Nobody likes being poor. As a matter of fact, you’re probably reading this because you want to better your chances of becoming more of a money-magnet and not the other way around.Here are 3 lessons I picked up over the years:
1. Determine what people value, and go all-in on that
In every bookstore, there’s a whole section of books dedicated to people who are interested in finding out the formula to knowing their worth. And while discussions like these teach us how much we could be charging our clients, they shed very little light on what our clients really gain from our services, which is what really drives the money.
Topics like this usually just sell one idea: you’ve been working for x years, and you know this much; therefore, this is how much you should charge.
There is absolutely no harm in that logic. In fact, I believe that we should acknowledge precisely how far we’ve come in our journey. At the same time, settling with this kind of mindset only makes us forget that our time is really just worth what people will pay for it.
In other words, no matter how highly esteemed we think we are, if the role we play in others’ lives doesn’t drive THEIR success, then our costliness to them makes no sense.
Although it’s essential to have some sort of base rate, it’s equally crucial to price your services based on how integral your output is to your clients versus your assertion of how expensive you think you are.
Flexibility will always be key, and knowing what position you hold in the overall equation is important.
So how do you use this? Shift your focus to what your clients value. Take the time to determine how much you will really be helping people.
When you enter the picture, what problems are you solving, and how much are these problems worth? Of course, that’s not to say that your rates are reliant on how your clients value you. But if you are going to be making them a lot of money change your pay structure around.
For instance, instead of charging $80/hr for 2 hours, you can bill your clients a just fixed percentage of the savings. It makes you sound confident but it can earn you more money too!
Here’s a clearer picture of that concept: If you charge $80 per hour, it doesn’t matter if your client saves $2,000 or $20,000. You will get $160 for two hours for your time and expertise.
However, if you charge 10% of their total savings thanks to your services, you immediately bump up your wages by over 10x on a $20,000 project.
This pricing tactic not only helps drastically increase your income; it constantly reminds your clients of how much value your involvement really created. This makes people see you as an investment and not a cost.
2. Be your own talent, not something else
You don’t need to hear a TedTalk to remind yourself that your welfare is your responsibility. You can talk to as many consultants, freelancers, and solo entrepreneurs you can find. The majority of them will say the same thing: you will make more money working for yourself versus working for somebody else with the exact same workload.
It makes sense because there isn’t someone up top skimming money from your earnings.
An academic study not too long ago suggests that an applicant is most likely to earn 10% more for trying his or her hand at a startup or a small business equivalent and failing, compared to someone who shares a similar background but has kept safe by staying in a nine-to-five.
This increased entrepreneurial pay reality is even more evident when you’re an expert at something.
But that’s the real kicker. This is true if you are an expert and you should only sell your expertise.
Know what you aren’t an expert at? Social media, or running a website.
Well then. There lies our first area of opportunity. Granted how we have a wealth of resources at the tip of our fingertips. Outsource everything that isn’t your major value add.
If you bring in $5,000 a week with a 50 hour work week. You are effectively making $100/hr. If the easy parts of that work are outsourced such that you save 20 hours and pay $500. Your hourly rate has gone way up!
Now you make $4,500 for a 30 hour work week, or $150/hr.
That was the easiest 50% raise I’ve ever seen!
Plus branching out to create stable networks of friends and helpers never hurt anyone either. Everyone loves good team.
3. Keep expanding your skillset
It’s a dog-eat-dog world. You lose the moment you refuse to keep expanding your skillset. It takes a few years for a skill to remain valuable before it starts becoming outdated.
For example, if you’re learning how to write Java or master No-Code programming, there’s a high chance you’re going to need to learn a more updated version of what you already know now in the next five years or so.
Even better people will pay for skilled workers. So commit to yourself to keep learning. Then once you’ve learned, ask for a raise! Seriously, your super skills can easily net a 10% raise in your job and voila. Every hour you ever spend is 10% more valuable.
If you rinse and repeat this for a few years, you’ll not only be very skilled but you’ll also be paid a ton.
Consider these three tips to become an eternal learner:
- Have a checklist of skills you want to master every year. Graphic design, video editing, sound engineering, it’s up to you. The internet provides a long list of free online classes that allow us to explore our most creative selves yet.
- Be on the lookout for new technology. I hate to break it to you, but when you don’t find it in you to acquire improved digital skills, you deprive yourself of a universe of opportunities. Technology is irreversible. That means for you to keep increasing your value, you’re going to need to keep looking for ways for innovations to favor you. Find out emerging tech trends in your industry, and learn whatever you can.
- Commodify more than one skill. Go-getters are most likely to be good at many things. You might as well charge for them all.
For instance, if you have an eye for designing furniture, don’t let go of your coding skills altogether. While focusing is often the best, following your best results is typically a path to success.