How Much is Your Time Worth?

One of the big problems for people who are trying to leave a day job to freelance full-time is figuring out how much money they need to make to get by doing freelance work. It’s not necessarily the case that you have to be making the same amount you did in your day job, since there are costs associated with leaving the house for work (fancy clothes, for one, and gasoline) that you don’t have when you work from home.

I’ve been catching up on old magazines lately and I saw something in an issue of Real Simple from this spring that dealt with this issue of figuring out how much your time is worth. It was written to help people decide if they should do something themselves or pay someone else to do it, but it’s instructive for people trying to figure out how much money they’re really making at their day jobs as well.

Basically, you start with the amount of take-home pay you have. Add up all the expenses associated with working, such as clothes, transportation, meals you eat away from home. Subtract that from your take-home total.

Then you add up all the time you spend on work and work-related activities. That’s not just time at work, but time spent commuting, going to after-hours events and doing reading or other activities that are off the clock.

Divide the amount of money you’re really making after work expenses by the amount of time you’re really spending and you’ll find out what your hourly rate is.

How Does This Help You?

This doesn’t mean that whatever number you get should automatically be how much you charge for an hour of your time. You might want to ask more, and for some projects you’re sure to get less.

But it does help to have an idea of what you’re really making at your day job so you know how much you’re really living on. Once you’re approaching that figure in your freelance life, you can start giving serious thought to giving up your day job.

Look Online for a Full-Time Career

I was chatting with a mom friend the other day about what I do and it occurred to me that right now all the income I make is from jobs that are completely online. It’s actually been that way for a while, since I haven’t done any book editing since the little one was born and my local newspaper stopped running book reviews.

I still send out queries to print publications occasionally (and have far more than I’m willing to admit sitting around in various stages of almost ready to send) but the bulk of my focus is on online work.

I like working for online publications because in my case it’s instant gratification — I write a post, publish it and it’s online immediately. I get paid quickly that way, too. I might make more money if I wrote some of these articles for print publications, but it would also take me more time and energy to send a query, wait for a response, do the research, send it off, wait for it to be edited and published, wait to get paid … I’m not so good at all that waiting.

And the good news is, it’s not that difficult to get into regular paying gigs writing online. One of the publications I occasionally write for I think I got hooked up with through a Craigslist ad. And of course About.com is my main source of income, but if you have a passion for a topic they’re looking for a Guide to, it can be a great way to get your name out, write a lot and get paid pretty well as well.

Writers, I’d like to know how much of your income comes from online publications versus print. Do you make most of your money from one or the other? Which do you prefer?

Is Generalization Better for Freelance Writers?

I read a story in a recent issue of a writing magazine about how to make more money as an article writer that suggested writing for five or more niches to keep it interesting and to keep money flowing in from a bunch of potential areas.

That doesn’t sound bad on paper, but I’ve read a lot of other things that recommend having just a couple of niches — as few as one to three — in order to maintain focus and make your work easier because you’re more of an expert in your field.

So who is right? Should you spread yourself around or have more focus in your career? As usual, there are pros and cons on either side.

The Case for Generalization

It’s a great idea to put yourself out there in multiple niches if:

• you bore easily
• you already have a lot of interests that are potentially marketable
• the same article can be targeted to multiple niches (if cooking is an interest you could pitch the same story to food, family and women’s magazines, and potentially with a different slant to health magazines, for example)

When Specialization Works

Many people who make big bucks freelancing — whether writing articles or doing copywriting — say they’ve been able to do so by focusing on one or two niches at a time. Why?

• Having just a niche or two makes it easier to establish yourself as an expert/name/go-to person in your field. In the case of copywriting, this usually means you can charge more than an unknown in the field.
• You can use the background information that’s in your brain and sources that you’ve cultivated over and over.
• Your work will take less time over time because you don’t have to reinvent the wheel with every assignment.

Of course there’s a potential drawback in that you might get burned out writing about the same thing all the time, and if you pick an incredibly narrow niche it might not be that profitable.

How I Work

I started out as a complete generalist, taking just about any assignment that was offered. In my day I’ve written keyword articles about a huge range of topics, from aromatherapy to music, small business issues to green living.

As a copywriter I’ve ghostwritten an ebook on scabies, autoresponders on Internet marketing and press releases for a samba school.

Now, my extremely limited time mean’s I’m a lot more selective about what I can write, and that’s caused me to narrow my niches down even more than I already had. Today I mostly write about crafts and writing, though I’ll write about health and parenting issues when I have time as well.

I’d love to be doing more copywriting, particularly for small, green businesses that need help with social networking and blogging, but there’s not a lot of time for that these days. Still, my range of work is pretty narrow most of the time, and even if I were working on every niche at once, one or two would definitely be dominant (though you’ll see it might expand to as many as five niches, so I guess I’m straddling the line a bit).

