CFOs...We Need To Talk About Freelance Rates

Well, not just CFOs. This is for anyone who's holding the purse strings at an advertising agency, production company, or any other business that employs freelancers.

And what is it we need to discuss? Well, it's not the actual amounts freelancers are paid, that varies according to experience, industry, location, and relationships.

No, this is about how the finance "wizards" look at freelance rates. Namely, hourly and daily rates and the time it takes to get the job done. After talking to a lot of my friends and colleagues this is a widespread issue. So, let's dive in.

Time Is Money. Isn't It?

I mean everyone I talk to in the industry says the same thing. Time is a valuable resource. But you wouldn't think so when you look at the way freelancers are used. Here's a quick example of the issues more experienced freelancers are dealing with:

Let's say you have the option to hire two freelancers. For this example, we'll look at copywriters (because I am one). The first writer has five years' experience and charges $100/hr. The second writer has 15 years' experience and charges $150/hr.

The money people look at this on paper and say, "well let's go with the $100/hr writer, no need to spend any more." This, as freelancers everywhere know, is a false economy. Looking at just the cost of the writer without taking other factors into account is myopic.

See, as it turns out, the less experienced writer is going to take longer to get the job done. With experience comes speed and a whole lot more knowledge to tap into. The veteran knows what works, what doesn't, how to align with a tone of voice quickly, and has way more strings to his or her bow. Add specific industry experience on top of that, such as CPG or pharma, and you've got an even greater asset.

Some Simple Math.

The end result in this hypothetical (although this is pretty much something that I've seen happen consistently over the years) is this:

It takes the 5-year writer 10 hours to complete the job, and an additional 5 hours to address redirection and other issues. That's $1,500.

The 15-year writer got everything done in 6 hours and had only minor adjustments to make, resulting in 8 hours on the invoice. That's $1,200. And the agency got the work in almost half the time it took the 5-year writer to deliver.

Now if you took that outcome to the finance department, they would choose the 15-year writer in a heartbeat. "We get the work in half the time for $300 less? Hire that writer!" But it doesn't work like that. They're not looking at all the angles. They see an hourly or daily rate and base 95% of the decision on that. (Incidentally, this also seems to be the same way employees are chosen to be laid off when a company downsizes, excluding the C-suite obviously).

Imagine a different scenario. Not in advertising, let's say automotive. You take your car to two different mechanics. The first says the job will be done in 2 days for $2,000. The second says you'll get the car back in a day for $1,800. It's a no brainer right? Your car is fixed faster and the price is lower. Go with option two.

But if you look at it the way freelancers are viewed, the first mechanic is $1,000/day. The second is $1,800/day. Yeah, that second one costs almost double. No way. Too expensive.

To sum up, freelancers who charge more and take less time to get the job done are being penalized. Most agencies seem to prefer the lower rate without looking at the bigger picture. And until we can get the finance department to have a massive paradigm shift, it's not going to change.

As I have said often, "if you can't afford my rate, you definitely can't afford someone cheaper." Can I get an Amen? Actually, a mild grumble of "yeah, that's a fair point" will do.

#Freelance #FreelanceRates #FreelanceCopywriter #Financial #CFO #AdvertisingLife #Money #FreelanceDesigner #FreelanceArtDirector