#020: Hourly Rates: When Do They Make Sense? And How Do You Keep Them High?

Welcome to the High Income Business Writing Podcast, helping you propel your writing business to a whole new level. And now, here's your host, Ed Gandia. Well, hello everyone. Welcome to episode number 20 of the High Income Business Writing Podcast. I'm your host, Ed Gandia, and this is the podcast for business writers and copywriters who want to take their writing businesses to the six figure level or the part time equivalent. Just as a reminder, you can find details show notes to this episode by going to b2b launcher.com episode 20. So if you're driving, jogging, or somewhere where you can't take notes right now, don't worry, I got your back. These are very detailed show notes that you can reference later at your convenience. So for those of you who have followed me for a while, this is not going to come as a surprise, but I'm not a fan of quoting hourly rates, at least not when you're a freelance writer. However, I have to admit that there are some situations where it makes more sense to quote project work by the hour. And if you do it right, you can still earn a great living and keep your client happy doing it this way. The problem is that in most cases, it still doesn't make sense. Now, today I don't want to talk about that. I've addressed this issue before. I made the case for project flat fees today. I want to talk about when it makes sense to quote hourly and how you can do it profitably. And I'm certainly not the expert in this area. So recently I was corresponding with a colleague of mine, a lady by the name of Kathryn Andes. And Kathryn is a web content writer and SEO specialist based in California. And she is excellent proof that, that you can make this model work. Kathryn is consistently quoting $125 to $145 an hour. And get this, she is booked solid. She's booked months in advance. And what I wanted to do is talk to Kathryn so she can explain why she's chosen this hourly rate model, how she makes it work for both herself and for her client, and how she handles pricing objections and pushback when it does come up. So let's get right to the interview. This is a really fun talk and I think you're going to get a lot out of it. Hey, Kathryn, welcome to the show.

Well, thank you, Ed. Thank you so much for inviting me. It's a real pleasure.

Likewise. Likewise. We've been talking and corresponding really for a few years now, and as I mentioned to you recently, it's great to see all the progress you've made over the last three, four, five years.

Oh, thank you so much. Well, I've always followed you, and a lot of the information you've sent out has been really, really helpful to me and encouraging. So thank you for that.

Oh, fantastic. No, it's great to hear that. It's great to hear that. So let's start by. Why don't you tell us a little bit about the work that you do and the types of clients that you go after and do work for.

Okay. Well, I would say the kind of work I do the most, I describe myself, is a web content developer and a search engine optimization specialist. And don't let that last one scare you. I'm not super technical, but I've just picked up a few things along the way and I kind of study it from the writing point of view. Search engine optimization, 90, 95% of it is writing and writing type tasks. So I have been able to position myself that way. I work mostly for local companies, and by local, I mean they could be across the country, but in their own area they are local. So it's not a big corporation. I do have a few clients that sell all over the country, but most of them are local. And I'd say most of their sales revenue are between 3 and 25 million, with the average being around 10 to 12 million dollars a year.

Okay, so these are. They're small, but they're not micro. They're not, you know, just your standard mom and pop that does 500,000 in revenue right now.

Once in a while I do get a mom and pop like that. But they are more. That's more the rarity.

Okay, can you give us a sampling of what maybe your last three or four clients, what types of businesses they are?

Okay, well, even though I describe myself as a specialist in the home improvement industry, that has not panned out as well as I would have liked. But I do have some flooring clients, flooring company clients. I have a solar panels client right now, and I have an accountancy firm and an insurance firm. So you can see it's a really wide variety of specialties.

Yes, yes, but you're so. That's neat. Instead of focusing on industry, on our industry or industries, you're open there, but your whole specialty is really the type of work you do. So web content and SEO.

Correct.

Great. How long have you been doing this type of work?

Well, I relaunched my freelancing business in 2008. Before that, from 2000. I started in 2003. And to be a writing business. And I did all sorts of things. I did grants, I did resumes. I'm in the state of California. And it started going broke in 2006 and all the grant writing work dried up. So by then I had picked up some print work. I picked up my flooring company client and I had done some print work for him. And he asked me to do his website, which I did. And it looked it was fine, it was a fine website, but he didn't do well in the rankings. So then I did some studying up and got some coaching and that's when I relaunched my business. Narrowed my focus in terms of, you know, what I put on my website. You know, during that time I was really hungry, I needed work. So I would work with pretty much anyone who hired me. But I didn't. I narrowed my focus on my website. What I promoted that I would do. So I would say this. Web content development and search engine optimization I've been doing since late 2008.

And have you noticed that it's made a difference? In other words, communicating the fact that this is what you specialize in, web content development, search engine optimization. Do people get that?

Well, at first they didn't. They're getting to know it more. There was a lot of education I had to do in terms of my web presence. Yes, definitely. In terms of getting jobs on the ground, I had to invest in terms of education, which I do with my weekly or my now it's twice monthly newsletter. And I also write for the local business journal and I do a lot of networking. So as people got to know me and understood what I did, then they started to grasp the value. Now the interesting thing is in the last year or two, the business owners are becoming more savvy and so it hasn't been as hard a sell as maybe as it was five years ago.