Quick Tip: How Much Money Do You Need?

When thinking about whether it’s time to quit your day job, you might wonder exactly how much money you need to be making regularly before you make the plunge or how much you really need to save as a cushion.

Six months’ living expenses is not the same as six months’ salary. To really know how much money you need, you need to keep track of your expenses, figure out which ones are essential (rent, food, transportation, utilities, etc.) and which ones you could live without (at least some of your entertainment, clothing and Starbucks expenses, for example).

The essential number is probably (hopefully!) a lot lower than your actual salary, and that’s the number that should be your target in terms of how much you need to earn at a minimum to be comfortable leaving your day job.

Major Pubs Getting Content for Peanuts

Here’s an interesting story from Ad Age, of all places, about publishers going to online content mills to get content for their mainstream publications. You might have heard of Demand Studios’ deal with USA Today to provide travel content, but it’s not the only partnership between the major online content producers and more mainstream media.

Reuters has used stories from Associated Content and Woman’s Day uses Associated Content articles online, according to the story.

Great Exposure, or Getting Ripped Off?

The writers of these articles might take great pride in being published in higher-profile places than their articles are usually seen, but on further thought they might get pretty offended by the small amount of money they made on the content compared to the wide play it gets.

Associated Content writers, for instance, make between $5 and $30 per article; Demand’s range is similar (though I think they go as low as $3 and $15 may be the high end of their range). When the companies that buy the articles are paying between $75 and $120 per article, it seems some of that should be going back to the writer.

And when you consider how much using that content is saving the publication that otherwise would have had to hire staff or a freelancer to produce that content, it seems like a good deal for everyone but the writer.

Article Mills Aren’t All Bad

This is not to say that people shouldn’t be writing for these article clearinghouses. I know that some people do make decent money from such work, and I’ve done plenty of it (including a little for Demand, just to see what it was like) in my day.

But it does seem like when articles are getting chosen for those higher-profile publications, the author should be getting more recognition, and more payment, than he or she is probably getting now.

And no writer should go into work for one of these companies expecting or even thinking that their work could get noticed by a big-time publisher. The odds against it are very high. I don’t know if assignments for these publications are labeled as such, or if writers even know if their work is used elsewhere, but the more traditional ways of trying to break into a market are probably still the best.

Freelancing Woes: Not Getting Paid More Common

The Wall Street Journal had a story yesterday about the fact that trying to collect payment as a freelancer can sometimes become like another job when people don’t pay up in a timely fashion.

When you’re dealing with big money, you don’t want to just let it go, but it can be really time consuming and expensive to get a deadbeat to pay up (if you have to take them to court, for example, or simply because you’re spending time on trying to get paid that you would otherwise be spending on other freelance work) such that some freelancers decide it’s just not worth it to pursue.

Michelle Goodman, who has written a book on freelancing, says freelancers often don’t pursue non-payment right away because they don’t want to look like a jerk, when in reality it’s the person who’s not paying who is the jerk; you just want what’s owed to you.

Avoiding the Bad Guys

It’s not always possible to stay away from scam artists and companies that mean well but have financial problems after you’ve already contracted to work for them. I know I’ve had the problem before, and the Freelancer’s Union says three-quarters of all freelancers have had trouble getting paid at some point (and 40 percent of the union’s members had trouble last year alone).

One great tip is to do your homework before you accept a job. Google the company or publication and see what kind of reputation it has. I’m more wary of startups than I used to be because they often seem to lack in budget what they have in enthusiasm for their projects.

There are websites like Ripoff Report and Anglea Hoy’s Whispers and Warnings where you can research companies or complain if you haven’t been able to get payment.

Make sure you have an agreement in writing with the company before you begin work, and include a clause about what happens if you aren’t paid or are paid late — will you tack on a fee, charge interest, etc.? Then if you aren’t paid promptly, stick to your guns and send ever-increasing invoices.

Recovering What You’ve Lost

In some cases you’ll probably decide not to go to the trouble of trying to get paid (that was what I decided to do, as I was “only” owed about $300). If you’re owed a lot, you may want to consult a lawyer and consider legal action against the company.

Realize going into it, though, that you might not come out ahead even if you do eventually get paid. Between legal fees and court costs, and the fact that in small claims court it may still be up to you to recover any judgment, it could end up costing as much or more as just taking to loss would.

Of course that doesn’t mean we should let deadbeat companies get away with it. When someone doesn’t pay you, even if you decide against legal action, make sure you get the word out. You would want other freelancers to do the same for you, right?

The Freelance Life: It’s Not Just About the Writing

Wouldn’t it be great if being a freelance writer meant you just got to write, all day, every day, about whatever you wanted?

