First, we opened the floor, inviting fellow freelancers to submit their payment-related questions. We've now collated many of these and below, you'll find our answers.
“I'm new-ish to the game. How do I charge: per word, per hour, per job?”
Tiffany Markman: Per second. Nah, just kidding; that's lawyers. In my mind, the smaller the increment, the less control you have. So I've never charged per word. I have a flat hourly rate for each of the different services I offer, and I work out - subject to the brief - how much time I'll need for a particular job. Then, I calculate a flat rate based on that. Of course, this is much easier when you've been doing it a while and you know how long things take. To begin with, get as clear a brief as you can, so you can guesstimate the input required - you'll get more accurate at this as you go.
Jo Duxbury: Per second sounds like a great idea, Tiffany! In my work, I've moved away from charging per hour and am now charging project fees. Value-based pricing means you are remunerated for the experience and benefit you bring to the client, not just your time. Think about it: as an experienced copywriter, it will take you far less time to throw together an ‘About us' page for a website than it would a junior writer. Sure, your hourly rate will be higher (make sure it's market-related), but sometimes you'll come out charging less than a junior would because you can do it in a flash. So figure out what a reasonable price is for the end product, and charge that. A slightly more ‘gut-feel' approach is to figure out what fee you'd be happy with earning for that work. If they paid you R5000, is that too low? Too high? What about R10 000? Keep throwing figures around and you'll soon settle on something you're comfortable with.
“Do you charge different rates for different sectors - like a higher rate for corporates and a lower rate for community newspapers?”
TM: But wouldn't that be penalising the big guys for being big? Seriously, although many freelancers do this, I couldn't be bothered. Dem rates is dem rates. I have different rates for proofing, editing, writing, training and consulting. But within those disciplines, I charge everyone the same rate, except regular clients (who get discounts for certain volumes of work) and NGOs. What this means is that I'm low-cost for the big guys and more-or-less average for the littlies, but affordable for everyone. (I also take on two to three pro bono jobs a year, but I choose these in advance - which makes handling ad hoc approaches for free work much easier.)
JD: I agree. I don't charge different tiers of rates either. Because you know what, it will come out and then clients will always feel like you're ripping them off. Your rate card should be fixed and should reflect your ability and experience. Choose to work only with clients who recognise the value you add - and then do a fantastic job for them - and you should have little trouble getting them to pay you for it. It is, of course, up to you to communicate and demonstrate this value clearly.
“My friends and family always need work, and I tense up when it comes to quoting/invoicing.”
TM: That's why I try not to work for friends or family. It's awkward. Because it's not lemons you're selling them at cost - it's your time, energy and expertise. And what's ‘cost' anyway? As a rule, if it's immediate family or close friends I do the work for free, as I feel better about it and find the process easier. Anyone less related than that, I refer to a (good, pre-qualified) colleague in the industry. So everyone's happy.
JD: If it's a once-off ‘can you do me a favour' situation for a friend that will only take a couple of hours, I'll do it for free. But be aware of scope creep with these kinds of projects. Larger projects for friends are different: We're engaging in a professional relationship and where possible, it's better to engage day-to-day with your friend's colleague than the friend him/herself. I treat them just as I would any other client: my terms are very clearly communicated and I stick to them rigidly. Just because we know each other socially doesn't mean you don't need to sign and return my invoice or pay a deposit. For family, if I have capacity, I do the work for free, but they know that client work will take precedence and their work may get bumped.
“I'm a creative. That's why I went into freelancing. This admin stuff kills me: quoting, invoicing, chasing money, keeping books. Can you help?”
TM: Beyond advice, no. You're not just a creative. If you want to feed yourself, you need to realise that you're also a small business owner, and that the left-brain stuff is part of the job description. Outsource the bean-counting, if you must, but get it done and get it done properly. Otherwise consider a return to the little cubicle. It's safer.
JD: Sorry, but once you go solo, the creative stuff will be reduced to just a fraction of what you do. Unless you're willing to do the sales, marketing, admin, finance, tea-making and more yourself, you'll not be able to sustain yourself as a freelancer. This comes as a shock to many creatives who've been cocooned in studios. If you want to focus on the ‘work', go back to an employer and let them handle all the boring stuff.
