How to Make Money from Writing? No Seriously, How Do You?
Revenue vs. Profit. How Do You Value Your Time? Not Forgetting To Account for the Joy of Writing.
I’ve read many articles and watched many videos about how to make money from writing. In fact, this article that I’m writing was inspired by Jenn Leach who writes 10 blog posts a day. I mean that’s crazy, as in Wow! How do you do that, and how can I do that? You can read her post here.
Now, I have to assume, and I know what they say about assumptions, that one of the reasons you would want to write a lot (whatever that number is) is to help make money. But I have to ask, are you really making money from writing? I should be more clear, are you making profits from writing?
Revenue vs. Profit
To make sure we’re ‘on the same page’:
- Revenue is the money you earn from writing, the email money transfers, the direct deposit, the paycheque you received, or straight cash. It is the amount you receive before any costs are deducted.
- Profits represent the amount of money remaining after the Costs are deducted from Revenue. We can get more detailed into the Direct & Indirect Costs and Fixed vs. Variable Expenses, but I can discuss that in another post.
- Profits divided by Revenue represent the Margin, or the Profitability (expressed as a percentage). And yes, there are types of profitability and margins e.g., gross profits & margins and operating profits & margins, which also, will be discussed in another post (these other posts are adding-up)
- The higher the profit and margins, the ‘better the business’.
Back to my question, I’ll use this example to explain. Let’s say you earn $250 per article ($0.25 x 1,000 words). What are the costs (which is mainly your. lol time) of earning that $250? This is my general approach to writing an article (it could be more or less):
Now, what is your hourly rate? Let’s use $25.00 per hour. I realize that rates can be more or less. At $25.00 per hour, the total time, or cost of producing the article is $187.50 ($25.00 x 7.5 hours). With a cost of $187.50, the profit is $62.50, and the margin is 25%.
A first question: Is 25% a ‘good’ margin for writing? I Googled this exact question and could not find an answer to this specific question, other than general information stating that “… a 20% margin is considered high (or “good”)…”, courtesy of the Corporate Finance Institute.
But the more important question is: What is the value of your time?
Is $25.00 per hour a fair representation of the worth of your time? I live in Canada, and the minimum wage is $16.65 per hour (Government of Canada, April 2023). So, at $25.00 per hour, your (my) hourly rate for writing is $8.35 (50%) more than minimum wage. Is that good?
- What else could I (or you) be doing to earn income (revenue)?
- What are you not doing when you’re writing, what is the opportunity cost?
- I can’t answer these questions for you, but I do know that my time is worth more (much more) than $25.00 per hour.
What happens to profitability when I value my time higher? Writing is no longer profitable.
A quick recalculation with an hourly rate of $50.00 results in a cost of $375.00. At a cost of $375.00, writing the 1,000-word article at $0.25 per word.
Getting back to the discussion of making money i.e., profitability, other valid questions include: 1) Can you earn more than $250.00 per article with the same costs? and 2) How can you lower your costs (become more efficient) in producing the article?
Yes, I have heard of ChatGPT and played around with it and found it very formulaic. You can add more prompts, commands, specifics etc., to make it more dynamic, but I’m ok for now. Also, I have a perspective (opinion) on the commoditization of writing, a state that we’re already in, to some degree, which can/will lead to the disintermediation of writers driven by ChatGPT and the likes.
Of course, when it comes to writing we cannot — and should not — discount the value of the joy, reward, sense of accomplishment, peace, therapy, connection, and sense of community, which is a product of writing. So maybe it’s this intangible value that needs to be included in the calculation and analysis of making money from writing, maybe.
So, how do you really make money — and I mean profits — from writing? Seriously if you have ideas, other than ChatGPT, I’m all ears.
BTW
Writing this article took me about 2.5 hours. 1.5 hours for the draft and another 1 hour to finalize, which translates to a total cost of $125.00 ($50.00 x 2.5 hours). Revenue will be $0.00, so that means there is no Profit, I’m actually in a Loss position. However, when I consider the intangible value, well maybe it's priceless. //
