My actual hourly rate

Today’s edition of Wishful Working is a 4 minute read.

I’ve been thinking a lot about my hourly rate.

I’ve mentioned before that I do not typically quote and bill projects using an hourly rate. Back in February, I wrote this newsletter about it: Should freelancers sell their time?

TL;DR — Generally, no.

That newsletter goes into more detail, but I often find that charging an hourly rate limits how much money you can make and “punishes” you for your expertise and efficiency. 

Think about it. A certain type of writing project may take me 10 hours the first time I do it, but by the 20th time, it may only take 7 hours. Should I be paid less for the second project because I’ve gained expertise and refined my processes? No!

For this reason (among others), I prefer project rates. If I charge a flat rate of $1000 for the above hypothetical projects, my “true” hourly rate increases from $100/hr to $143/hr if I go from 10 hours to 7 hours. That’s more like it.

I use a project management platform, Moxie, that calculates my “true” hourly rate for me by doing the simple math of dividing my project rate by the amount of time spent for each project. The platform also allows me to toggle different settings, so I can see what my “true” hourly rate is for each individual clients.

Let’s take a look. Here’s my hours worked and true hourly rate across all client work in 2023:

If I look at individual clients, my lowest hourly rate was around $30/hour (a journalism project), and my highest hourly rate was around $200/hour (a series of projects for a fortune 100 company). (Reminder that both of these clients were invoiced at flat, per-project rates.)

If I toggle another setting, I get this:

Who added 250 more hours worked while tanking my true hourly rate? 😠

Oh, right. It’s me. 

I track all of my non-billable hours — time spent emailing, pitching, networking, marketing, doing my taxes, writing this newsletter, etc. And I’m the biggest slice of the time pie:

I love having this data because I am a nerd. But it also helps me evaluate my business and consider things like:

• Am I generally making more or less money than I was last year? How do I feel about that?

• Is there a certain client (besides me) bringing down my overall average true hourly rate? Or bringing it up?

• Do I need to charge more?

• How much time am I spending on non-billable tasks?

I can also see a trend view of my hours that shows which month was busiest (September) and which was least busy (November). If you can’t tell, I’m a big fan of time tracking and the insights I get from it. 

And when it comes to the non-billables, I embrace them. Not everything I do for work is something that directly generates income, and that’s okay! It’s necessary, and it’s enjoyable. One of the most surprising things about freelancing is how much I enjoy the admin work. 

Yes, even taxes. 🤓

See you next week,

Kara

Wishful Working is inspired by my desire to see more people enjoy a life not centered around work. For some, the path to freedom and flexibility is through self-employment, but we also need to challenge cultural norms and champion healthier working conditions and work/life balance for all types of workers.

Who am I? I’m a freelance writer and entrepreneur based in small-town Saskatchewan. I write longform content for B2B clients, and I help founders and independents name their brands and projects at Naming. Connect with me by replying to this email or finding me on LinkedIn or Twitter.