“Clients often ask me to quote and then say, ‘Well, we've only got [R2000 less than I quoted]. Can you do it for that?' What do I say?”
TM: You smile to yourself, take 10 deep breaths and say, “Absolutely. But which of the items on the quote are you willing to leave out? We need to chop R2000 worth.”
JD: ‘Which elements would you like to exclude?' Ideally suggest to the clients which parts they might be able to do themselves, but make it very clear what that work would entail. You'll probably find they ask you to do all of it in the end anyway.
“I'm not sure what other freelancers' payment terms are, but I find 30 days challenging on my cash flow! Do you have any guidelines?”
TM: This is a contentious one. As a rule, my (and most veterans') terms are strictly COD or payment-on-signoff. But I do make exceptions. There are agencies with whom I've had long relationships, and they've always paid - eventually. So I need to understand that they often wait up to 90 days for payment, and just be patient. The rub, however, is that a client must be a medium-to-long-term regular, with a spotless, no-quibble history of paying me, to earn the exception. I'm strongly risk-averse. In terms of the cash flow issue, you either need a complement of COD clients to off-set those with terms, or you need enough incoming work for it not to matter much.
PS I never, ever so much as get out of bed for a new client without a 50% upfront deposit. And if they ‘don't pay deposits', I don't work for them. Simple as that.
JD: I'm less negotiable on payment terms. If a client doesn't have the cash reserves to pay my bill when I've finished the work, I get nervous. I had two clients close shop last year and luckily my payment terms meant I had to write off only about R1000 in bad debt. I don't start any work until a 50% deposit is in my account - and then if the work will be finished within a month, I ask for the balance on completion. If it's going to take longer than a month, I break the balance down into milestone-based payments, which have immediate terms. If you go for a massage or buy something in a shop, you pay for it immediately, so why should this be any different?
“I'm skaam [shy] when it comes to chasing money. Help!”
TM: Bidness is bidness. You started to incur costs the moment you sat down to take the brief, and you've been doing so ever since. So suck it up, put on your strong voice and make the call. Remember: this isn't a hobby; it's your livelihood. If it helps, call the finance person and pretend to be your own accountant. (I shouldn't admit this, but I do it often. Or I ask my actor husband to step in. He can sound scary.)
JD: Get over it. If you're too shy to talk about money, you're going to struggle as a freelancer. Demand (politely) what you are owed. And remember, companies will usually pay the people who are calling most often and making the most noise about their invoices. I recommend taking a short course in money management to arm yourself with some financial knowledge - it's very empowering.
“Sometimes there's such a long wait to get paid that I think client never will. But I don't want to make waves and have them use someone else next time.”
TM: I'm going to be honest here: I've lost work because of my payment terms and clients because of my regular follow-ups when chasing payment. For some, I'm just too pushy (even though I'm friendly, reasonable and often, even charming). But if the job's been done to brief, to budget and within deadline, I shouldn't have to phone a client every two weeks forever to remind them to cough up the balance. And if I do, that's a client I'd prefer used someone else next time. Cheerio, mate. G'luck.
JD: My definition of a client is someone who pays you for work you do. If they're not paying, they're not clients. Do you really want to retain them as clients if you're going to have to spend hours chasing money every time? Get rid of them (resigning a client is a great feeling!) and make space for new, lovely clients who do pay you promptly.
“When do you, eventually, write off a bad debt?”
TM: When I've chased and chased and the mere appearance of the client's name on my spreadsheet makes me gag and I can't face expending more time, energy or sanity pleading for my due. But there's a ceiling. So for more than Rx, I'll go as far as debt collection and then the Small Claims Court before giving up. Having said that, since I started using a clear set of terms and conditions, getting approval on them and getting 50% deposits upfront, I've had very little bad debt. Long may it last.
JD: Work out whether the effort, stress and costs involved are worth the money you're owed. If they aren't, let it go. Deposits and milestone-based payments will limit your risk and final payments outstanding should be small (max 10% of project value).
Disclaimer: There were questions about Small Claims Court, debt collection and tax deductions, but we've decided to make the following blanket suggestion rather than give possibly shaky advice: find a pro (ideally, someone with whom you can do a trade exchange) for tax, bad debt, legal or related advice, and be a hard-a$&.
