0623 Why Your Nursing Salary is IrrelevantWhen you try to figure out how to set your freelance rate, you may look to your hourly nursing rate for guidance. That’s not a dumb idea. But it’s dead wrong.

Recently I exchanged emails with an RN2Writer reader who helped me out by supplying information about a website that I wasn’t sure paid writers. Turns out the site does pay (which is great), even though it doesn’t pay a lot.

One sentence in that nurse’s email stood out to me:

“It doesn’t pay great, but the hourly rate is about the same as I make as a nurse, so I figure I’m doing OK.”

Oh, dear.

What Constitutes ‘Working For Cheap’?

I understand where this nurse is coming from. When you start out as a freelance writer, you have no idea what constitutes a “reasonable” rate. You probably hear a lot of chatter (including from me) about not working free and avoiding working for cheap—but what do those terms mean? Oh, “free” is easy enough to decipher, but what constitutes working for “cheap”?

If $30 an hour represents good pay for a nurse, doesn’t it also equate to good pay for a freelance writer?

Well, it’s better than $0 per hour, that’s for sure. And it’s better than $5 an hour.

But $30 an hour is not great pay for a freelance writer. The reason? A concept called ‘total compensation.’

Get To Know: Total Compensation

When you are employed as a nurse for an institution, you likely receive a number of fringe benefits:

  • Paid sick leave
  • Paid vacation
  • Paid holidays
  • Subsidized health insurance premiums
  • 401(k) matching

If you work for a super-duper employer, you may receive even more fringe benefits:

  • Paid CEUs
  • Referral bonuses
  • Tuition reimbursement
  • Signing bonus
  • Life insurance
  • Disability insurance
  • Parking

In addition, when you work as a W-2 employee, your employer pays a portion of your FICA taxes:

  • Social Security
  • Medicare

Your employer also pays for Worker’s Compensation coverage in case you get injured on the job and for unemployment insurance in case they lay you off.

Taken together with your hourly wage or annual salary, the value of these items is referred to as your ‘total compensation.’ Some employers provide an annual recap of the total compensation they provide to you.

If you’re curious, you can calculate your total compensation yourself.

According to the U.S. Bureau of Labor Statistics, in 2014 non-salary compensation made up about 30% of total compensation per person across industries for private employers. What does this mean?

Let’s Do the Math!

If your hourly rate was $24, and you clocked 1872 hours (that’s 36 hours a week for 52 weeks), your total salary would be $44,928. But that doesn’t include your fringe benefits. We can estimate this. Using the BLS average, multiply your salary times 30% to get $13,478. That’s roughly the dollar value of your fringe benefits.

Add this number to your salary: $44,928 + $13,478 = $58,406. This figure should roughly equal your total compensation.

Spoiler Alert: Freelance Writers Pay For Their Own Fringe Benefits

Why does this calculation matter? Because as a freelance writer you must pay for all your own fringe benefits—and 0623 As a freelance writer...those expenses must be factored into your rate.

There is no employer paying you to take days off. If you get sick, you earn zero dollars for that day. No one other than yourself pays your monthly health insurance premium. Want to buy life insurance? Get out your checkbook.

How $30 an Hour Becomes Less Than $20 an Hour

That $30 an hour we talked about earlier isn’t looking too good as a freelance rate now, is it? Let’s say you’re able to bill 20 hours per week at that rate consistently. You’ll be grossing $600 a week or $2400 a month. Sound OK?

Now let’s take out self-employment taxes and retirement savings and the full cost of health insurance for yourself and your family. Figure at least 30% of your hourly rate for those expenses.

That takes your net down to about $1600 per month.

Oh, and that $1600 a month? Yeah, that’s not your freelance salary. That’s your net business income. You still need to subtract all the cost-of-doing-business items, like internet (ka-ching), toner for the printer (ka-ching) web hosting (ka-ching ka-ching). Just for fun, let’s figure at least $200 a month for all of that. (And let me tell you, $200 a month is very low, in terms of overhead.)

So maybe you can pay yourself $1400 a month.

Can you live on that? If you can, fantastic! But I sure can’t.

“But,” you say, “I’m planning on working 40 hours a week!” Great. Good for you. But it’s doubtful you’ll be working 40 billable hours a week, at least not when you’re starting out. And if you do work 40 billable hours a week (which in my humble opinion is nuts), figure on adding 10-20 hours a week for administration and marketing. You like the look of that?

Don’t you want to pursue freelancing in order to enjoy your lifestyle?

Ok, So…How Much Should I Charge?

No one can set your hourly rate but you. I’m not going to produce some magic number I believe everyone should shoot for.

My point with this lengthy screed is don’t compare apples to oranges. Don’t base your writer rate on your nursing rate because you’ll undoubtedly be undervaluing yourself.

Instead, try doing the math backwards. Try to get a ballpark figure for what your expenses might be, and then estimate what hourly rate you must make in order to achieve the income you need—not just to survive, but to thrive.

Now you tell me: How much should you charge? How much DO you charge? What thought process did you use to set your freelance rate?

Wishing you well,