The Tyranny of the Going Rate

When it comes to work or markets that are new to them, many writers cast about for the "going rate." This is the magical average number that is supposed to inform them on how to price their labor. Although I do agree that, when used wisely, market information is a great help. But wise use is difficult and often overlooked by writers. And then, going rates do more harm than good.

There are a few ways in which going rates can hurt the marketing and business planning of writers. The first is that without a number of qualifications, they are illusory because there is no single market. Here are some of the questions you would need to ask before knowing whether the money one writer received was applicable to your situation:

• What is the level of experience or specialized knowledge necessary to do an assignment?
• What are the expectations of the clients?
• What are the demands of the work?
• How large is the client and what will it demand in working processes?
• What is the industry?

In answering the questions, you cut the market down to a more specific segment. When you can accurately describe the work and the circumstances, a market rate may exist, but that's rarely what you get from other writers, who also may not be considering whether their experiences and circumstances match yours. In the end, you could have a situation in which you're effectively comparing a local lunch counter with the largest fast food chains as clients.

Focusing on a going rate can take writers out of the necessary consideration of their own personal rates. Do they have the experience to charge higher numbers that more seasoned colleagues might command? Have they even calculated their own bottom-line hourly figures to know the smallest amount they can accept while adequately funding their own businesses? If the going rate for a type of work is smaller, then it won't matter unless you're already making the money you need and you're taking the assignment for other reasons, like getting clips on a new-to-you topic.

Immediate attention to the going rate can also play havoc with your negotiation. In negotiation theory, you first look at what you need and want. By starting with prevailing rates, you assume that the rates are as universal as you think, allow others to set your business model, and put yourself at the mercy of a general atmosphere in which supply has so outstripped demand that the average pay is ridiculous. This can subconsciously bias your negotiation strategy, even when you're absolutely sure that you're a clever negotiator and that you wouldn't be adversely affected. Not only could you, in all likelihood, you will because it changes your emotional state.

One major reason that people ask about a going rate is that they don't want to leave money on the table. In a well-conducted negotiation, you look at what I call the value equation -- what you want, what the other person wants, what each of you can offer, and the value you each hold for what the other has. No seasoned businessperson is going to pay you more because others are getting more. That line of argument is no more useful today than it was when you said to your parents, "But everyone else gets to do it!" You can only get more by showing enough value that the client is motivated to pay to get it.

Finally, even if you do get answers from writers, it's generally two or three, and they may be repeating some numeric mantra that they have heard in the past. That does not make a representative sample, so you still don't know the going rate.

Can you use going rates? Absolutely, but only when you can precisely determine them, your negotiation practice is solid, and you are confident in your abilities to ultimately please a client. Ironically, at that point you have far less need of market rates because you know your own worth and are confident in asking for it.