All Technical Writers Make $100,000

["M. David Orr" <whitears -at- INTERACCESS -dot- COM>]

Matthew Danda wrote:

>All tech writers make around $100,000 a year. If you are not, than
someone else is taking your money:

I think it is true that free-lance technical writers with 3-5 years or more
experience are worth about $100,000 per annum (retail) to companies who
purchase from agencies or tech writing firms. The buying company could hire
a staff tech writer for about $40,000 to $50,000 plus benefits (say 20% to
40% of base). However, many tech writing projects in Fortune 500 companies
especially are of short duration (a few months). We've done a break-even
statistical analysis complete with charts and graphs. It shows that it
actually pays a company to hire a contractor for up to 650 hours instead of
hiring an employee. Many projects are of this duration or less.


>1. Contract company. If you get your paychecks through a contract
>company, and you make, say, $50,000 a year, guess where the other half
>goes? In the contract companies pocket!

As an owner of a contract company, I (in my dreams) wish the money all went
into my pocket. Unfortunately, only about 2% to 5% does. Let's say we can
sell a tech writer for one year at $100,000. Here's where the money goes:

100%    Revenue
-55%    Direct writer costs
-5%     Indirect costs (for example, inactive writers on payroll)
40%     Gross margin
-15%    Selling and marketing expense
-20%    General and administrative expense
5%      Operating profit (unless, of course, we lose money on a project because
the writer doesn't                     perform or the client does something
like going bankrupt. We also have to pay another 1% to finance our debt
related to line-of credit.)

Buying companies can hire free-lance writers directly, but they will not pay
an individual what they pay agencies. Why? They are willing to pay a premium
to the agency because of the safety they provide: 1) a buffer from the IRS
on independent contractor issues, 2) insurance in case something goes
wrong--like an extended sickness or non-performance. Agencies can quickly
replace writers if necessary, and most offer some guarantee of performance
or replacement for non-performance. (We pick up any retraining costs in case
of non-performance of one of our writers.)

>2. Learner's fee. If you are a newbie with less than 2 years of
>experience, you are subject to a learner's fee of $60-$80,000 a year.
>This is a cruel fact of life, but should only be temporary.

We charge less to our clients for new hires because they have less
experience, knowledge, and seasoning. They require more down time
(non-billable time)for training. The margins are very much the same as for
more experienced writers. We charge less, they get less.

>3. Stability tax. If you refuse to interview for other jobs, or refuse
>to leave your current job, you are paying a tax for the stability. The
>employer keeps the difference between your salary and the $100,000 you
>are really worth.

A tax is paid more or less at gunpoint. Choosing stability in exchange for
money is just that--a choice. Employees do generally improve a companies
margins, if they can be kept busy about 80% of the time on billable tasks.
But there are higher training costs and downtime associated with employees
than for contractors. Also, employees have to have cubicles and equipment
and spend up to 20% of their time in necessary social interaction on the
job.


>4. Confidence fee. If you are reluctant to "start over" at a new
>company with a new project and a new development team, you are paying
>a "low confidence" fee. (This might also be interpreted as an
>"Employee Loyalty" fee, which is really the same thing.)

This may be true unless the employee comes with great credentials and
negotiates a higher salary than existing employees at the same level. This
situation can also result in market adjustments for existing employees.


>5. Human resources penalty. If your current employer won't raise your
>salary to $100,000 immediately, it's because that raise will throw off
>the entire Human Resources salary structure for the entire company.
>Its easier for HR to say no to you and bring in a new writer at $50/hr
>than to give you a $50,000 raise. Thats life...accept it and move on.

See 1. and 4. above.


>6. The "I make what I need" syndrom. If your first response to this
>salary issue is, "Well, I make what I need to be happy," than you are
>first in line to be ripped off! Well, wait a minute. Ignore that
>remark, and send me your resume. I'll start a tech writing contract
>company and hire you! Then I'll pay you what you need to be happy, and
>I'll keep the rest. Ha!

There is some truth in this summary. But people also have "self image"
salaries and rates. If they get paid below the self-image rate/salary, they
are disgruntled. If they get paid above it, they are scared. I believe this
has nothing to do with market value.


>Summary
>Tech writers are in demand and are essential for some businesses to
>succeed. A skilled writer that produces good work is making $100,000.
>If not, than someone else is capitalizing off that labor.

Exactly, employers provide marketing, administrative support, peer training,
equipment, and money for financing payables until billings are collected. In
return for the risk and investment, employers make a profit (loss). My
typical return on investment over 5 years is about 12% to 15%. With a bond
or CD, I could make about 6% to 8% with no risk. With the stock market, I
could average about 15% to 20% over ten years with less personal risk. This
is capitalism for sure. I think it's fair.


>Small Print
>This discussion assumes you are good at your work, and able to produce
>good output in reasonable timeframes.

It leaves out who pays for the damage when the above is not true and
something goes wrong on a project.


>Personal Comment
>Perhaps I am being dramatic and somewhat Marxist (ie companies are
>unfairly capitalizing off the tech writer's labor), but I take the
>risk of being PROVOCATIVE in order to get a point across.

I think the valid point implicit in what you say is that the more risk
writers are willing to take and the greater their investment, the more of
the $100,000 they get. Of course, I'm being somewhat capitalist.

>BTW, I am not at $100,000 a year yet. But the gap narrows....

May the (Market)Force be with you!

___
M. David Orr
Orr & Associates/Usability Management
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Mailto: whitears -at- orrnet -dot- com
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