I’m afraid that’s the image some people have in their minds when it comes to the dream of being a freelance writer. But the reality is far from that.

Think of just a few of the things you have to do every day, or at least regularly, that probably don’t fall into that idea of writing all the time:

• coming up with ideas
• finding markets to query
• market research
• writing queries
• following up on queries
• bookkeeping
• paying taxes
• marketing and networking
• keeping up with your field by reading blogs and books
• website maintenance
• e-mail
• social networking
• keeping your office or workspace clean and organized

And that’s just off the top of my head. Even on days I spend what passes for a lot of time at the computer these days, not a whole lot of it is spent just writing, and even less is spent just writing whatever I want. For writers who want to make a living at it, there is a lot more to it than just the writing.

That frustrates a lot of people, or even makes them angry — the dream was so much better than the reality!

But the truth is, all those little details are necessary and they’ve got to all be kept running smoothly or your business won’t be as successful as it could be.

As ugly as it might seem, you really do have to think of your writing career as a business.

You’re in it to make money, right? Then you have to focus on all these other things almost as much as you focus on the writing.

Sure, it’s not much fun, but it’s absolutely essential to your success.

Saving is Key for Freelancers

Tax season is a great time to be reminded why it’s so important for freelancers of all stripes — not just writers — to save a lot of money throughout the year. Not only do you need money to pay your taxes, now and throughout the year if you pay estimated taxes, there are several other sorts of savings that you ought to have.

Emergency Savings

None of us like to think about the prospect of not being able to work, not being able to get work, having a spouse who gets laid off or hurt and can’t work, a sick child or a disaster that means we need a lot of cash fast, but all of those things can happen.

It’s often said that people need to have a cushion of at least six month’s living expenses (some say six month’s salary, but at least enough to live on) for those “just in case” moments, but very few of us actually do.

It’s a great idea to set aside 10 or 20 percent of each paycheck you get into savings for this purpose. If you get a big job that outside of your norm, try to save all of it.

Taxes

Anyone who’s done much freelancing of any type knows that taxes take a huge bite out of your profits. Not only are you paying your share of the taxes as you always did when you were an employee, now you’re paying the share the company you worked for used to pay as well.

Again, putting aside a 15 or 20 percent chunk of each check for taxes is a great idea so you won’t have to scramble at tax time — or estimated tax time; remember you have to pay taxes quarterly in most cases or face fines from the IRS.

Big Purchases

It always seems that your computer or printer goes out when you least expect it, and when you can least afford to replace it. If at all possible, it would be great to have money in the bank that you could use for such purposes without dipping into your emergency fund. (Or it can be part of that fund but keep $1,000 or $2,000 out of your calculations when you’re looking at the goal of having enough for six month’s expenses.)

Health Care

If you don’t have insurance through a spouse’s plan, you’re officially in charge of buying your own insurance or saving enough money to pay cash when you need a procedure. The costs can vary widely, so this is something you’ll have to do your homework on — ideally, you’ll have researched this and have a plan before you quit your day job.

Retirement

This is probably one of the most neglected areas for freelancers and others who work for themselves: saving for retirement. And I have to admit I’m guilty of ignoring this part of my financials. I haven’t contributed anything to my retirement since I quit working my full-time job about two and a half years ago.

But I also know that I don’t want to keep working forever, and now that the markets are smoothing out a bit, it’s more than time to get back in there. I have a bit of a 401(k) that I intend to roll over into something, probably a SEP-IRA (retirement accounts specifically for self-employed people). It’s always a good idea to check with a financial planner to find out what’s right for you.

Money Talk is No Fun

All this talk of money — particularly when most of it is saved for a rainy day — isn’t that fun, but when those bad situations arise you’ll be so glad that you had a system in place for saving that should help you get through times when you aren’t making as much money, you need a new digital camera or your child needs braces.

Make saving a habit and you’ll feel a lot more secure about living the freelance life.

Quick Tip: Broaden Your Horizons

Don’t limit yourself to just one kind of writing. most of us start our writing careers thinking about the glossy newsstand mags, and they’re great, of course, but there are a lot of other ways to make money writing: smaller magazines and trade publications, regional mags, newspapers, newsletters, websites, corporate writing, ebooks, ghostwriting, even poetry and fiction.

Branch out and you’ll likely have more fun and make more money.

Quick Tip: Remember to Reslant

Whenever you write an article or query, practice coming up with ways to reslant the piece for other markets. The same research that goes into an interview piece for one publication might work as a how-to for another (noncompeting, of course!). Or a similar idea to one pitched for a women’s magazine might also work for a garden or cooking publication.

Reusing your research — with some fresh material and quotes — means you’re spending a lot less time on the subsequent story or stories so you’re making more money with less effort, which is what we all want.

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