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Price Your Time Like A Business

Updated on August 13, 2015
CC BY 2.0  Money in Hand
CC BY 2.0 Money in Hand | Source

Is Your Income in Alignment with Your Dreams?

Today, I have a fictitious case study for you, based on many of the people that I have talked to. One of the most common things that people complain about is money, or lack thereof. It's a difficult issue, because we all want more of it, but most of us feel like it's out of reach. So, I'd like to focus on the first common mistake that people make: undervaluing themselves.

This topic is talked about extensively in the context of freelancing and self-employment. But, really, this applies to everyone. It's all about alignment. As a life coach, I see a lot of dissonance between what people want and what people do. Most people aren't doing what it takes to get where they want to be, but they complain and agonize about not already being there. That's perfectly normal. It's human. But, let's talk about how we can bring your vision and your actions into alignment when it comes to your money.

CC BY 2.0 Paying Bills
CC BY 2.0 Paying Bills | Source

Meet Gabriel

Gabriel works full time as a waiter in a small diner making about $1,500 a month. Gabriel also cleans houses for a few families in his neighborhood to earn an extra $175 a month. Gabriel loves both of these jobs and is very good at what he does. But, he struggles to pay his bills every month and is unhappy with his living situation. He cannot afford a car, so he relies on public transit to get to and from work. He lives in the best apartment he can (barely) afford, but it's very small, and not in a very nice neighborhood. Gabriel recently lost a lot of weight and none of his clothes fit him, but he can't afford to buy all new clothes.

Gabriel wants more from his life! But it seems like no matter how much harder he works at doing what he's doing, he can't get ahead.

Cost-based Pricing Analysis

The first model I'll show you is a cost-based pricing analysis. In this model, you add up all of your expenses and divide by the number of paychecks in a month (if salary or tip based) or number of work hours in a month (if hourly). So, if Gabriel sits down and thinks about a SMART goal (Specific, Measurable, Attainable, Reasonable, and Time-bound goal) for where he wants to be, his anticipated expenses might look something like this:

Monthly Expense
Cost
Rent and utilities
1000
Food
300
Car Payment
250
Gas, Insurance and Maintanance
250
Clothing
60
Total Healthcare and Insurance
150
Cell Phone
60
Recreation and Discretionary
330
 
 
Total
2400
In order to live the way that Gabriel wants to, he needs to be making $2,400 monthly
CC BY ND 2.0 Empty Wallet
CC BY ND 2.0 Empty Wallet | Source

Gabriel's New Awareness

After really thinking about it, researching the actual cost of the things that he wants, and adding it up, Gabriel now understands that what's in his head and what's in his life is out of alignment by about $700 per month. For the first time, he now has a clear picture of something to strive for- not just getting a nicer place to live or getting new clothes, but a sustainable situation that allows him to do those things without pain.

Market-based Pricing Analysis

Another pricing model that businesses use is a market-based pricing model. With this model, you look at what other people in your market are able to get for what they offer, and base your pricing on the market. So, if Gabriel took a look at what he's offering (waiting tables and cleaning houses) and what other people in those markets are making, some of the data he might come up with might be:

Position
Monthly Earnings
Waiters National Average
$1,803
Waiters in Travel Accomodations
$2,087
Restaurant Supervisor Position
$2,702
Housekeeping National Average
$1,875
Housekeeping Supervisor Position
$3,258
Source: US Bureau of Labor Statistics, bls.gov
L'Enfant Plaza Hotel Lobby
L'Enfant Plaza Hotel Lobby | Source

Gabriel's New Awareness

By researching what other people make, Gabriel learned a lot. First of all, the diner he's in doesn't bring in enough customers to make what he should be making for that job. A restaurant in a hotel would likely be a better place to get what he's worth for his skills. He also began to consider something he had never really considered before- going from cleaning houses to doing housekeeping in a hotel or hospital. Not only does it pay a little bit more, he wouldn't be relying on tips as heavily, and there's more of an incentive to eventually take a supervisory role.

This is Just An Example, and Just the Beginning

Although I attempted to use real data, this case study is fictitious and is not intended to provide any real advice for waiters or anyone else. This is simply one tool that I might use as a life coach to begin the conversation about making more money. Gabriel is very happy doing what he's doing, but he just isn't making enough money doing it for the fairly modest life that he wants to live. Maybe your dreams are bigger. These tools work for everyone from Gabriel to multi-billion dollar corporations!

Gabriel still has some work to do to bring the two into alignment, but this new awareness is a huge shift in his way of thinking about what he's doing. It's no longer these vague, "I'll know it when I see it" type goals, but something concrete that he can really start to work towards.

Try this yourself! Take about 30 minutes to really do your research here and think about a SMART goal that you can achieve and what it will be like once you're there. Then, you can begin to think about how to get there, and stop just worrying and complaining about not already being there. You control your destiny!

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