When does it make sense to add a junior writer to your team?
How much would you have to charge your clients, so both you and your junior writer are well compensated?
Figuring out how to profitably scale your business with a writing team is complicated. If you get the equation wrong, you can inadvertently lower your internal hourly rate—which undermines the purpose of scaling in the first place.
In today’s article, I’m drilling into some of the most relevant metrics you need to consider before scaling your business with a writing team.
Your Average Internal Hourly Rate Across All Clients
Your average internal hourly rate across all clients is a great way to track how you’re doing today and determine whether or not you’re moving in the right direction. Basically, this rate is how much you’re charging, divided by the hours you’re putting into the work.
For our purposes here, let’s say that your average internal hourly rate across all clients is $150.
Your Internal Hourly Rate for a Particular Project
Let’s say that you’ve brought in a junior writer and have them onboarded and trained.
An opportunity comes up to write an ongoing series of long articles, with each article paying $1,200. The project is new, so you decide to tackle the first few articles yourself.
After the first few articles, you calculate that it takes you about seven hours to write each one, including revisions:
$1,200/7 = $171.43
That means that your internal hourly rate for this particular project is about $171.
As you’ll recall, your average internal hourly rate is $150.
This is good news! This project is providing a higher internal hourly rate than your average. With this information in hand, you can now figure out if it makes financial sense to put your junior writer on the project.
Your Net Profit
The next calculation you need to make is simple: What’s your net profit for the work? In other words, what’s the difference between what you’ll earn and what you’ll pay the writer?
In this case, the client is paying you $1,200 for each article. Let’s say you would pay your writer $500 to do each one for you.
That means your net profit would be $700:
$1,200 — $500 = $700
Your Internal Hourly Profit
You should also consider how much time you’ll still need to spend on this project, even if the junior writer is writing the articles for you. After all, you still need to assign the task, review the deliverables, manage the project, etc.
Let’s say you still have to spend two hours on each article, even when they’re assigned to your writer.
We’ve already calculated that your net profit for each article is $700. If you’re spending two hours on each article, you take the $700 and divide it by two, which comes to $350 per hour:
$700 profit / 2 hours = $350 per hour
Which means you’re making $350 per hour on this project for the time you still need to put into it.
Let’s call the metric the project’s internal hourly profit. This metric is useful because you can compare it with what you would make when you’re doing all the work.
Earlier, we said your average internal hourly rate was $150 an hour. By using a junior writer, you’re netting $350 an hour. So this is good news!
Let’s try a different scenario. Instead of paying your writer $500, you pay $700. This reduces your net profit to $500:
$1200 (payment for each article) — $700 (what you pay the writer) = $500 net profit
Which means your internal hourly rate for this project is now $250 per hour.
$500 profit / 2 hours = $250 per hour
This is still great when compared to your $150 internal hourly rate.
When You’re Not Doing Better Than Your Average Rate
But what if you were only earning $800 for each article, or paying the writer more, or spending more time fixing and managing these projects?
You’d probably find that your hourly rate on this outsourced work is LESS than your average internal hourly rate. When that happens, you either need to adjust some of the variables, find a different opportunity, or look for a different writer.
Better Metrics Leads to Better Decision Making
These basic metrics are important to track and understand if you want to scale your business. You need them to make better decisions so you can earn more in less time—or at least earn more in the same amount of time.
At the end of the day, that’s the key to scaling your business successfully.
By the way… whenever you’re ready, here are 3 ways I can help you grow your freelance business:
1. Grab a free copy of my book.
It’s called Earn More in Less Time: The Proven Mindset, Strategies and Actions to Prosper as a Freelance Writer. The title says it all. 😉 — Click Here
2. Join my implementation program and be a case study.
I’m putting together a new implementation group this month. If you’re earning $5k+/month (or the part-time equivalent) from your freelance business … and you’d like to grow your income quickly with better clients … just email me at [email protected]
3. Work with me privately.
If you’re a 6-figure writer who’s trying to earn more in less time, with less stress, I might be able to help you get there faster than you think. Just email me at [email protected] and put “Breakthrough” in the subject line, and I’ll get back to you with more details.