The Writing Coach Blog

Contract Terms Every Freelance Writer Should Know

Whew! Landing that new client was a boon to your bottom line. However, now the editor is asking you to sign a freelance contract that’s packed with legal terms you’ve never seen before (or haven’t paid much attention to). To help you protect your business, we put together this short list of terms that every writer should know.

First North American serial rights

Magazines and newspapers often ask writers for the first North American serial rights. By agreeing to this, you’re promising first dibs on your story in the U.S. and Canada. Many publications (a.k.a. “serials”) now say these rights include their websites, too. In other words, they won’t pay you extra for putting your print story online, in the digital version of their periodical. Even so, with FNASR, you retain the copyright.

“It’s equally important to know what you’re not selling,” notes Moira Allen, editor of Writing-World.com. “You are not, for example, licensing a publisher to reprint your work in another format, such as an anthology. The publisher may not distribute the work outside North America; that would require a transfer of ‘international rights.’ …FNASR is an ‘exclusive’ right, which means you can’t transfer it more than once or to more than one publication.”

Electronic publishers often use the broad term “first rights,” without specifying how or where your work may be published. Before agreeing to this, consider whether you may want to pitch or sell the same article elsewhere. If so, request more specific language in your contract, such as “first electronic rights.”

All rights

Beware of this blanket term, which is often used by publishers who don’t want to buy additional rights (reprint, anthology, archival, etc.) later on. Once you’ve sold “all rights” to your article, you may never resell it—but the publisher can, without sharing the proceeds.

“All rights is usually a bad deal for writers,” advises author Marcia Yudkin, who specializes in creative marketing. “It means you sell the magazine the right to publish the article as many times as they like, to resell or to license the rights to a movie or computer database or audio publisher without paying you another dime, ever. If you’re asked to sell all rights, try to negotiate something better.”

That “something better” could be first rights of the type you specify or perhaps “exclusive rights” for a limited period of time, such as 60 days after submission or publication. That essentially means you reserve the right to resell the piece after the agreed upon period ends.

Work (made) for hire

This is like “all rights,” except that you’re giving up any claim to copyright. Most work for hire is done by full-time staffers — as in, the company owns all of what they produce — but some publications want freelancers to agree to this, too. If you do, you are allowing the publisher to use your work however they see fit, including under someone else’s byline. You can’t safely reuse the reporting you did, either, because any similar material you use could “infringe” upon the copyright, which you no longer own!

“In most cases, work-made-for-hire and all-rights contracts are a rotten deal for writers. If publishers want additional rights beyond first print rights—exclusive or non-exclusive — they should pay for them,” says the American Society of Journalists and Authors in a position paper on the topic. “In only a very few situations do we acknowledge that such arrangements may be acceptable: a book ‘written to order’ as a promotional vehicle for a company and/or its products, for example … or certain kinds of corporate writing.”

In some cases, such as when you foresee no real potential reusing or reselling the material, this may be fine. Think: technical and users’ manuals, corporate press releases, or marketing materials. But, in general, avoid “work for hire” contracts whenever possible.

Payment on delivery, acceptance or publication

Beyond your rights, make sure any contract includes terms of payment. “Payment on delivery” means that your fee is due as soon as you turn in your story (and an invoice, if requested). “Payment on acceptance” is pretty much the same thing, unless you’re submitting an article that wasn’t commissioned: You’re sending in original work so an editor may review it, at which time they may or may not decide to use it. “Payment on publication” means that your invoice won’t get processed until after your story is published.

Laurie Pawlik-Kienlen, who writes a “Quips and Tips” column for her blog, The Adventurous Writer, recommends establishing a deadline for “payment on publication” offers. “If you agree to accept the editor’s payment on publication offer, ask for a light at the end of the tunnel. For instance: ‘Payable upon publication or six months from date of acceptance, whichever is sooner.’ That way, you’re not sitting around for years, waiting for the editor or publisher to pay you for your writing.”

Kill fee

Last, but not least, you’ll want your contract to include language that ensures you’ll get paid for assigned work if your story never runs (or “gets killed”), for whatever reason, usually having nothing to do with the writer or the quality of the writing. “Publications die. Editors have a change of heart. Insist that a kill-fee clause is part of any contract you negotiate or sign,” Jeffery D. Zbar advises in Writer’s Digest. “Ask for 50 percent; settle for no less than 30 percent. If the magazine demands to pay less, you may be dealing with a substandard publication—and be inviting trouble.”

Freelance Writing: Do What You Love — and Pay the Bills

By Rebecca Smith Hurd

Q. How do I balance making money with fulfilling my passion as a writer?

A. “Balance” can be defined and achieved in so many ways that if you ask three veteran freelance writers this question, you’ll get three different answers. What works well for one scribe may fail miserably for another, because their talents, goals, interests, circumstances and financial needs vary. Some freelancers rely on non-writing jobs or supplementary income to help meet their bottom lines, while others earn a living exclusively as writers.

