between the time I give my price and the time of the client’s counteroffer.

So, how much am I worth as an editor? The answer depends on who is giving the answer. To the client whose book I helped transform into a gazillion-copy bestseller, I may be worth $200 an hour. To the packager who is used to hiring local editors for 50 cents an hour, I may be worth no more than $10 an hour. But none of these valuations matter if I haven’t a sense of what I am worth as an editor and if I don’t stand firm on that worth. I am always willing to charge more; I am  never willing to charge less.

Professional editors are able to provide professional-level service because they are adequately compensated. They earn enough that they can afford to occasionally not earn enough on a project. Adequate compensation ensures that the editor has the time to think and review; there is no need to speed up the editing process so that the editor can make room for the next project in hopes that the next project will mean better compensation.

Inadequate compensation is part of the problem of unprofessionalism. No matter how you slice the earnings pie, you still need to earn the whole pie to pay your living costs. The thinner the slices, the more of them you need to create a whole pie — the lower you see your worth, the lower you are willing to negotiate, the more projects you need to squeeze into the set amount of editing time to create the “whole pie.”

Lower worth also means less ability to say no, to turn work and clients away, which means less control over your own business. People give the advice that you should have so many months of savings so that you can manage through a dry spell or have the ability to say no to a project/client you don’t want. That is good advice, but only half of the advice needed. The other half is that you need to know your worth and not bid against yourself.

If a client’s only concern is cost, then the client is not really looking for skilled editing; the client is looking for the ability to say the project was edited, regardless of editing quality. There is often a penalty to pay for approaching a skilled craft like editing with that view. Of course, the benefit to me is that my worth goes up when I have to reedit poorly edited material.

Ultimately, the keys to the answer to the question “So, how much am I worth as an editor?” are these: knowing your required effective hourly rate; ignoring rate charts that provide no link to reality (because they fail to disclose the underlying data and/or fail to define terms) and that act as a brake on your earning ability; and refusing to bid against yourself by standing firm on your price (which assumes that you have an articulable basis for your price). This is a sign of a professional and successful editor.

What do you think?

Richard Adin, An American Editor

Related An American Editor essays:

• On the Basics: Dealing with the Perennial Question of Setting Rates for Our Work
• The Proofreader’s Corner: How Lucrative Are Your Editorial Clients Really? Keeping an Eye on Creeping Costs (Part I)
• The Proofreader’s Corner: How Lucrative Are Your Editorial Clients Really? Keeping an Eye on Creeping Costs (Part II)
• The Business of Editing: Discounting Rates
• The Business of Editing: Fee Negotiations (Part I)
• The Business of Editing: Fee Negotiations (Part II)
• The Business of Editing: Fee Negotiations (Part III)
• How Much Is That Editor in the Window?
• The Business of Editing: The Pride of Price
• The Business of Editing: Standing One’s Ground
• The Business of Editing: Why $10 Can’t Make It

Business of Editing: Does Market Perception Matter?

In recent discussions about pricing of services it was suggested that perception of worth was an important factor in the battle to obtain higher fees. It was suggested that by setting pricing too low, potential clients would balk at hiring the freelancer because of the perception that the freelancer cannot be very good, which perception is based solely on the low price. The advice then being that it is better to turn down low-priced work than to give the market opportunity to misperceive the worth of your services and your skill level. (See “The Real Problem with Low Freelance Rates” by Jake Poinier for the original argument.)

At first blush, the argument appears to have value, but after thinking about it for a while, I think the argument of market perception is a very minor matter.

We need to begin at the very beginning: How does a freelancer know what is too low a price to charge? No discussion regarding pricing can have any merit if this riddle is not solved first. We have had this discussion before, and the resolution begins with knowing your required effective hourly rate (rEHR). (For that discussion, see the multipart series “Business of Editing: What to Charge.”) In the absence of knowing your rEHR, it is not possible to know whether the price you are contemplating charging a client is too low.

