Different Payment Types for Freelancers

While it may be worthwhile to talk about whether a freelance writer should accept payment via PayPal, wire transfer, or a cheque in the mail, we’ll save that discussion for another day.

Instead, today’s blog post is about how a freelancer should go about charging his or her clients. When you go into an electronics store, it’s obvious that you will be paying a price for each product. If you sign up for cable television, you can expect to get a monthly bill. What about freelancers?

It may seem like a simple enough question to ask, but it’s one that is worth considering if you want to maximize your income as a freelancer. Different payment schemes can result in vastly different earning potentials. For example, are you opening yourself up to the possibility of earning passive income from your efforts or are you only getting a one-time payment for services rendered?

Here are a few possible payment types that you may want to consider:

  • Hourly Rate: Many other professions, like accountants and lawyers, tend to charge by the hour. The advantage is that if any project takes longer than expected, you will still be compensated accordingly. However, I don’t charge by the hour, because it does not give me any incentive to be more efficient. Some clients may also become disgruntled if you take more hours than expected.
  • Per-Word Basis: It makes sense that you shouldn’t be charging the same rate for a 300-word blog post as you would a 2,000-word essay. In this way, it sounds like it would make sense to charge on a per-word basis. However, you should bear in mind than a single word of sales copy is not equivalent to a single word of a casual blog post. If you’re going to charge on a per-word basis, be sure to have different rates for different kinds of writing.
  • Per Article Basis: This is my preferred payment type, because it encourages me to write more quickly while maintaining a high enough quality to satisfy my clients. We agree upon a word count range for a certain price. This way, I know exactly how much I’ll be getting and they know exactly how much they’ll be spending. No surprises on either side.
  • Price Per Project: Charging on a per project basis is much the same as charging on a per article basis, except you are giving an all-inclusive price for the complete project. For larger projects, you can offer a bulk discount of some kind to attract more sales.
  • Revenue Share: If you are having trouble determining your freelance rate, you could partake in a revenue share model. This strategy has the potential to be very lucrative, but it also has the potential to earn you next to nothing. However, getting a share of the revenue (or performance-based pay) is one of the only ways to earn passive income from your clients.

This article came from the perspective of a freelance writer, since that’s who I am, but the concepts can easily apply to other freelancers, entrepreneurs, and consultants as well. Are you doing everything in your effort to make more money without sacrificing your integrity or values?