The beauty of freelancing is that you can choose to do whatever best suits you, your life and your business at any given time. The only universal truth seems to be that writers who are passionate about their work make putting words to the page a priority. After all, you can’t make money writing if you don’t write!

Writer #1: Passion Pays

Patrick Di Justo is a full-time writer whose work appears in Wired, Scientific American, and The New York Times. Prior to his freelance career, Di Justo programmed robots for the federal government and ran a planetarium in suburban New York. He says he “literally can’t remember” the last time he took a job he hated just for money.

“I am the luckiest writer on the planet, because I spend all my time writing articles I love,” says Di Justo, whose book The Science of Battlestar Galactica is due out in October from Wiley.

Di Justo, who last summer celebrated his 10-year anniversary of “Working With No Pants,” says that over the past decade he has occasionally done other paid work. This includes teaching science classes for the American Museum of Natural History and occasionally fixing computers for his neighbors. But the lion’s share of his income comes from writing.

“I have always lived a very simple lifestyle—I don’t feel the need to take extravagant vacations, or to have the latest cars and gadgets, or even to try every new restaurant,” he says. “Because of that, I can have a very enjoyable life on the money I make from writing.”

Writer #2: Stories on the Side

In contrast to Di Justo, children’s book author Chris Barton says he spends most of his working hours not writing. The Austin, Texas-based scribe, who supports a family of four, fits in bursts of creativity whenever he can.

“I’ve got a full-time office job, so that relegates my weekday writing time to an early-morning window (usually between 5 and 6:30 a.m.) and my lunch hours,” says Barton, a business analyst at Hoover’s. “I get in some additional hours on the weekends, mainly before my children wake up, and if I’m on deadline I can often summon the energy for a little more writing after my kids are in bed.”

All of those piecemeal hours can add up to some good work, says Barton, whose Shark vs. Train is on the New York Times best-seller list. “For me, the biggest benefit of the office job has been allowing my writing career to flourish without the pressure of having to provide for the mortgage and our health-care premiums.”

Barton also does paid visits to schools, which is not only financially rewarding but “a whole lot of fun.” Just as with his office job, though, there’s a trade-off: Time spent soliciting visits, preparing presentations, traveling to and from schools, and visiting the schools is time spent not writing, he says. It’s also time away from his office job, which means using his vacation time or making up the hours on other days.

Writer #3: Labor of Love

Meanwhile, Sue Fagalde Lick says she’s having difficulty balancing making money with writing, in part because she’s caring for a spouse with Alzheimer’s. “I don’t mind if you mention my situation,” she says. “In fact, it is totally relevant, in that freelancers have no safety net when it comes to major family events such as illness or death. Such things make it hard to work, and there’s no paid time off.”

Lick, a former newspaper reporter and editor, is currently focused on writing her fifth book—and relies on other income to make ends meet. “Right now, my ‘day job’ is as a music director at our church. It’s hard work and definitely takes time from my writing, but it also gets me out of my office and around people and feeds my passion for music,” says Lick, who’s based in South Beach, Ore. “I also do some editing and teaching, and I have passive income from selling the books I have already published. If I didn’t have a portion of my husband’s pension to live on, I would have to get a full-time job.”

Lick doesn’t yet have a publisher, but she’s passionate about the topic and is confident that her efforts will pay off. “[The book] addresses the lives of women like me who do not have children because their mates were unwilling or unable to have children with them,” she explains. “If it doesn’t sell, I will definitely self-publish it because I know there’s a market out there: I get lots of hits at my website and my Childless by Marriage blog.”

Balancing making money and art is always a challenge, she adds. “Do you focus on the things that pay at the expense of those projects about which you feel passionate, or do you risk investing all your energy in something that might or might not pay off. I spent many years writing articles about whatever I could sell, but I have reached an age where I feel I can’t [spend] any more time on writing that doesn’t have long-term value. Life is too short.”

Do you have a question about freelancing? Ask Writing Coach.

When a Freelance Writer Should Work for Free

By Rebecca Smith Hurd

Yes, you read that headline right. There are, in fact, moments in every freelance writer's career that warrant working for free, at least according to panelists who spoke during the recent Future of Freelancing conference at Stanford University. Working for low or no wages can actually benefit your business, if you choose assignments and negotiate non-monetary compensation wisely.

Michelle Goodman, author of My So-Called Freelance Life, said that "a good exposure situation" can pay off in spades when it comes to activities like selling books, building your name recognition, and keeping up various platforms. Think: marketing. It's OK to take on the occasional non-lucrative project if it promises to boost a personal product or brand. "You really need to be discerning," she cautioned, clarifying that working for free "has nothing to do with volunteering. I'm talking about the people who don't want to pay you."

