Once you decide to make the shift from on-site employment where you commute to the job, you must then decide what services you will provide or products you will manufacture and how much to charge for them. Many who build home businesses focus on providing services. For those who prefer not to leave the comfort and familiarity of their own homes, setting up shop as a freelancer makes good sense.

The term “freelancer” has lost most of its stigma and includes people who earn a living as independent contractors, temp agency workers, on-call workers, and contract workers. Freelancer used to indicate a scrappy individual who did odd jobs to survive and avoid the dreaded “employment gap” on his resume when between positions of regular paid employment. Job candidates still dread the employment gap for good reason, because many recruiters and hiring managers filter those gaps to automatically disqualify otherwise suitable workers.

Recent years coined the term “gig economy.” However, the concept is far from new. Writing for Forbes, Simon Constable points out, “Such a way of working has long been the practice in many professions. For instance, almost the entire Hollywood economy is based on moving from gig to gig for actors, directors, and crew. The same is true of barristers (a.k.a. trial attorneys in the U.K.), as well as many plumbers, and electricians. Artists have long worked this way, as have bricklayers, welders, and taxi drivers.”

The gig economy means workers have little or no safety net. They bear the responsibility for taxes and other entitlements, for health insurance, for retirement savings, and so forth. They do not receive paid vacations or paid sick leave. The reality of this economic landscape grew from the repercussions of the Great Recession when companies terminated millions of positions and former employees had to reinvent themselves to earn incomes sufficient to put food on their tables. The erosion of any concept of lifetime employment conferred an enduring instability.

The Harvard Business Review states that “Approximately 150 million workers in North America and Western Europe have left the relatively stable confines of organizational life — sometimes by choice, sometimes not — to work as independent contractors.” Statistical research organization McKinsey & Company analyzed data regarding the independent workforce in a survey of 8,000 people across Europe and the USA. Their findings: 20 to 30 percent of the workforce freelance. McKinsey & Company breaks that data down even further to categorize freelancers into four groups: those who freelance because they want to (30%); those who freelance to earn extra money (40%); those who freelance and would prefer to work in traditional employment (14%); and those who work as independent contractors because they must (16%). Nation1099 states that “approximately 11 percent of the working adult population in the U.S. are working primarily as full-time independent contractors in the gig economy.” The organization says statistics predict that “By 2027, more than half of American workers—58 percent—will have had some experience as independent contractors.”

Regardless of why someone choose to immerse herself in the gig economy, additional statistics reveal that the creative fields show the most growth, even if they’re not necessarily the most lucrative.

Great expectations

Expectations of freelancers embarking upon new careers as independent contractors often wildly underestimate the difficulty of carving a living from that new career. A young professional’s expectation that the world owes him a living dies first. Let’s be brutally honest: No matter how competent your skills, no one will hire you unless you have a solid portfolio of work to demonstrate those skills. Building a portfolio often requires doing work for free or at deeply reduced fees just to convince someone to take a chance on an unproven contractor.

Here’s a hint: Choose to give your work away instead of devaluing your education and skill by working for pennies per hour. Working for free is a gift to which you can assign a donated value. If you work for a pittance, then you not only set yourself up as a low-bid vendor, but you also train clients to undervalue your work.

New contractors to the gig economy also miscalculate the time a freelance career takes, whether it’s the time spent on finding projects and/or clients or the time spent on completing projects. While the time spent on prospecting for new clients varies, any freelance writer or editor must know his or her capacity to process work. Accept too much work, and you miss deadlines, deliver substandard work, and disappoint clients.

Determining one’s capacity often arises after receiving questions such as “How many pages an hour can you edit?” In response to that common question, An American Editor notes, “Editing speed in itself is not indicative of anything, largely because the number leaves out myriad bits of necessary qualifying information.” Various factors affect editing speed, not the least of which include the type of editing, the specifications for a page of content, the type or genre of content, a client’s instructions, and the quality of the written content.

For instance, what type of editing do you do? The Helpful Writer identifies eight types of editor and explains what each does. Clearvoice identifies six types of editors and describes their specialties. The granddaddy of all online references, Wikipedia, lists 24 separate kinds of editors.

Another example: what’s a page? Back in Ye Olde Typewriter Days, authors adhered to standard manuscript format. No publisher considered any unsolicited manuscript not submitted in that specific format. Managing editors knew the typical manuscript page averaged 250 words and could then estimate with reasonable accuracy the length of an article or book. 

Word processing and document formatting capabilities today enable writers to format their manuscripts as they please by adjusting page sizes, margins, typefaces, font sizes, spacing between lines, and so forth. The endless formatting variables result in one author’s manuscript page containing 250 words and another author’s manuscript page containing 600 words. It doesn’t take a genius to figure out that it probably takes longer to edit 600 words than 250.

Writing for ACES, an international alliance of editors, Samantha Enslen used several authoritative sources to discern an editorial standard, which works out to an average of six standard manuscript pages an hour or 1,500 words an hour. This number proves useful in serving as a base for calculating how long a project will take. Experience informs the individual editor whether to reduce or increase that per-hour word count. This “industry average” also enables a freelance editor to estimate the feasibility of a prospective client’s deadline.

As for freelance writers, production rests upon the type of content, how much research is required to discuss the topic with intelligence and authority, formatting requirements, and, of course, the anticipated length of the document. Other factors affecting project delivery include client instructions, the number of rounds of editing and revision, and the writer’s competence and comfort with the material.

Especially on bid platforms, freelance writers commonly encounter buyers with uninformed expectations regarding the production of well-written content. Therefore, the savvy writer understands the necessity of determining a standard unit of production. Wordcounter states that the average writer can draft, edit, and revise a 1,000-word essay in 3 hours and 20 minutes. Once again, your speed will vary, but that baseline statistic gives you a platform for calculating a project fee.

The big question

Every project boils down to “How much does it cost?” Before tossing out any random number, consider the task, your expertise, and how much time you’re pretty sure you will spend doing it. Sometimes, you overestimate and sometimes you underestimate. Either way, once you settle upon a fee, you’re stuck.

Using the baseline numbers from above, decide how much you want to earn per hour and compare that to industry standards for professional writing and editing. Like any profession, newer, less experienced, and presumably less skilled workers command lower fees than do those with decades of documented experience and solid portfolios of work backed by client testimonials. However, the Editorial Freelance Association and The Writer’s Market—both authorities in the industry—offer detailed guidelines as to competitive fees for professional services.

To calculate your fee for a project, begin by using the average rate for processing (editing) or producing (writing) content. Figure out approximately how many hours you will need to deliver the project and then multiply that number by an hourly wage you consider fair. The results may surprise you and your client.

Remember, you and your client have divergent goals regarding fees. He wants great content for the lowest possible price; you want to earn as much as possible from the project. That’s where negotiation enters into the discussion.

Bid platforms do not support such negotiation and cater to low-bid vendors by reducing the service you provide to a commodity. Understand that a freelance writer or editor competes in a global market. Prepare to justify your value and decline opportunities that devalue your skill and the service you provide.