How much do you charge?

I haven’t written about writing lately, so I direct your attention to this blog post, with which I interacted.  The occasion of the post was that Robert Bly saw a recommendation that, unless your customer complains, you are not charging enough.

I don’t need to repeat my own appraisal of that advice here.  Another calculation was made: you should charge your client ten percent of the value he will receive.  If you can promise your client $10,000 from your work, then you charge $1,000.

I think this is great when it can be done, but I’m not satisfied with the formula.

  • What if it would take you 1000 hours to produce copy that would make a client $10,000?  Would you work for a dollar an hour?  On the other hand, what if a client knows of an audience and will pay you $5000 at a satisfactory hourly rate of pay for work in order to make $5,000 profit?  If he is basically leveraging his knowledge of the market to turn a profit, and getting you to do all the other work, then this would still be a win-win situation, even though the ratio is 1:2 rather than 1:10.
  • In many cases, writing involves a risk-taker who hires out the development of content.  In such cases the writer is in no position to say much with certainty.  The enterprise might pay big for the investor and it might not.  Naturally, the investor will want to pay as little as possible and Craigslist.com is filled with the lowball offerings of some web dreamers.  The issue then becomes, what do you need to be paid to make it worth your while?
  • It is a mistake to think that even everything done in business can be quantified.  An internal company newsletter or a newsletter to present customers can be desirable and needed without a precise way to determine its value.  But whoever you get to write and edit the newsletter still needs to be compensated for their time and work.

So while I’m sure there are circumstances where the 1:10 rule works, I don’t think it covers all the situations.

One thought on “How much do you charge?

  1. Jim

    I don’t know why you would set a rule-of-thumb like 10 percent (or whatever). It seems to be a really weird way of thinking about what to charge.

    What you can charge depends on the price of your competition as well as the value of what you produce for your customer.

    If you are a monopoly, then the economic rule of thumb would be this: charge your customer one penny less than the price that would make him just indifferent between using your services or not.

    If you’re in a competitive market, then charge the market price, regardless of how much value your services generate.

    Presumably, your market is somewhere in between, because subjective elements make it difficult to define (or identify) “competitors.” Still, it would be a combination of what your competitors charge (on generic elements) as well as what unique (“monopolistic”) qualities you bring to the table.

    Reply

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