For example, I rarely volunteer my services. But I recently started a travel website, AllAboutPuebla.com, in an effort to provide people who don’t speak Spanish access to reliable information about the city of Puebla, Mexico. A colleague asked me to contribute to an e-book that he plans to publish this fall about Latin America. My 300-word essay about Mexico would be featured alongside contributions from scores of other writers/bloggers in the region. In exchange for my unpaid submission, the editor promised me free publicity. “Below your entry in the e-book will be your name and a short description of your [site] and a link,” he wrote. “You’ll receive a copy of the e-book and may you distribute it as you wish.”

Three hundred words seemed like small price to pay for a book with enormous potential to reach a very targeted audience. Rationale: Other contributors are bound to tout and distribute the book to their readers, too, which for me means that my entry could be read by hundreds or thousands of people who I may never otherwise reach. So I took on the assignment.

Before you accept an assignment for little or no money, try to negotiate other things to your advantage. Ask your editor questions like:

• Where, exactly, will my story appear on the publication's website?
• Will my story be featured or promoted anywhere?
• Where else do you plan to run the piece?
• Will you link to my website, blog, Amazon.com page, etc.?

When you turn in your story, gently remind the editor of the terms you agreed to — and provide the appropriate supplementary information, such as the URLs you'd like linked.

Be careful not to overload your schedule with pro bono commitments. Limit yourself every month to the number of free and non-monetary projects you're willing to take on, advised freelancer Matt Villano, whose clients include GQ, TravelChannel.com and The New York Times. Paid work should always be your top priority. "Writing at ten cents a word at some point is offensive to us," he said.

Indeed, working for free is not an effective long-term business model and should be entertained only when the anticipated benefits (e.g., free marketing) outweigh the costs (e.g., not meeting your bottom line).

"It's important that we don't devalue our work," said Damon Brown, who contributes to publications as diverse as Playboy, Family Circle and AARP. Brown says he always weighs how badly he wants a job versus coming in with a bid that's too cheap. "Err on the high side. If they want to hire somebody of Craigslist at a nickel a word, then [let them] go for it."

Health Insurance Help for Freelance Writers

By Rebecca Smith Hurd

Being the boss of you isn’t always a picnic. As a self-employed person you may have to find, secure and pay for your own health care. And getting adequate, affordable insurance can be a challenge, particularly if you’re older, chronically ill or have gone without coverage in recent history. Fortunately, with a little work, it’s usually doable.

Rule No. 1: Shop around. If you’ve recently left a job with benefits, it’s a good idea to sign up for Cobra while you’re still eligible.  It provides great backup while you look for a less-expensive policy. Ask your current insurance provider whether you can convert your existing company policy into an individual one and get a quote. If you go for, say, a higher deductible, you may be able to keep your policy relatively intact without a huge change in premium. (Advantages: You’ve already been accepted, and you won’t have to switch doctors.) Bear in mind, however, that your costs will likely increase because, as a small-business owner, you’ll be picking up the entire tab, rather than having some of it subsidized by an employer.

That said, depending on your situation, you may be able to find a better deal if you take your business elsewhere. Several professional organizations offer group rates for freelance workers nationwide — and offer good places to start shopping.

Freelancers Union

The Freelancers Union is a nonprofit group for independent workers, including freelance writers, editors, consultants, and contractors. Anyone can join for free. The union, through a third-party provider, offers health insurance to members in 31 states, and provides dental, life, and disability insurance nationwide.

In 2008, the group started its health-insurance company in New York State, where it now issues its own policies. Freelancers Insurance Company was “created to meet the needs of independent workers, with plans tailored to fit freelancers’ health care needs more closely than traditional plans typically allow,” executive director Sara Horowitz explains on the group’s website. “We also believe that, through FIC, we will be better able than commercial insurers to control the cost of coverage to our members.”

FIC got off to a shaky start, but seems to have ironed out the kinks since then. “This is a big idea from a group that is trying to build an infrastructure to support entrepreneurs and microbusinesses,” John Tozzi blogged for BusinessWeek. If you’d prefer to play it extra-safe and keep shopping, read on.

Mediabistro

Mediabistro is a professional organization for anyone who works in a content-driven industry, from news organizations to public relations. Membership in its AvantGuild ($55 a year) buys freelancers access to all sorts of resources and discounts, including medical insurance. New York residents can join its group plan, and individual plans are available through its partner, Affinity Health, nearly nationwide. (Mediabistro says those who live in Hawaii, Maine, Rhode Island, Vermont, and Washington are not eligible, due to state laws.)