The second prong of the answer lies in knowing what price is the general price for the services required in your market. Each market has its own pricing scheme. Editing reports that are going to be submitted to a government agency is likely to be more expensive for the client than the editing of the novel that will be self-published. And working for a packager will carry a different market price than working directly with researchers seeking to polish an article for journal publication.

The third prong is delineation of the services. Too often we use a general term, such as copyediting, and assume that everyone understands the term to mean exactly the same thing. Of course, the reality is much different and you cannot compare my copyediting with your copyediting unless we have come to a mutual agreement as to what copyediting entails. We have to compare apples with apples, and even then, we need to compare cooking apples with cooking apples rather than cooking apples with eating apples.

A fourth prong is also fundamental to the answer: Under what conditions are you working? By this I mean are you in a position to turn down low-paying work and hold out, perhaps for months, until something comes along that meets the definition of “not too low paying”? In other words, are you the sole source of income in your household? If not, does the other person in the household earn enough that you can sit idly by waiting?

This fourth prong is the most often overlooked prong when discussions about pricing occur. It is easy if you have a lot of money in the bank or a spouse who has a secure job and earns enough to pay all the bills; it is not so easy if your income is the primary (or lone) income in the household. Yet when the argument about market perception is made, it is rarely disclosed why the argument’s author believes he can take the high road.

These prongs (and others not mentioned) are key to understanding why it is easy to make the market perception argument but not so easy to abide by it. Yet there is an even more fundamental flaw with the market perception argument, which relates to how many of your clients actually view the market that way. That is almost an unanswerable. In the absence of actually getting a prospective client to tell you why you are not getting a particular project and telling you honestly, measuring market perception’s effect on your business is nigh impossible.

My experience among my market is that I lose work because my prices are too high. In 31 years of editing, I have never had a prospective client tell me my prices were too low; only that they are too high. And when you peruse the various forums, you rarely see someone say that they didn’t hire an editor because the editor’s price was too low; invariably, the reason is that the price is too high. (When I do read a comment questioning pricing that is too low, with a little investigating I discover that commenter is a colleague, not a buyer of services.)

Is this to say that there aren’t clients who do not react negatively to low pricing? No, because I have no doubt there are such people. But the key is that they are not in my market and that is the market with which I need to be concerned.

There is another fundamental flaw with the market perception argument. The argument rails against low pricing but never identifies what is correct pricing or the maximal pricing. It is always couched in low pricing terms (which also is never really identified — is $25 an hour too low? How about $35? Or $50? Or $100? Or is $50 too high and $35 both correct and maximal?), which leads us back to where we began: How can pricing be judged if we do not know our rEHR?

And equally important: How can our pricing be judged if our EHR remains unknown?

I have made this argument numerous times yet still colleagues talk in terms of too low pricing. The key is not the pricing but what you can turn that price point into. If your rEHR is $20 and your EHR is $40 and your price point is $2 per manuscript page, is your price point too low? I think not.

One other point about the market perception argument. It is always couched in terms of how clients view you but is really based on how colleagues view you and the desires of colleagues. I think we would all agree that high-quality editing is a very valuable service. I know that we could come to an agreement as what is a fair rate that every editor should minimally charge. I also know that we can all agree that some colleagues charge too little for their editorial work. But when we make these agreements they are made base on our desire to be better compensated for the work we perform.

What we want is for everyone else to adhere to a standard we impose so that we can be part of a rising compensation tide. That is, the market perception argument is not based on what is good for you, but on what is good for me. And that is the ultimate flaw of the argument: the lack of agreement as to what is good for me.

Regardless of how you come down on the validity and worth of the market perception pricing argument, in the absence of knowing your rEHR and your EHR and understanding your market, it is not possible to determine where your pricing fits in the market perception scheme.

Does the market’s perception of your pricing affect your market’s view of your skills? Do you agree or disagree with the market perception argument. Do you know your rEHR and EHR?

