Journal: News & Comment

How to give a fixed-price editing estimate

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Editors and other freelancers prefer to charge by the hour, while many companies and individuals hiring us prefer to pay a flat rate. A colleague asked me today about a quote she was asked to give:

They want me to quote a fixed price. I was going to charge them an hourly rate with an estimate of how long I thought it was going to be. But it sounds like they only want to pay one lump sum and that's it.

• Do you think this is a wise venture and
• Is it normal practise?

It's not at all unusual for companies or individual clients to ask for a flat rate—even if they end up paying a bit more—because it gives them a predictable budget to work with. Some tips on setting a flat rate:

• You can only decide if it's wise to take a contract if you think you'll get enough money to justify the time it will take from other things you might do. If you need the income, that might lean you more to doing it that if it's just nice bonus money. (On the other hand, if you have something you've been saving up for and want to consider this a good way to save up all at once, that's a nice way to think of it too.)
  
  
• If the client will only pay cheap, consider whether you'd rather enjoy the weather, or do less work for someone else who pays more, than stress out about something that turns out to be $12 an hour or something. In other words, don't do it just because you can or because they'd like you to. It's a business decision.
  
  
• Even though you may know the client, get a written contract anyway. The Standard Freelance Agreement from the Editors' Association of Canada (EAC) is a good start.
  
  
• Build in a bit of buffer to your estimate in case you don't estimate all that well.
  
  
• A typical technique is to do your best to try to figure out how many hours it might take you, then multiply by a fair hourly rate (at least $35—I charge $50), then add 15%-20% for admin time, discussion, and overflow. If the result is higher than you think they'll pay, offer it anyway. If they balk, then shave it down a bit—no sense bidding yourself down before they even know about it.
  
  
• Remember revision and proofreading time, maybe multiple instances.
  
  
• Don't forget that if this is a product you know a lot about, you'll be much faster (and probably better) than someone new to it, so if you charge a higher rate, that's only fair for the efficiency the client is getting. Low price isn't everything.
  
  
• Note that Canadian Goods and Services Tax (GST) or any other value-added tax in your jurisdiction is extra—if you charge it.
  
  
• Include a cap on your working hours in the contract if you can, with a set hourly rate or additional flat fee if you go over, so if things go way overboard, you have something to fall back on. Don't invoke that if you're over the cap just a bit, but have it ready in case, for instance, the client goes and changes things on you radically when you've already done half the work, making you have to re-do everything. Even if you never charge them, the possibility of extra fees makes your clients think harder about loading you with tons of work or changing their minds part-way through.
  
  
• Alternatively, use a different technique to estimate: Try to determine the value to your client (how much they'd have to pay internally, including staff salary, office space, computers, benefits, etc.), and charge them that plus a 15% margin. Or figure out the total number of possible free hours you could spend on this project if you has to use them all up between now and the deadline. For example, if you have other projects on the go, this one might have 6 hours a day, 3 days a week on average, for 4 weeks, times $35: about $2500. If that's in the range, quote it. If they go for it, you don't have to worry that you'll be lowballing.
  
  
• Finally, track your hours anyway. Then you'll know whether you estimated well. If you're over your estimate, you can let your client know in your invoice (with an appropriate discount to your regular hourly rate applied so that you reach your agreed flat rate), so next time if you estimate higher, both you and they will know why.

The May issue (450 K Acrobat PDF file) of the EAC's West Coast Editor has a useful cover story on estimating, by Naomi Pauls.

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