“Mediabistro.com offers well-priced individual or family coverage through a group plan to New Yorkers and discounted plans to those outside the state,” Leslie Alderman wrote in the New York Times.  She also noted that one AvantGuild member managed to find a policy for a third of the average going rate. Family coverage includes domestic partners, too. Mediabistro members may also apply for nationwide dental insurance and discount prescription cards.

Society of Professional Journalists

As its name suggests, SPJ is a group for professional journalists of all kinds. Like Mediabistro, the society offers a broad array of tools and support, including several types of health insurance for freelancers. Its major medical policy is provided through Marsh Affinity Group Services and Healthinsurance.com, which give discounts to SPJ members. (Membership costs $36 to $72 per year.)

“As a journalist, I joined the SPJ and in return got decent health insurance for a reasonable price,” writer Rachel Kaufman posted on Freelance Switch. “I was paying for the exact same plan out of pocket, and it was costing me $20 more a month — so for an annual membership fee of $36, I’m saving quite a bit. (It helps that I can join the org at the ‘household rate’ for living under the same roof as another SPJ member).”

Various types of plans—HMO, PPO, MSA and fee for service—are available through SPJ, depending on your state of residence. The society also offers catastrophe major medical, term life, disability income, accidental death and dismemberment, group hospital indemnity program, and short-term medical plans.

Freelance Writers: The Future Is in Your Hands

By Rebecca Smith Hurd

Forget all the "sky is falling" talk about the death of print media. Freelance writers working today have an opportunity to reinvent and re-create themselves with more independence and autonomy than we could before, Jim Bettinger, director of the John S. Knight Journalism Fellowships, said during his opening remarks at the first Future of Freelancing conference. "It feels like we're back on offense again," he said.

The gathering of mid-career professionals, held June 18 and 19 at Stanford University in Northern California, featured panel discussions about everything from entrepreneurship and investigative reporting to social media and the digital revolution. The general consensus among speakers, who represented newspapers, magazines, books, websites, blogs, and related businesses, was that now more than ever writers can control their own professional destinies.

After all, Bettinger noted, quoting either French playwright Molière or American computer scientist Alan Kay: "The best way to predict the future is to invent it." Here are few tips gleaned from the conference on how to go about doing just that.

Collaborate for leverage Whether you're looking for office space, health insurance or new clients, joining forces with others can really pay off: Collective bargaining power tends to drive prices down and the odds up across the board. Brett Levy, a former L.A. Times editor who co-founded the Journalism Shop, helps experienced reporters and editors get freelance work. His site recently partnered with eByline, which connects news organizations with writers to buy, sell, and distribute stories. The service lets writers "hang their shingle" for free and then either pitch stories or wait to be contacted by participating publishers, many of which are mid-sized newspapers. Writers can negotiate exclusive or nonexclusive contracts, and groups like the Journalism Shop can shop around its writers. Levy believes content platforms like Ebyline, Publish2 and Seed "may become the hottest area" in freelancing-if enough writers and publishers get onboard.

Promote yourself (and your brand) Although writers are rarely obligated to maintain a blog, a Twitter account or a Facebook page, having a strong online presence is likely to increase your success as a freelancer exponentially. This particularly applies to aspiring authors. If you can show a literary agent, an editor or a book publisher that there's an existing market for your idea, that you already have an audience, they are more likely to consider buying your book, said Dawn Davis, editorial director of Amistad, a HarperCollins imprint. And, the more legwork you do to promote yourself, the easier it is for your editor to convince the publisher to spend more on doing even more. Writers should think of the marketing process as a collaboration, she said.

Publish yourself

Technology has made do-it-yourself an economic reality for freelance writers of all kinds. The costs of starting a blog or producing an e-book, or even a printed book, are relatively low. Many blogs, like Grammar Girl and Sh*t My Dad Says, have evolved into successful books-and self-published works sometimes get picked up for reprint by larger publishers. Various panelists also noted that a finished story, project or book is often just the beginning of a dialog with readers-and that a follow-up pieces, speaking engagements, consulting gigs, and various add-on services can drive up the value of your information.

Provide extras (for extra pay)Speaking of add-ons, some magazines now pay writers extra for supplying additional content to accompany their well-crafted prose. For example, Wired will occasionally pony up cash for everything from "deep captions" to voiceover scripts, says articles editor Mark Robinson. Audio and video recordings can prove valuable, too. What doesn't get used online can make the fact-checker's job easier and even help you, the writer, remember details for the narrative that aren't in your notes.

If all that sounds like a whole lot of extra work for freelance writers, well, maybe it is. But veterans in the field promise the effort will pay off. "There's more opportunity out there than there has been in years," said Scott Robson, vice president, new movie initiatives for MTV. "You can actually earn a decent amount of money if you're willing to put in time and energy. Not Vanity Fair or New Yorker rates, but you can put food on the table."