Yeah. So five years ago you could have talked about web, web, web and why it's so great and important and most people didn't get it. Maybe today it's an issue of, well, they already understand the value and they're actually maybe even actively looking for someone to help them with a web project, whether it's their website or some kind of online marketing.

Yeah, because I'm having to turn down people now and I'm getting that. The biggest thing is five years ago they just wanted pictures and no words on their websites. And it was really hard to convince them to let you write anything which you need for search engine optimization and for selling and for differentiating you from the competitors. And now I'm getting people calling me, saying, I developed my website. It looks good, but the writing, I don't have any writing on it. Five years ago, they weren't doing that. So, yeah, it's definitely better now.

I've seen the same thing where people now get the whole value of SEO. It's no longer one of those things that, well, that's not for me, that's for somebody else. Now they realize, yeah, we need to rank as high as possible.

Yes, yes.

I'm curious about. And we'll talk a little bit more about this later in the conversation, but I'm just curious, how have you seen your business shift in terms of the way that you land Fine. And land clients from 2008 to through now? In other words, how back then, how are you getting most of your clients? And how is that different from the way you find clients today?

You know, I guess it's really kind of the same. It's just that now the. I think if you stay in business long enough, you start to hit a critical mass maybe, where all of a sudden it's. It's a struggle to get clients. But all of a sudden you realize, like, I'm having trouble right now personally dealing with having to turn people away, like I'm a snob or something. And, you know, for a long time I went year. You know, just even three years ago, I was having, you know, two or three weeks where I didn't have any work, any real work, and at a time, and then it went to where I always had work, but I didn't know the work was coming. And in the last two years, I've been booked solid, you know, booked. You know, I haven't had any. Any downtime at all. And now I'm booked until the end of the year at least. So, you know, for me, it's really kind of new territory. I kind of don't know how to handle it. So. But I would say in terms of my particular way, of my particular method of landing clients, networking, article writing and sending out my tips to prospects who have contacted me. But, you know, maybe they didn't hire me. Like right now, my solar panels guy, I had a meeting with him over a year ago, and he hired, you know, some other company to work for him. And then he came back to me a year later, and it was because I kept in contact with my, you know, pips. So that's always been a good way for me to generate business. It's just. Just seems to have accelerated. And I Do get some off the web. But I must admit, the hardest clients I have to sell are the ones who have more money and who are more online savvy. It's interesting. You wouldn't think that would be it, but I do.

Maybe it's because they have an idea of what they're looking for. Maybe a better idea where I would think maybe a local small company would need more hand holding and would feel more comfortable with that personal touch.

Yeah, it could be. It could be that all the consulting I do is, you know, that's where my value is. And with some of these other companies, they. Well, except even the ones who contact me online need a lot of help. They're not, you know, they're not the real super savvy. They're maybe more savvy than my local. I just find people who shop on the Internet want to go a little bit more cheaply.

Yeah.

So it's not always, but it does happen.

And it's interesting that it's. And I agree with you as far as the critical mass thing. All freelancers who work their business consistently eventually get to a point where it starts becoming easier. And they do reach a point where they have to start turning down work. And it's interesting that, that it's taken about three, four, five years because that's what I find. My, what I've looked at is when I, when I talk to different people and ask them, when they finally reach that, it's usually a three to four year period where it's not that they're doing anything different. Right. You're doing all the things that you've been doing all along. But I would guess that a lot of it is now. Word of mouth referrals. People that have been in your newsletter for a while and it was just a timing issue.

Yes.

That's great.

Yeah. So tell people to hang in.

Yeah, very important.

Do you have any advice for how to turn people down?

Well, you know what, it's interesting. I find that a lot of prospects when you tell them, listen, I'm booked for the next three months. I'd love to work with you. And you do it in a gracious way. They're suddenly more attracted to you. And now it's either like, well, you know what we weren't thinking about at first. We thought there's no way we can wait more than 30 days. But I'm willing to wait for her. I'm willing to wait two months or maybe even three months. But like you, we've had this conversation before, right? Where some people just can't wait. I mean, three, four. And in other cases, they'll come back. They'll come back. They end up hiring. They were so impressed with the fact that you're book solid and you were so gracious and so professional that the person they ended up hiring didn't work out or the project got delayed anyway. And now when they come back to you, they're like, super sold.

Okay, all right.

So, you know, I don't know. That's. That's worked for me. I had one instance where a guy actually started trying to sell me on the fact that I needed to take him on anyway. I mean, like, really hard selling. I was like, hey, man, seriously, I can't do this. That's cute, but that's only happened once.

Yeah. Yeah. Well, I've had people wait two months. I haven't had anyone wait three months yet, so that'll be interesting.

You know what? Two months is a long time. That's impressive.

I know, I know. I've had two or three clients that way. So. Yeah.

