Tips for pricing writing and editing projects on milestones, not by the hour

My freelance pricing strategy maximizes two competing priorities: the chance I will get paid properly for my work, and the likelihood that the client will be happy. That means pricing and billing on milestones, not by the hour. So let’s go over the best way to make that work.

Why I price on milestones

The simplest way to bill for a project is by the hour. But billing by the hour has drawbacks for client happiness. Hours are tough to track, especially if you’re doing work for multiple clients at once. The client has to trust that you are not padding the hours. And they are paying for your time, instead of for your deliverable. If something is taking longer than they think it should, they’re going to question why you’re not more efficient. So billing by the hour is best for getting paid, but not the best for client happiness.

Pricing to get paid on milestones has its positives and negatives, too. For example, if I’m ghostwriting a book, I might set up the following milestones:

• 35% billed up front.
• 20% on delivery of first drafts of five chapters.
• 20% on delivery of first drafts of all chapters.
• 20% on delivery of final draft of manuscript.
• 5% at conclusion of supervision of copy edits and page layout.

Now the client is paying me for actual work delivered, not for hours worked. If I am more efficient, I generate a higher hourly rate for myself, but the client doesn’t have to worry about that.

This pricing structure generally makes the client happier, but it does have drawbacks. If things go wrong or are harder than I expected, I end up working more for the same pay. It also demands a lot of experience in how projects go, since I have to predict what milestones we will reach — in the breakdown shown here, for example, I am predicting that there will be only two drafts, not three or four or ten.

Pricing on milestones has another benefit you might not realize. It tells the client, “I’ve done this before, I know how it’s going to go.” This reassures the client that you know what you are doing, which generates trust.

Some tips for pricing on milestones

Pricing on milestones tends to make clients happier, but is riskier for the freelancer. If you do this, you have to protect yourself. Here’s how to do that:

• Charge a hefty amount up-front. For limited-scope projects like editing or ghostwriting a white paper, you can often charge half up-front. For a large project like ghostwriting a book, which generally costs at least $50,000, one-third up-front is more realistic. Charging half of a project cost that large would demand a lot of trust from the client, while charging less than one-third puts you at risk for not getting paid enough.
• Limit the number of milestones. Remember, with corporate clients, getting paid is sometimes a struggle. And when you’re working for individuals, they don’t want to be writing checks (or paying through PayPal) every week. For a small project, two or three milestones is about right. For larger projects, six to eight are appropriate.
• Make milestones match clear deliverables. “Write five chapters” is a clear deliverable: your client and you are not going to get into a fight about whether you did it. “Complete half the project” is a lot fuzzier and subject to disagreement.
• Set milestones that roughly match the project timing. Ideally, you’d like to get paid regularly, say, once a month or more. So set up the deliverables so that they match the work you expect to do. In the case I showed above, writing is slower than rewriting, which is why the first deliverable is for five chapters, not a complete first draft. Rewriting will go faster, which is why it makes sense to bill for it all at once. If you choose the deliverables and milestones appropriately, you won’t find yourself doing months of work with no payment on the near horizon.
• Price for challenges that may require unexpected work. When writing or editing, if there are multiple reviewers involved, that’s going to add extra time. If you’re going to have to do research or conduct interviews, that can extend the required time as well. A smart freelancer sets prices that account for such challenges. If things go more smoothly than expected, you can just smile and pocket the difference, or, if you’re feeling generous, offer the client a discount. (That’s one way to make clients happy.)
• Write the contract so you can bill for out-of-scope work. Projects sometimes take unexpected turns that will cost you lots of extra time and effort. If you possibly can, just do this work anyway without upping the bill, and tell the client about it — they’ll appreciate it. If you can see that a job is going to balloon out of control, discuss the appropriate charge for that with the client. Again, here, your history of delivering what you promised will help. For example, in a recent project, I needed to do extensive research, which the client had originally promised would not be necessary. I negotiated an additional payment for that, which the client was happy to pay since they were pleased with the work done already.
• Include a small payment for the end milestone. There are often tasks that need to be finished at the end of a writing project, such as wrangling footnotes, dealing with copy edits, and reviewing page layouts. You shouldn’t do these for free. But it’s also unwise to make a big final payment hinge on completing these little tasks, which extend your time to get paid by months. The solution is to include a final payment for completion, but make sure you get nearly all of the price of the job before you get to that stage.
• Invoice as soon as possible. I tend to be working on about 15 projects a year, and as I described earlier, I keep the number of milestones per project limited. As a result, I send about 50 invoices a year. Since the accounting overhead for me is low, it’s no problem for me to send invoices as soon as I complete a milestone. This reminds the client that my payments are aligned with my work, and gets me paid as soon as possible. (It often takes several weeks to get paid, so you may as well start that cycle as soon as you’ve completed the milestone.)

The downside of this bill-for-milestones philosophy is when projects go in unexpected and problematic directions. That means you, as a freelancer, must constantly be aware of what’s on-track and what’s likely to cause a problem, and raise those concerns with the client well before the project gets derailed. Setting your rates high and anticipating problems will minimize the chances that you’ll be poorly compensated when things go awry.

The unspoken tip: choose projects carefully

The best way to make the pay-for-milestones method work is to choose the right projects and the right clients.

A contract that is well within your set of skills will allow you to anticipate how the project will go. And a client who comes via a referral or through an agency is far less likely to be a flaky lunatic.

If you must take a project for which it’s impossible to predict how it will go, you’ll have to bill by the hour. It’s your only alternative.

But if you have a good ability to project what will happen, bill based on milestones. That’s what’s most likely to keep both you and the client happy.