How to Keep the Freelance Fire Going

"Success is not the result of spontaneous combustion. You must set yourself on fire." —Reggie Leach

by Maya Payne Smart

For years, that quotation was taped to the screen of the computer I used to hammer out articles that explained everything from the aluminum-market outlook to the best ways to organize your home. The legendary hockey player's words were a constant reminder that self-motivation is key to victory in the competitive field of freelance writing. Unlike staff reporters, who even on slow news days get paid just for showing up, freelancers must constantly hunt for new assignments and their next paychecks.

And boy can it be tiring!

Writing and reporting alone, often at the risk of rejection, can take a lot out of you. Throw sales, marketing, invoicing, collecting and business planning into the mix and burnout starts brewing. Setting yourself on fire occasionally is one thing; kindling your efforts daily is another. There are many days when my to-do list outweighs my motivation level — and the term "self-starter" feels more like a punishment than a redeeming quality. Like Sisyphus pushing a boulder uphill only to have it roll back down, freelancing can feel laborious, tedious, even futile.

Given the inevitable ups and downs, how can writers keep their fire for storytelling alive? I heard some good answers to this question during "Can I Get a Witness? Writing for Social Change," a panel discussion that I moderated last week. Hosted by James River Writers, a Virginia nonprofit on whose board I serve, the two-hour event brought together Richmond Times-Dispatch columnist Michael Paul Williams, historical novelist Linda Beatrice Brown and AOL News contributor Emily Troutman to discuss how they use journalism, fiction and commentary to give a voice to the voiceless.

The event wasn't focused on freelancing per se, but I couldn't help but make connections between their work and ours. Together the panelists gave a master class in tapping emotion, seeking truth, connecting with readers (and other writers) and finding balance. Here are their tips for refueling.

Write passionately.

It may sound counterintuitive, but sometimes you can get more pleasure out of your writing business by investing more of yourself into it, even when you're tired. Rather than conserving energy by doing the minimum required to interview a source or write an article, give it your all. Regardless of the subject, write as if the story matters, as if only you can tell it, as if every word counts.

For Williams, the writing process starts with emotion. "It starts when I'm cussing at the TV set or balling up my newspaper and tossing it across the room," he said.  "It all stems from the outrage that you feel. It's almost childlike — this isn't fair; this isn't right. When you feel that, it writes itself. By the time you sit down at your computer, it's just a matter of polishing it up."

The notion of letting something powerful and personal guide your work doesn't just apply to columnists. "At heart, if you're a good journalist and you're doing your job, we need to be advocating for something," Williams said. "Otherwise, we're just stenographers. I don't know too many journalists that go into this with the idea of just taking notes in rote fashion and putting them down in some kind of newspaper.  It's got to be about more than that; it's got to be about some kind of greater good."

Indeed, reconnecting with your initial passion for writing is a surefire strategy for staying excited about the work over time. Your stories must be about more than a word count or paycheck.

Show humanity.

As a freelance writer, Troutman has traveled to locations as far flung as Istanbul, Turkey, and Port-au-Prince, Haiti, to offer "humanist perspectives on complex issues." She emphasizes the individual dignity of the people involved in the stories she covers as well as the worth and capacity for growth of her readers. 

"I've found that most of my experience in changing people's perspectives about a place or a problem is about them knowing me," she explained. "That's why there's power in writing fiction where you get to know a person or character, or in a columnist with a voice that people identify with. In my work, I try to tell the stories of real people who I meet so I interject that personhood into it."

She also connects on a human level with sources and readers through social media.  "It adjusts the way I talk about problems," she explained. "I know I'm going to post [stories] on Facebook or Twitter and the people on there aren't necessarily subscribers to the New York Times home edition; they are my friends from high school, my grandmother, my aunts and uncles. Social media has made me more aware of the potential audience-the real general public."

The conversation among readers who've been introduced to a new issue and sources who want to stay in touch minimizes energy-sapping feelings of isolation and plants writers within a community of learning, encouragement and support.

Be authentic.

It's certainly much easier to be passionate about your work and celebrate humanity when you are writing about subjects that you genuinely care about. Be selective about the work you pursue and the assignments you accept. 

Find a way to write what you love as opposed to psyching yourself into loving what you happen to be writing — or what you think has the best commercial prospects. Brown described a crossroads she reached in the '70s, when it became clear that the kind of books she wanted to write weren't likely to appeal to a wide audience.

"It was at that point that I decided that I was either going to be authentic or I was not going to write, because you can be a sleazy, non-truth-telling fiction writer very easily and make lots of money," she explained. "I thought, ‘You're either going to be who you are or there's no point in doing this. It's too hard.'"

Three novels and several poems, plays, short stories and essays later, Brown continues to tell her own truth. "For me, it is a spiritual thing.  I was put here on earth to use the gift of the word, and if I don't do that, I don't feel good. The energy is there because you love what you're doing."

