Avoid This Mistake At Any Cost!
Today we are going to discuss a mistake that you need to avoid at any cost if you don't want to kill your dreams while they are still in the egg. This podcast will allow you to secure unlimited potential instead of capping your dreams and ambitions.
If you are looking for a solution to earn more and scale your business while working less, then you are in the right place.
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So today I wanted to take this opportunity to talk about something that you shouldn't do under any circumstances. Because this is actually going to kill your dreams and eventually going to kill you. So it's something you want to avoid at any cost.
Trading your time for money.
I see a lot of freelancers who basically ask me “I am a like a designer and I'm paid by the hour”.
The problem with trading your time for money is that we only have 24 hours in a day. So basically if you have 24 hours in the day those 24 hours is the maximum you will be able to earn. So basically what you're doing is putting a limit on how much you can actually generate.
So after sleeping let's say you have 16 hours. Out of these 16 hours maybe you need to eat. Let's say that's a good three hours. And also you know your breakfast your lunch and then your dinner stuff. So that's 13 hours that you have left, to do whatever you need to do. But are you going to work all these 13 hours? If you do you might go insane very quickly because you know you can't spend all your time eating and working so you need a little bit of time like you all the time to rest your brain or to do something you like because you do have passions and you do have a life as well.
Let's say you know you want to spend time with your family and stuff and you're going to do that like three hours a day. So those three hours include meal family time your hobbies and stuff like that. And depending on where you work. If you if you have to commute, you need to take that into account as well.
So let’s say you have 10 hours during the day. If you charge 20 dollars an hour then the maximum you can make is two hundred dollars a day. That's the maximum you can make. And nobody is limiting it but you. OK. So the only way to earn more would be to charge more. But how much more can you charge? So you know obviously you could decide to work those 10 hours but you know how quickly are you going to become like super stressed and depressed and stuff? And you will have a social life. Right.
I've seen a lot of people. They just work work work work work and eventually they are more miserable than when they started the adventure of their life. You know they wanted to be their own boss so that they could be happier and do whatever they want to do but they end up working like crazy. And yet because they do have to pay the bills and they've made a crucial mistake when they designed their business model which was charging people by the hour.
And also the you know even if you decide to do it like you know work like 10 hours a day the first couple of days the quality might still be there but the quality will decrease as well as you know the more miserable you feel you feel do with the less or the quality is going to be. And eventually, not only you'll be miserable but your clients and the people you're serving are going to be miserable as well. So it's not a long term strategy. All right.
So the aim here is for you to work less than you were working before. So that's the reason why you decided to start a venture. And that's what entrepreneurship should be. When you're an entrepreneur, your gains and the profits that you can generate are unlimited. It doesn't mean that you're going to make millions like straight away or something.
But what I mean is that you could make zero or you could make a billion dollars. Nothing is stopping you. And in this case if you're working by the hour then you're stopping yourself and nobody else is doing it.
Avoid This Mistake At Any Cost
So what’s the alternative?
You could work on a project based on what the client wants to achieve. OK.Let me give you an example. So if you start working with a client and you're just doing the operational stuff. So the client says “you know what? I want a web site” and you're like” oh man Mr. Client I can deliver the Web site. I'm going to work 100 hours on it”. I mean these are like fictional numbers.
And you charge 20 dollars an hour. So that's two thousand bucks. So the client says “oh you know what? Two thousand bucks bam no problem”. He pays. You're happy you go celebrate with your buddies and you have beers and stuff. So you just made two thousand dollars and you're happy.
So now let me give you scenario number two. The same client tells you “I need a Web site” and you're like “Oh OK. But what do you want to achieve with that Web site? And he's like “I need a Web site because we're mainly doing none digital stuff and we want to be digital and on the internet, and we want to increase our share online with our visibility”.
So you're like “Oh right. OK. So how much money are you guys making today? Outside of the Internet”. And he says “we're making a million bucks”. So you ask “So what do you want to achieve with your Web site. How much money do you want to make with that Web site? And he says “we'd like to make at least five hundred thousand”.
And at that point you know what they're trying to achieve. You know their aim is to get five hundred thousand bucks right. And you can tell them that “Well you know what? OK. So I know you want to make 500,000. If I make a Web site that's going to allow you to get those 500 thousand bucks would you be happy to pay fifty thousand bucks for it?” This works out at 10% cost of the final objective. It's the equivalent of, well give me one and I give you back 10. But if you told them straight away “dude its fifty thousand bucks”, they'll be like “No way no way” and they will go to someone else.
But if you price it based on their financial objective, it can work. So that's why I was saying to have a strategy talk with them first to understand what they're trying to do and how much they’re trying to generate out of it. Then at that point you can price it based on what’s in it for them.
And at that point you could actually charge more money than an hourly rate. I'm pretty sure some people have paid that kind of price. Because if they achieve the objectives that they set then they're going to make four hundred and fifty thousand profit.
And of course this is just an example.
So this is what you have to do. Instead of just throwing a number and limiting that number yourself using the number of hours that you can actually work, if you determine how much the client is trying to make and then you take a percentage of it.