Richard Adin, An American Editor

The Business of Editing: Discounting Rates

It has been asked: Is discounting your rate ever justified? The answer is “yes, but not usually.” We have all been faced with the dilemma: Should we offer a discount in order to get the job? Or because the potential client is a student? Or [fill in the blank]? The answer is not easy. I begin where I always begin when it comes to rates — with the effective hourly rate (EHR). Discounting a rate is like setting a rate in that you must first know how much you have to earn to keep yourself afloat. It is neither very smart nor does you any good to earn less than your required EHR.

Many years ago I would have said that it is better to have some income than no income. That was in my days of not applying business practices to my business and not realizing the potential of my business. The truth is that it is not better to have some income than no income. It is only better if that income meets your required EHR. Note that I am speaking of required, not desired, EHR. I learned quickly that rather than take on work that was below my required EHR I was better served spending my time marketing myself, trying to find work that would meet my required EHR. This is also true when it comes to discounting my rate.

I never discount to a rate that is below my required EHR; I want to be able to pay my bills, which is something I will not be able to do if I do not meet my required EHR. There are several factors at play. First, before discounting my rate, I need to be earning overall more than my required EHR, and preferably close to my desired EHR. It is that difference — the difference between my earned EHR and my required EHR — that is the negotiable area.

Second, the client needs to be a repeating client. It does me no good financially to provide a discount to a one-off client, even if I think that client will tell friends and neighbors how great I am. The reason is that the one-off client will also tell friends and neighbors what he paid and the friends and neighbors will be expecting a similar discount. For repeat clients, especially institutional clients, I am willing to consider a discount because I know I can make up for the loss on the particular project on future projects or because it is worth my while to charge a little less in exchange for a larger volume of work. Which brings me to the third point.

Third, volume discounting is reasonable as long as the discount does not go below my required EHR. In the case of a volume client, I always keep in mind my Rule of Three (see “The Business of Editing: The Rule of Three“) as it will do me no particular good to have a lot of business that I am losing money on. But volume clients are what I want because such clients assure me year-round profitable work. In a sense we have gone full circle. Discounting one’s rate is acceptable in the circumstance that doing so does not bring the rate below one’s required EHR.

Where most of us part ways is with the other requirements. Usually the argument is that

• it is a new subject area for me that I want to explore
• the client is poor
• the subject matter of the project is one that I am very interested in

and other similar “reasons.”

The first question to ask yourself is this: Are you a business or a charity? If you are a charity, then these reasons have some merit; if you are a business, these reasons have no merit. As a business, you need to earn enough to stay in business and even to earn a profit. Why remain in a business that cannot provide income sufficient for your needs?

The second question to ask yourself is this: If I undertake this project, will it preclude me from taking on a higher-paying project? If it will, then it should be avoided. Why take on a project that costs you both money and opportunity?

The third question to ask yourself is this: If I take on this project will I have the time and money and energy to market myself to better-paying potential clients? If no, then don’t take on this discounted project. Discounting is fine when you are in a position to do so, when your business is such that whatever loss you will take can be made up for. It is also fine when it is connected to volume. But under no circumstance is it fine to discount below your required EHR, which means you must have calculated your required EHR beforehand. (To calculate your required EHR, see the five-part series “Business of Editing: What to Charge.”)

One thing we haven’t considered is the worth/value of your editing. I consider myself a highly skilled professional. My services can make a difference. How valuable are those services? The more valuable they are, the less willingly they should be discounted. I differentiate my services by the price I charge and the quality I provide; discounting takes away that differentiation. And it becomes a slippery slope: If I discounted today, why not tomorrow? The consumer will neither understand nor accept the fine differences we use to distinguish among projects and clients; if my price was $x yesterday, the consumer expects it to be $x today and on both days expects high-quality service.

Are there times you can discount? Yes. Are there times when you should discount? Yes. The way your  recognize those times begins with knowing your required EHR and evaluating whether giving the discount will further a legitimate business interest. In the absence of either, no discounting should be given, and under no circumstance should a discount result in an EHR below your required EHR.

Richard Adin, An American Editor