Freelance Writing: Budgeting the Easy Way

Every freelance writer needs a plan for saving, spending and cash management, but too few take the time to craft a formal budget. Sometimes it's because they don't recognize a budget's power to express priorities, offer a reality check or guide business decisions. In other instances, they know its worth but are so busy trying to make ends meet that they never get around to it.

That's too bad. A little spending discipline can go a long way toward improving the profits and enjoyment they get from writing. Don't miss your chance to take your business to a new level! Here's an easy, step-by-step guide to crafting a budget, plus a template to help you get started.

1. Gather information.

This process is all about operating in reality and seeing exactly how much it costs to conduct business. The first step is to collect all of your financial documents for the past 12 months. Bank, credit card and PayPal statements will provide insight into exactly how much you've spent and received, while invoices and bills will give you an indication of future costs and expenses. I recommend gathering a year's worth of information so that you can see seasonal variations in spending and receipts.

If you've been at this for a while and have already synthesized this raw information into income statements (also known as a profit and loss statements), refer to that instead of the individual monthly statements.

If you're new to freelancing, put your reporting skills to work by conducting online price research and interviewing other freelancers about their start-up costs, from office supplies and business cards to websites and conference attendance. The more realistic your budget is, the better off you'll be.

2. Project sales.

Now that you have your financial data handy, add up your sales. This may be as simple as totaling all of the deposits and credits on your last 12 bank statements or logging into your online banking system and pulling a deposit/credit report. Be careful to observe the different sources of money, such as sales, interest income and transfers from savings.

When budgeting, it's important to start with sales projections, rather than cost estimates, because that shows you the constraints you must work within. A common mistake freelancers make is saying, "I need this amount in order to market myself. I need to do a website, buy business cards, and do X, Y and Z." That may true, but you can do those at different levels depending upon your financial reality. Don't psyche yourself out of going into business by exaggerating its costs. In other words, you could do a $10,000 website, a $1,000 website, or a $100 website, depending on what your cash flow dictates. You don't want to set yourself up for failure by overspending or relying too heavily on credit card or other debt.

But your work isn't over when you've tallied previous revenue. You can't just assume that you'll make the same amount of money from those clients going forward. You have to temper your estimates with your understanding of new circumstances. Have any of those clients gone out of business? Have you noticed that their page counts are shrinking because they've lost advertisers? Has the editor that you worked with left the business (or gone to another publication)? Are there any other indications that you may not make as much money from a particular client in the future as you did in the past?

On the flipside, you want to look for opportunities. Do you have cause to believe you'll make more from certain clients for some reason? Again, because budgets are reality-driven documents, you want to weigh more heavily things that are certain or close to it. If you've signed a contract that says you're going to be getting $2,000 a month from a custom publication for writing a feature an issue and you don't have plans to breach it, then go ahead and factor that into your anticipated income.

Don't base income projections on wishful thinking. Force yourself to justify every number with reference to past experience or pertinent research. Your budget needs to be conservative in order to help you weather the inevitable storms of the freelance life. Sometimes, reality will tell you that your income isn't where it needs to be, and that can motivate you to do some additional marketing or offer new services.

3. Estimate expenses.

After you've projected your monthly revenue, it's time to tally monthly expenditures, which include the direct costs of producing your goods and services, which vary given production levels, and the fixed and variable overhead expenses that go along with conducting business. Beyond the basics of office supplies and Internet access, there's a whole range of other expenditures — taxes, health insurance, emergency fund — that you should budget for as a responsible business owner who aims to be doing this long-term.            

It's the variable expenditures that you look to first when it's time to adjust your spending to come in below your sales. For example, if I anticipate a dip in revenue in June because I'm firing a difficult client, then I need to adjust variable expenses, such as office supplies or marketing outreach, that month to stay on track.  Fixed expenses like the rent for my office can't be adjusted as easily because I've signed a 12-month lease that doesn't end until October. 

After you've estimated all of the different revenue sources and listed the various business expenses you're likely to incur, you'll want to plug these figures into an Excel spreadsheet or a Google Documents budget template. Here's a sample.

Why Every Freelance Writer Needs a Budget

by Maya Payne Smart

Many freelance writers work without a formal budget. They run extremely lean operations, spending money on little more than office supplies, phone calls, and Internet access and considering the leftover money as profit. Keeping overhead low is their lone strategy for staying in the black, and they see no need to complicate a checkbook-and-calculator operation with spreadsheets and income and expense projections. But by operating without a budget, they're missing an important opportunity to evaluate their performance, examine their priorities, and identify new opportunities.

