Paid by the Job not by the Hour

Back in July, the post Busting Your Ass Is Stupid highlighted the pitfalls of increasing wealth by focusing on increasing your hourly rate. Recently, an extension of this became abundantly clear. When you do work for someone else, find out how much the resolution of a problem is for them, and offer to resolve the issue at that price.

Let's say that someone has a tear in their sail and they want it fixed. How much is it worth to them to have the sail repaired? If it is a huge tear, probably quite a bit. If it is a minor tear, maybe it isn't an immediate need and some sail tape will hold for a while. But what if a storm is coming, a small tear, even with tape, will end up in a big tear, unusable sails, and a potentially life threatening situation.

Val has the talent, skill, machinery, and materials to do this job. Should Val offer to work on their sails based on some hourly rate? No, she would then be limiting her earning power AND, more importantly, be penalized for skill. Since she is so efficient with the sewing machine, a proper repair might take her only 30 minutes but an unskilled person may take an hour with the resulting job being sufficient in both cases. Val has thusly been penalized, if she works based on an hourly rate, for having a deftness with a sewing machine.

The better approach is to identify how much resolving the problem is worth to the person needing the repair. If it is with $50, and Val can do it in 30 minutes, all the better for her. Both the person in need gets what they want, a fixed sail, and Val's not being penalized for being good and she can then work on someone else's sail for the next 30 minutes, making even more money.

Is this taking advantage of the person whom needs the sail fixed? No, they have already established in their mind how much it is worth being fixed. If that amount meets Val's desires to fix something, then both parties are happy. Win-Win.

Everyone has problems. Everyone can assign a value to a problem's resolution. Focus on how much that problem's resolution is worth, and then go from there. Never, ever work based on an hourly rate because in the end, you will generate far less income for yourself.