So let's talk about really what I wanted to spend some time here on. And thanks for that background, by the way. That's really helpful. The reason we connected recently is that you price your work a little differently. You quote hourly rates for the most part, rather than flat project fees. So tell me why you do that.

Well, going back historically, I did it. You know, I used to listen to lots, and I still do listen to lots of podcasts where there was differences, you know, people debating what should you do. And I did try the project fees for many clients, and I just wasn't landing the jobs. If I quoted 5,000 for a large project, I just wasn't, you know, getting the jobs. And then the few jobs I did get, I found that my internal hourly rate was not very good. So I was frustrated. And I also remember reading Bob Bly's thing on rates, and he said that for a project that didn't have a lot of, you know, that was really a long, complex project, it was okay to charge hourly rates. And that's what I found I was doing. I was doing large, complex projects. People would come to me without a website. Sometimes I ended up building a website in a GoDaddy template forum. That was one of the things I did to survive because I found people would be interested in me writing their sites, but when they found out that I couldn't also build it, I didn't get the job. So I had. I had been webmastering my own site. Which was a GoDaddy site. And I know that's a sin in the WordPress days, but, you know, so I was confident I could build a respectable site for a small client. Client. And I'm sorry about my computer noise. I don't know if it's coming through to you.

Oh, no, you're fine.

I can hear it. Okay. Anyway, so I realized that for some of these really small clients, mom and pops who just needed a 5 to 10 page website, I needed to say I could also build one. And I don't really like doing that too much anymore. I prefer to work with a web developer. But I still have one client right now I'm building a site for. So anyway, besides building the sites, I would help them set up their local listings with Google and Yahoo. Then they'd want help setting up their Facebook pages, and then they wanted help with this and that. So I really was doing a lot of consulting. Maybe I'd go out and hire the graphic designer for them or find one for them. It was really a creative director or project management type role that I have with almost all of my clients. So that just merits a hourly rate because there's just no way you can say to someone, hey, this is going to cost you $20,000 and have them hire you. It's kind of funny because they'll hire me based on my hourly rate. And usually around the 6 or $7,000 mark, they start to panic. So it isn't that. That's usually where the pushback comes. It isn't at the beginning.

So you mean that they'll hire you at the hourly rate even if it's over $100 an hour? And that's no problem. Even though they can probably do the math in their head as to what this might end up costing. But if you were to charge a flat project fee of $10,000, that would freak them out.

Yes, at least that's what I found.

Okay, so let's go there then. What, what rate range do you normally quote or do you have different ranges?

Well, right now my highest paying client is 135. And I do have some clients at that rate. I have some older clients who are at that are fairly large that are at 100 and125. And I have one nonprofit who's at my way, way, way, way back rate of 75 an hour. And that's a favorite charity for me. So I'm never going to ra.

There's a good reason for that.

Yeah, yeah, yeah. But so I'd say That of my commercial clients, the lowest I have is 100. And they were, you know, one of my first clients. They're very easy to work with. They give me carte blanche to do whatever I want. They're also a good bread and butter client because there's no rush on their project. So if I do get a slow periods, I can just go in and work on them. So I'm never without income, so it'll be a long time before I raise them.

Okay, so.

But most of my clients right now are 125, 135 an hour. And I, and I'm starting to quote 145 for new clients who want to wait three or four months. So far I've had no takers. But you know, right now I'm. It's easier for me to raise my rates in $10 increments than to $25 increments. I still kind of choke at saying 150 an hour.

Yeah, well, you know, I've always said you're, it has to, you have to do it confidently so you have to practice it or you have to have the business backlog to give you the confidence or you have to do it in increments that make you feel comfortable.

Exactly.

Nothing wrong with that. Nothing wrong with that. So you've gradually. It sounds like you've been raising them over the years with new clients for.

The most part, correct? Yeah, yeah, I did. One of my hundred dollar client had been at 75 and I just couldn't keep him there. So I did give him one raise. But then, then after that I've. It's always been new clients. Yes.

Okay. So one of the, one of the fears that many freelancers have when they quote hourly is that it's. Now your pricing is so transparent, right?

Yes.

It's so easy to focus on the fee at that point because it's easily comparable to an attorney or an accountant or other professionals. How do you keep the prospect or the client to focus on your value instead of the actual hourly fee?

Well, I love this question because I always figured I was way more valuable than an attorney or accountant. I mean, in my town, how many accountants and attorneys are there and how many web content developers and search engine optimization specialists who aren't going to rip you off, are there? I guess one of the way I cite my value is when I'm describing a page that maybe I've developed for a client. I'll tell them this page, especially at the beginning. At the beginning, I'm more expensive than your average writer because I charge everything by the hour. But over time, my price does go lower as I know them. And also, if I write a page, it lasts for years and years and years. I mean, they can go pay $700 for a large print ad in a newspaper, and then the weekend's over and they have to do it again the following month. Whereas they pay $700 to $1500 for a page with me. That same page will keep bringing them back.