Freelance writer Julie Sturgeon says that having a strong grasp of her historical income motivates her to pursue premium clients and keep her spending in check. "I know what my expenses are on a monthly basis, and I've been in this long enough to build a pattern of extra expenses," she explains.

For instance, Sturgeon doles out $700 for tax preparation every February, $250 for business insurance in September, and $1,000 for a conference each June or July. "This builds a framework of what my cash flow needs to look like. Roughly, I need $4,000 a month for utilities, supplies, services, insurance, 401k contributions, advertising, payroll (it's just me, but still, I have to pay my salary!) and taxes, plus those extra expenses. Everything above that I label ‘profit,' that extra income to pay for the wants in my life, not the needs."

Keeping tabs on expenditures — such as her own research, writing and editing labor, plus support services like transcription and scheduling — helped her set her ideal hourly rate ($75). Now she categorizes her clients as "premium," "steady" or "gap filler" based on where they fall with respect to that rate. She always says "yes" when premium clients call, even if it means all-nighters and weekend work, she accepts work from steady clients if it doesn't cut into her personal time, and she turns to gap fillers when the pipeline runs thin.

"Budgets strike most of us as limiting, the killjoy that keeps us from doing what we want to do," she says. "In my experience, it's been just the opposite. I've said 'yes' to some fun projects that fell into the gap-filler category because I knew I could afford it. And I've survived a few nightmare projects because every time I sat down at my desk, the [premium client] folders reminded me that this would take care of July's budget needs, making the other folders my profit money that month."

But the budget only works if you do. Sturgeon revisits her financial action plan monthly to see where she stands. "As I pay my bills, I run reports with Quicken to make sure my monthly estimates are on track, and not trending upward," she says. "Utility costs rise, the price of goods goes up, and you need to stay on top of that."

Budgets also put your priorities on display. For instance, comparing your expenditure on marketing vs. research or on outsourcing vs. your own salary gives an indication of the kind of business you're building. Heavy reliance on independent contractors suggests that you're building a virtual team vs. in-house capacity.

In my case, I'm spending more on technology, graphic design and freelancers than I'm paying myself during the first half of the year because my business is in growth mode. It requires more sales, marketing and accounting support than it did when I was just selling articles to a dozen magazines and websites. Now that I'm marketing and selling information directly to hundreds of individual consumers, I need a larger team to meet the demand. I'm betting that investing in people now will help me earn more down the line.

A budget's real strength is underscoring opportunities for improvement. If your selling, general and administrative costs are high relative to your sales, you may need to control costs better. If your sales are continually exceeding expectations, maybe it's time to fund a new project, up your 401k contributions or give yourself a raise. The bottom line is: Following the money is the price of admission for business owners.

Do you have a formal budget for your business? What have you learned about your work or yourself as a result?

Freelance Writing Pay Rates: Hourly vs. Flat Fees

by Rebecca Smith Hurd

Q. Should I charge by the hour for freelancing or by project? What are the pros and cons?

A. Freelance writing fees are frequently non-negotiable. Many print publications and websites offer a fixed rate, either per-word or per-article, and contributors either take it or leave it. Sometimes, however, an editor will ask you what your rate is. This is when you'll need to decide whether to charge by the hour or the project. The best choice, seasoned professionals say, depends on you and the assignment in question.

"If I have a clear idea of the scope of something, I prefer a flat fee. I have a good idea of how much time it takes me to get things done and know roughly what I think my time is worth," says Mathew Honan, whose work has appeared in Mother Jones, Popular Science, Runner's World, Time and Wired. "However, if a project is really open-ended, or doesn't have fixed deliverables (such as copy to file at a certain word count by a certain date), it's probably smarter to be paid by the hour."

This is particularly true of research or consulting projects, Honan says. "I may not know exactly what I'm getting into until [I'm] knee-deep. For example, I helped a university edit a new catalog. There was no previous example for me to look at, nor did the client know what length the finish product was going to be, so I couldn't know in advance how much work it would require. In that case, I billed by the hour," he explains. "But if I'm doing something like reporting and writing a story, or editing a brochure, where I know more or less what the end result will be before I get started, I always want to know what my total take-home is going to be upfront."

Setting a fair rate — whether it's per word, hour or project — requires you to be realistic about your time, resources and overall ability to deliver quality material, to someone else's specification, on deadline. When determining your fees for any project, remember to factor in any expenses (phone calls, database fees, travel, etc.) you're likely to incur while completing the assignment. Ask the client to clarify any vague aspects of their request, to make sure you agree on the nature and scope of the work.

"When I'm offered a project I want, I do a happy dance, then get to figuring out how long I'll spend completing it," says Erika Stalder, who writes a teen advice column for ABCfamily.com and has authored four works of nonfiction for Zest Books. "I consider research, writing, expenses, image sourcing and editing. Then I set a fee at my hourly rate, plus a built-in buffer."

