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You are receiving Jane Friedman’s self-study class, How to Earn a Living as a Writer. New lessons release every Friday through April 18, 2025. Browse the archive.
Week 12: Know your effective hourly rate
Do you remember your first job?
Aside from delivering newspapers, my first job was at a small family restaurant called Jerry’s. I worked as a hostess and earned $4.25 per hour, the minimum wage at the time.
Later I jumped at the chance to move into a waitress position even though it paid a lower hourly rate of $2.13 per hour. That’s because I knew my effective hourly rate would be much more—I’d be earning tips.
Shrewd freelance writers and editors—especially the ones who don’t have a day job—always consider their effective hourly rate when accepting a job. A job that appears to be low paying might in fact be quite profitable if it doesn’t take much time. Conversely, a job that is high paying might end up being a financial liability if the writer fails to grasp how much time it will take to complete.
For book authors, an effective hourly rate is often a fraction of a penny if the book sells at the industry average, or under 2,000 copies. But the financial upside can be tremendous if you happen to write a bestseller that continues to bring in royalties for years after the work is finished. That’s when you enter the magical world of passive income, to be discussed later in this series. (To be sure: You don’t have to write a bestseller to benefit from this dynamic: having dozens of titles that sell in small quantities, consistently, will produce a similar desired effect.)
Outside the world of passive income, anyone who wants to make a full-time living from writing must take to heart the cliche, time is money. Not every activity you participate in will earn the same effective hourly rate, but it’s wise to set a working standard and increase that standard over time. This quickly gets into the issue of pricing, and ensuring that your pricing is leading to an appropriate hourly rate—yet another issue that will be addressed in this series.
Here is a powerful demonstration of why hourly effective rate matters so much:
Writer A
- 10% of hours: $1,000 per hour
- 20% of hours: $200 per hour
- 20% of hours: $100 per hour
- 50% of hours: $10 per hour
- Income: $350,000 per year
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Writer B
- 30% of hours: $1,000 per hour
- 20% of hours: $200 per hour
- 20% of hours: $100 per hour
- 30% of hours: $10 per hour
- Income: $800,000 per year
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You might say, “Jane, no writer earns $1,000 per hour.” I beg to differ. If you price based on value, not hourly rate, it can be done. Or if you are able to serve many people at once (if you can scale what you do), that also increases your effective hourly rate. This is why small-group coaching is a popular offering, as well as online classes that enroll hundreds of people.
Exercise
Some writers or editors work on an hourly rate (or you might work a day job with an hourly rate or have an annual salary). But many full-time writers and editors earn money based on other metrics. They will charge by the word or by the page, or they might charge a flat fee for specific services. If you don’t know your effective hourly rate, it’s time to calculate it.
- Freelance writing. Divide the amount you are paid by the number of hours you spend researching, writing, revising, and communicating about the article. If you aren’t tracking time spent on your assignments, start today.
- Freelance editing or services. Divide the amount you are paid by the number of hours you spend on the job. Include all communication with the client and administrative work. Don’t know your hours? Again, time to start tracking.
Conduct this exercise for each type of work that contributes to your bottom line. Different types of work have different effective hourly rates, and that’s OK. Maybe some work you do because it keeps you visible in the market or it has prestige associated with it—there are important values and benefits aside from money. Maybe some work you don’t particularly favor, but you’re good at it, you can complete it quickly, and it’s highly profitable. Use it to support less profitable work as needed.
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The Business of Being a Writer, Second Edition (releasing April 2025)
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