the BIG idea in making money - no matter your occupation, niche, etc.

Discussion in 'General Business' started by vip-ip, Feb 12, 2010.

  1. #1
    Hey everyone,

    Perhaps I'm confused, but it seems like a lot of creative people here chase projects, no matter how much their client is willing to pay them. If you're of legal working age - no matter what you do to earn money - read on. To enlighten fellow DPers, here is the big idea - in content creation, in web design, or any other industry or business:

    FIGURE OUT HOW MUCH YOU'RE WORTH PER HOUR.

    An hour is a commonly accepted unit of time for which you can get paid. It's all math, no sleigh of hand or trickery. To figure this out - as with my previous thread in the Copywriting forum - there's a formula:

    [Your Fixed Financial Need] + [Your Desired Profit] / [Hours] = Your Hourly Net Worth

    Net worth = money after any applicable taxes. There's not much theory behind this, it's just commonly overlooked; there's money that you NEED to earn, then what you WANT to earn for fun/savings/other expenditures, and bam - that's your worth.

    For instance: mortgage/rent ($1000), food ($400), transportation payments ($300), miscellaneous expenses ($300) - this adds up to a hypothetical need of $2k [let's assume that's monthly]. Now, on top of that, you want to earn $500 because you like traveling and want to save up for a vacation. Do the math, and your worth is a total of $2,500.

    Now, figure out how much time you work a month. Most people work 40-hour weeks, so a month is about 160 hours. Therefore, your hourly net worth is $2,500 / 160 hours = $15.63 per hour. If you live in the US and get approximately 30% of your paycheck's total subtracted for taxes, then that means your official pay must be right around $20-$21/hr.

    As an entrepreneur, your job is to figure out how to make that, but that's not what this thread is about. However, taking 5 minutes to do this will HELP you figure that out. Going back to our total-need-is-$2,500-a-month model: If you know that a 500-word article takes you a half an hour to write, and your hourly net worth is $15.63, then you better ask for $8 for that content today, or else you won't be able to feed and clothe yourself tomorrow. If a 10-page web site takes you a week, then that's 40 hours of work, which is worth at least $625.

    It's all math, folks.

    P.S.: this is my 500th post :) yay!
     
    vip-ip, Feb 12, 2010 IP
  2. BlackIrish

    BlackIrish Active Member

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    #2
    Congrats dude!

    Nice post - I think Eben Pagan said something similar, about valuing your time in $$$ :D
     
    BlackIrish, Feb 12, 2010 IP
  3. nowimhere

    nowimhere Active Member

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    #3
    I saw this in get altitude , either way, its good to be reminded of this stuff!
     
    nowimhere, Feb 12, 2010 IP
  4. GarageDetailer

    GarageDetailer Peon

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    #4
    When self employed it's easy to get sidetracked on things that don't bring in any revenue. I ask myself throughout the day "is what I am currently doing professional"? It's hard to stay focused when working on the web all day, but by keeping focused on the money prize, we can all make more.
     
    GarageDetailer, Feb 24, 2010 IP
  5. sologame

    sologame Guest

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    #5
    Excellent guide mate, it really makes me to think about what my work hour is really worth.
    Im going to think more about this to increase my income :)
     
    sologame, Feb 24, 2010 IP
  6. MJHarborne

    MJHarborne Peon

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    #6
    Very true. Also, the value you place on your time sends a strong signal to potential clients about the quality of your work. Pricing yourself too low can actually deter people from dealing with you.
     
    MJHarborne, Feb 25, 2010 IP
  7. FavouritesBlog

    FavouritesBlog Peon

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    #7
    Work hard, Earn more.
     
    FavouritesBlog, Feb 25, 2010 IP
  8. Barefootsies

    Barefootsies Well-Known Member

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    #8
    Awesome post man.

    You're right. Many people do not ever consider that. I always get a chuckle when I read posts where people are trying to start a business for free or with no start up expense.

    I always tell them the trade off will me in hours you have to put in to make it. If you get free scripts, free content, so have a hundred or thousands others. So what will make you different then them? Commitment.

    So you may have to work 10x as hard to make your couple of crumbs.

    I guess when you are new, young, and hungry, you do not mind putting in 12 hour work days 7 days a week. Myself at 37, I have other things going on in life and my time is of value to me. Whether time with family, free time, or vacation. So working for a few pennies is not for me.

    People need to consider this when starting out in this online industry. Value of time, and ROI. Your time is an investment.
     
    Barefootsies, Feb 25, 2010 IP
  9. vip-ip

    vip-ip Active Member

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    #9
    Barefootsies,

    On the other hand, the more money you make from the get-go, the better off your savings account / stocks portfolio / whatever other investments you have will look like down the road. I'm in college and I'm a content creator. It's all freelance, but lately finding work hasn't been a problem for me at all, AND my prices aren't the lowest around either. I guess I found my niche, and in terms of converting to a decent hourly rate it's perfect for me :)

    Best Regards,
    vip-ip.
     
    vip-ip, Feb 25, 2010 IP
  10. tech_savvy

    tech_savvy Peon

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    #10
    quite a simple formula and convincing one too but maybe the work provider may not buy it.
     
    tech_savvy, Feb 28, 2010 IP
  11. rockyg

    rockyg Peon

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    #11
    Thing is, what happens if you launch a brand spanking new site that makes a grand stunning total of 10 cents a day. You spend 12 hours a day at it for a year before it starts making any kind of decent money.

    If you valued your time as $20 an hour after one month, you'd quickly give up. Surely the potential for future earnings has to play a factor? Isn't that what keeps us all going?! :D
     
    rockyg, Feb 28, 2010 IP
  12. vip-ip

    vip-ip Active Member

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    #12
    This is not about how I got to valuing my time at that, this is more like that's how much I NEED to make to sustain myself. It's the minimum for me. This number will be different for everyone - hence the explanation on how to figure out what you're worth.

    Best Regards,
    vip-ip.
     
    vip-ip, Feb 28, 2010 IP
  13. rockyg

    rockyg Peon

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    #13
    Gotcha. My Bad. On a NEED basis, you're perfectly correct. :)
     
    rockyg, Mar 1, 2010 IP
  14. AMac

    AMac Peon

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    #14
    Great post and it's good to remind folks about this as most seems to just put their heads down and work on wondering why they are not making big enough profits! At the end of the day we Work to Live Not Live to Work!!!
     
    AMac, Mar 1, 2010 IP
  15. mdvonline

    mdvonline Peon

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    #15
    mdvonline, Mar 1, 2010 IP
  16. Grit.

    Grit. Well-Known Member

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    #16
    My hat goes off to you with that formula. It's a wonderful concept there. It's not very often you get people worrying about covering their overheads etc and taking into account all of their expenses. I wish this was something I had thought about before.

    However, what you needed to do was find out the tax's taken off as a percentage properly, then with a definitive percentage, work out the real value. So for example you get 30% deducted from your paycheck and then end up with your $15.63 per hour, you therefore take this as 70% of your hourly rate. So to find 1% you divide this by 70 and then multiply by 100 to get your real hourly rate of about $22.32 (rounded down to the nearest cent).

    Again, thank you for the informative post
     
    Grit., Mar 4, 2010 IP
  17. vip-ip

    vip-ip Active Member

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    #17
    Great point Grit. As a full-time student I'm tax-exempt, so I'm not worried about that for now. Down the road, this will definitely be an issue.

    vip-ip.
     
    vip-ip, Mar 4, 2010 IP