For instance, if she estimates the work will take 40 hours, Stalder sets a rate at 40 hours plus a few additional hours "just in case I go over," she explains. "This prevents me from getting sucked into over-researching, overspending or overworking. The little buffer I create also gives me a challenge: If I meet my original hourly estimate, my overall hourly pay goes up, which can mean extra money for fun or my retirement (something we freelancers have to provide for ourselves). If I go over my estimate, the padding ensures I haven't overworked and screwed myself out of my hourly rate."

Project fees force Stalder to budget her time in advance, she says, which allows her to schedule new assignments without interfering with other projects she's already working on. It also helps her maintain work-life balance by preventing her from overbooking.

Other freelance writers prefer to charge hourly, especially when they suspect that a particular job may require multiple rounds of revisions or lead to additional requests. "If you've agreed on a set project fee, often the client will assume that additional work is included. So they get more work for no additional pay — and you get the short end of the stick," says Clare Kleinedler, a food and travel writer who's reported for Intermezzo, the Los Angeles Times and People and does copywriting work for eHarmony, MySpace and Zynga. "Hourly rates help avoid any confusion. It's much easier to convince a client that the extra hours were necessary (hence a higher invoice than what they may have expected) than it is to convince a client to renegotiate a set fee halfway through the project."

When taking on an assignment, Kleinedler specifies what her hourly rate will and will not cover. "Anything beyond the second round of revisions gets billed at our agreed hourly rate," she says. "'Additional work' means anything that wasn't covered in the project's scope at the beginning, because often clients will read my draft and then decide to go in a different direction — not because of anything I did wrong, but because they're working it out as they go — or request additional pages or sections."

As an example, she adds: "I once did five direct-mail post cards for a perfume company. They were happy with my work, but decided they wanted to change the subject matter of two of the cards, which meant I'd have to start them from scratch. I made it clear that I would bill them for the additional work, so that they wouldn't assume it was included in my original quote. Most clients have no problem with this, and the ones who do are just trying to take advantage of you!"

Whether you're charging by the hour or by the project, if you think an assignment will be more trouble than it's worth, your best course of action is to turn it down — and use the time to pursue another one that truly deserves your time and energy.

Do you have a question about freelancing? Ask Writing Coach.

Freelancers: Use Your Friends and Family Network

by Maya Payne Smart

Sometimes freelance writers make the task of drumming up new business harder than it needs to be by overlooking the resources right in front of them. Before you spend a lot of time chasing editors you've never met, why not tell the most trusted people you already know that you're looking for work? That's right: Talk to your friends and family.

You don't have to be Rupert Murdoch's next of kin or Arianna Huffington's BFF to use personal connections to your professional advantage. Your inner circle may not include any media moguls, but one of your friends or family members may know someone — or know someone who knows someone — who needs a story you're ready and willing to write.

Explain what it means to be a "freelance writer."

We tend to view friends and relatives as the people we hang out with when we're not at work. But as freelancers, we have to bring our networking A-game all the time. This includes casual and recreational situations. Start by clearly explaining your work, goals and interests. It's shocking how easily the uninitiated can equate "freelance writer" with "slacker."

Avoid this (and other frustrating situations) by providing examples of what you do — and don't do. Want to meet Lucy Lou who runs the pet daycare and needs someone to put together her Web site? No. Tell people what you specialize in, who your ideal clients are and which types of sources you like to cultivate. Help your friends and family help you.

By letting everyone know how hard we work, what exactly it is that we do and what we're looking for in terms of jobs, we enable them to share that information with others. Then, if they know or meet people who may be helpful to us, our names come to mind. The best part: Our new connection comes with a personal reference.

Keep everyone in the loop.

Once your friends and family know what you're up to, remind them again later. The easiest way to do this is to send them links to new stories periodically. The people who support you like to see what you're up to. If you belong to Facebook or another social network, post the link there, too. Encourage loved ones to forward or repost your work.

When my husband and I relocated to South Carolina several years ago, he told a local beat reporter he met that I was a writer, too. The reporter's wife happened to be an editor, and she got in touch with me when she was seeking writers for the launch of G Magazine, a lifestyle publication in Greenville. The connection led me to some interesting assignments, such as profiles of local celebrities, including bluesman Mac Arnold and Tour de France veteran George Hincapie.

Pursue leads — and follow up on them.

Recently, I was sitting next to a friend of a friend at a basketball game. He asked me what I do and I told him, very specifically, that I was a freelance writer who specializes in covering business topics for print and online media. As it turned out, he had a good friend who was the publisher of a national business magazine and said he would introduce us.

I sent the acquaintance a letter of introduction (for more on these, check out First Impressions: The Letter of Introduction), which he forwarded to his publisher friend. By the end of the month, I had a freelance assignment for the magazine.