Wow! Why Earning More Is Better Than Being Frugal

I am seriously honored. The other day I was on the phone with Ramit Sethi and he was asking me about how things have been lately with my business (For those that don't know, the primary reason why I'm even doing the things that I'm doing right now is because of Ramit's Earn1K course). I gave him the run down about all of the obstacles I've been facing and the successes that I've had and we parted ways. The next thing I know, yesterday he sends me an email saying “You are in the New York Times.” Holy crap….

The article is great and provides some great insight as to why you need to change your mindset from the “I'll just stop drinking Starbucks” mentality to  “I am going to make a valuable service or product that will build wealth.”  Of course, this is WAY easier said than done, so I wanted add some insight (hopefully valuable) that should bring some reality to the “earning more/being frugal” topic.

In the NYT Post Ramit Says:

The simplest way to earn money on the side is to turn your existing skills into side income. Nearly everyone has skills that others would pay for. Can you play an instrument? Consider being a music instructor. Are you obsessed with personal organizing? Hire your services out as a personal organizer. Do you have expertise in Excel, Web analytics or even free-lance writing? Many employers would love to hire you as a free-lancer.

This is a new way of thinking, and it makes many people uncomfortable. “That’s ridiculous,” they say. “Nobody would pay me $25 per hour.”

To them, I say two things:

1. You already pay service providers for things you could do yourself. Have you ever eaten at a restaurant? Changed oil? Gotten your hair cut? We all pay others for their services. Now, I want you to flip this around and charge for your own services. People will pay — as you already pay others.

2. You don’t know if your offer of services will work until you test it.

Twelve months ago, I declared it the year of earning more money and wrote a series of posts on the topic. I then launched an online course on earning money, in which I took hundreds of people from around the world and taught them how to turn their skills into side income.

You are already paying service providers

Ramit is spot on when he says that we are willing to pay other people for products and services, yet for some reason we feel as though we aren't in that special class of person.

Most of us underestimate the value that we bring to the table.  As I've said many times in other posts, you have talents and skills that other people want to learn or want to buy.  The problem (and I fell for this too) is that we are used to getting paid $10 -$30 an hour at our full-time job and when we think about charging $50+ an hour we start to feel like we are robbing people.

Here's the straight facts about how the corporate system works (you'll understand this more when you start your own business).  While you may be getting paid $30 an hour to do a job, a corporation is really paying a lot more for you than that because of benefits and overhead.  In fact, in very large corporations it's not uncommon for one person – who get's paid $30/hr – to actually cost the company $120+/hr.  When you start seeing how much you are truly worth, it makes charging a lot easier.

Divorce value from time

Now, the key is to divorce your value from time.  What's meant by that is that when you are doing business, try to show (and deliver) as much value as possible and base your price off of that value.  When your value is based on time you become stuck into another full-time job, but when time is separated you are free to innovate.

For example, it's not uncommon for me to charge my web development clients very high.  Often, I'll get prospects that are immediately turned off because the price isn't in their budget.  However, my ideal clients know that when they deal with me, they aren't just getting a website, they are getting my expertise and a vehicle to generate hundreds of thousands of dollars worth of revenue.  The same goes with any other service I provide.

The “earning more” road is NOT easy!

While it may seem like a great idea to earn more rather than to just be frugal, the fact of the matter is that it's extremely difficult.  BUT, if you try it and stick with it, you'll learn more in a year than you ever will in any university.

I started my entrepreneurial endeavors in the summer of 2009.  I was handy with fixing my friend's and family's computers and my original intention was to transfer that skill into helping others in the same way.  A couple of Craigslist ads and some frustration in dealing with people who wanted to only pay $20 for a couple of hours of work, I nearly quit.  Why would I want to spend my valuable weekend time for a lousy $20-$100.  All-in-all about 6 months of trying I earned a whopping $300. That was crappy.

As a last-ditch effort, I invested in Ramit's course and tried to take everything to heart.  It was enough to re-ignite the spark and get on the startup path again.  However, the road still sucked (in a good way).  There was long hours, I realized that IT sucked for me as a startup, some clients stiffed me on payment, some prospects wasted my time or were lost, my family was stressed, and I almost quit again.  Sure, I was making a whole lot more (as Ramit points out), but it was a roller coaster of immense joy, and total crap.

For example, there was one customer that had me driving 2 hours every week to meet, and every meeting the scope would change and he'd blame me for it.  After about 2 months the deal fell through and I almost lost my entire company (thankfully he agreed to let me keep half because of mistakes on his end).  On the other hand, One client that I'm working with right now loves me to death and they show it in giving me revenue and referrals.

All that being said, I wouldn't have it any other way.  Despite the failures, look at all the great things that has come about:

  • My wife gets to stay home (money is still tight).
  • My children have their mommy.
  • I've met some of the best people in the world.
  • I've been in the New York Times and Wall Street Journal.
  • I'm friends with NYT best seller Ramit Sethi.
  • I've moved my niche into web development and business consulting (This came about only because of getting out there and finding out what people want).
  • My consulting rate is $150 an hour (still trying to divorce value from time there).
  • The price of my projects range in the thousands.
  • I was invited to sell for the largest restaurant franchise company in the world (which I never really planned for).
  • My company made 20K+ revenue last year and is expected to triple that this year (or more).
  • I sell products such as ebooks now.
  • I also make considerable income with affiliate and niche marketing.

The point of this post is not about me but ABOUT YOU!!!!  You need to start now.  You'll never have a successful business unless you start.  Ramit is right, but as long as you keep in mind that the average business doesn't see profit for 3 – 5 years (Yes, that's the average), and you have the patience and fortitude to see it through, you'll be successful.  I barely graduated high school (actually graduated 2 months late), so if a dummy like me can do it, imagine how much better you'll do!

 

4 Comments

  • Harry

    April 27, 2011

    Dean, great job and that is wonderful with the NYT mention. Things are moving along and I encourage you to keep it up. Great Job!

    • Dean Soto

      April 27, 2011

      Thanks so much man! You too! I can't wait to see where your projects go!!

  • @JeffreyFriend

    April 27, 2011

    Wow, great post and CONGRATULATIONS!!!! You've inspired me to continue on in my journey man, and in a smarter way. I've been trying to make money from several different avenues, but it's time to focus on one that will make sense for long term earnings. I'm also going to look into Ramit's course and see what it's all about.

    • Dean Soto

      April 27, 2011

      Hey Jeff,

      Thanks so much for the comment!! Thank you, my friend. Dude, you are doing some great things with the social media club and also with handling your juggling your full-time job with your side stuff. You can totally get something going.

      Yeah, I'd totally check out Ramit's course. It really helped and most of the stuff I use today in my strategies come from that course. =)

      We should get coffee again whenever you are free.