What’s the Point in Having a Freelance Writing Business if Not to Make a Profit?
I’m noticing an interesting trend with each new crop of freelance writers. They’re earning money but they have no clue if they’re pulling a profit. They’re making ends meet, but they don’t necessarily have money to put away. Many don’t even factor in taxes or overhead which can be a rude awakening during tax time.
With that in mind, I’d like to offer up my brilliance for the day:
The purpose of any business is to pull a profit. If this isn’t happening, you may not be making good decisions…or you may not be aware you’re not making good decisions.
Here are some things to consider:
- If you’ve been freelancing for years and you’re still struggling to make ends meet, there’s a problem.
- If you pay the bills but you’re not able to put aside money for anything else, there’s a problem.
- If you started out with low paying clients to get your feet wet, and you’re still working for the same pay a couple of years later, there’s a problem.
Let’s the swap scenarios with the real world for a bit
Consider this: if you work for anyone, whether it’s fast food or a Fortune 500 company, there’s a good chance you’re going to get at least periodic cost of living increases in pay, right? It should be the same with freelance writing. As your skillset, client base and expertise rise to new levels, so should your rates. If things are the same for you as they were three years ago, you’re going to have to make some decisions:
If you haven’t raised your rates in years, you’ll want to ask yourself why. Is it:
- because you’re afraid of losing your clients?
- because you’re afraid clients will say no?
- because you don’t know what to raise your rates to?
First let’s explore whether you’re earning enough now.
Not only should you be supporting your family or supplementing your income, but you should also be able to stash something away for taxes, healthcare if needed, and business expenses. Ideally, you’ll also have something to put in the bank. If you’re not at least earning enough to put away for those business expenses, you need to charge more or find higher paying opportunities to balance out your lower paying opportunities.
Next let’s take a look at what you need to do to bring in more income:
You’ll need to assess a new rate of pay. What would you like to be earning and why aren’t you earning it now? What is the minimum you can charge and still earn a profit?
Now, most long-term clients won’t balk at a pay raise request, not if you’ve been working for them for a while at the same rate, and not if you turn in consistently good work and meet or exceed their expectations. They understand you need to make a profit, they’re business people too.
You’ll also want to weigh out whether or not you’ll lose clients if you increase your rate of pay, and if so, will you still be able to make ends meet. Negotiating is fine, but you don’t want your clients to have the upper hand in the pay discussion. You may have to walk away and find clients who are willing to pay your price if it means you’ll receive the rate and respect you deserve.
It’s just good business
It’s one thing to start out low, it’s another to stay low. All established businesses raise their rates periodically and you should too. If you’re not making a profit, you need to sit down and figure out the reason why. There’s more to life than just getting by.
Are you making a profit? If not, why?
Great points! The hardest part of freelancing for me has been negotiating prices. I’m typically not a salesperson or very pushy, but, as you’ve said, I’m in this to make money. Freelancing has forced me to learn skills I would have never developed otherwise.
I’d say I’m making a profit at the moment, new as I am to the game. Each month, I’m turning in enough after tax to cover food and some pocket money (I’m fortunate enough not to have to worry about rent and bills for the meantime).
I’m also smart enough to be provisioning for tax so that won’t be a problem.
I do need to work on increasing my client base this year and upping that income, but I’m pretty happy with how things are going at the moment. It’s important to remember that you won’t be making excellent money overnight, but keep plugging away and make smart choices, and it’ll come.
This is good advice for any business.
Also, for you newbies, don’t forget about the self-employment tax.
These are some interesting points, but I think you are not taking into account the state of the economy and the fact that we are and have been in one of the worst economic downturns in over a decade. It’s always great to get your asking price, and indeed to earn as much per project as the market will pay, but if your target market has been significantly impacted by economics, you have to respond and price accordingly.
Great point Carrie. While I’m new to freelancing (I’m still in the researching phase), I would suggest that if a client doesn’t want to up your rates, that you don’t walk away from said client until you find one who is willing to pay what you the rate you desire.
Honestly, I think very few freelance writers are running a business or think like businesspeople. This article, for example, isn’t really about maximizing profits from the viewpoint of a business owner. The thinking is too inside-the-box. This article is more from the slant that freelance writers create a job for themselves (not a business) and gives suggestions on how to boost their salaries a tiny bit. It’s more of the viewpoint of “ask for 25 cents a word instead of 20 cents a word” rather than “think how you can pitch a $500,000 project to a corporation.”)