21 Feb WTF is Money & How To Make More
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A seemingly simple, yet mind-blowing moment for me was when I realized that a $500 check is written on the same piece of paper as a $50,000 check. It didn’t hit me until I received my first $50,000 check for one of my side hustles.
Holding that piece of paper I realized that money is infinite. I was paid providing the exact same service I previously did for $500, but was able to charge $50,000 because the “value” of that service was much larger for the buyer. The time that I spent and the actual value I delivered were these same, but the perceived value to the buyer with more resources was greater. Thus, I was able to charge a lot more money. This is how you make more money – by adding value to those who are willing to give you more money for it.
Let that settle for a second. I’ll come back to it. But to see why this works, let’s take a trip back in time.
WTF is money? A quick history of money
Money is a method of exchange.
And at the heart of any exchange is a transfer of value.
Money = an agreed upon exchange of value.
Centuries ago money started as a simple credit system. People used to trade an object for another object or collection of objects. One chicken was traded for some wine. The value of each item was determined by each person and an agreement was made. It was a simple exchange.
But transactions likely got too complicated and people needed a method to represent the value of an object.
BOOM – Money was born.
Now money contains the value of the object established between two people (or institutions). This is the price,
So if you want to truly make more money, then you need to maximize the value and the price.
Whoah. Getting deep. But seriously, this is the key to making a lot more money. If you want to go deeper check out why I write about money.
How to make more money (and generally be more successful) in 5 Steps
See I told you we’d get here. This is a personal finance blog, right? Making more money is actually a pretty simple concept. Here is the strategy I use, but like any strategy, success is all in the execution.
1. Maximize value (delivering more than expected)
So many people in life do as little as possible and wonder why they can’t get ahead. If you really want to make more money you need to maximize the value you are creating for anyone who is paying you or you want to pay you. Whether it’s your boss or your client, focus on delivering more than is expected and you will make more money.
Maximizing the value that you provide is how to get a raise and is essential to building a profitable consulting business. Your boss will remember all of the value you provided the next time you ask them for a raise, and your clients will also remember when they need more help or someone asks them for a recommendation. A vast majority of my most profitable clients came from referrals from smaller clients. It’s pretty hard to get a high paying client, but maximizing the value you provide in every engagement has a way of paying you back over time. I am still getting referrals from clients I worked with 5 years ago.
TIP: If you really want to make more money you can maximize value without spending more time.
2. Maximize perceived value (happy client/boss)
This took me awhile to learn. Just because you are maximizing the value you provide in a project, doesn’t mean that your client or your boss will see it OR that they will find it valuable. Value, remember, is in the eye of the seller and the receiver. So you may spend an extra 20 hours working on a design that your client didn’t even ask for, but you thought it would be valuable to them. But your client or your boss don’t see those 20 hours, they only see the design.
If the design isn’t valuable to them then you essentially wasted your time because the perceived value was zero. Or the perceived value could even be negative because your client might think you were wasting your time on something that didn’t matter. You can maximize perceived value by really understanding what your client or boss wants and delivering that exact thing. You can also deliver added value, but you have to communicate what that added value is, in order for it to become perceived value. To sum up simply, just make sure your clients and boss are happy with your work. They will be happy if they clearly understand what you’ve done and how it benefits them.
3. Maximize efficiency (doing more in less time)
You need to think about your time like a business does. How you manage your time is essential to just about everything in life, but especially in business. Time is money, right? As you learn and gain more experience with anything you should be getting more efficient. If you aren’t then read The 80/20 Principle: The Secret to Achieving More with Less and check out this episode of the podcast below.
The first time I built a website it took me over 200 hours. The second time I built one it took me 120 hours. The third time it took me 40 hours. Now I build them in 2 minutes. LOL. You get the point. The cool thing is as you get more experience you not only get more efficient, but you can start charging more.
4. Maximize pricing (make the most money for your time)
If you don’t ask for more money you’ll never get it. Most of the money I have made has come from simply making the case and asking for it. A simple conversation can change your life. I went from making $400 or $500 per engagement to selling $50,000 plus projects in a short time because I focused on maximizing my pricing by working hard to understand the value to the buyer.
The more valuable what you offer to the buyer, and especially when you can tie the project to revenue, the more you can charge. I’ve had a few cases where I’ve been able to maximize my fees by taking a percentage of the revenue increases I drove. This is a lot of fun. For example, I worked with an e-commerce company and charged them a flat $2,000 per month for my digital marketing services that would increase the visibility of their business, but also negotiated 20% of the revenue increases that I could drive and attribute to my campaigns. It was the most profitable engagement I’ve ever done and unfortunately, the owner learned how to do it himself once he saw how successful I was!
Some advice – it’s easier to sell revenue driven compensation directly to the owner of a business, but harder to sell to their marketing department. It’s also generally easier to sell to associations and non-profits, because the money they are paying you with has already likely been set aside for services like yours. It’s also always harder to sell to a small business owner or maximize your pricing without taking on some of the risk.
You can have the same 20 minutes conversation to sell a $500 project as you can a $50,000 one.
5. Give back
A vast majority of the most successful people in the world give back their time and/or their money. I personally believe we all have a responsibility to give back to our communities and the world around us. Take the skills that you’ve developed in your job and share them. Not only is it good karma, giving back also opens up tons of new connections.
When I first started building WordPress sites I built some of them for local non-profits and charities to solicit donations and community support. From these organizations, I have been connected with board members, community members, and other organizations that I ended up working with. It’s really a win-win, and even if it wasn’t the world needs it.
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