I have a few days left to play out my month long sprint towards $10k of income in a month. I can already tell three things:
- Our household got close to hitting its goal of $10k.
- I cannot earn $10k per month
- There is a better way
Our Goal is Close
I said at the outset: $10k in billables was my goal. I said a consolation prize would be to get the household to $10k. I think we can get our household to $10k. We really needed to hit that number as the move follows on four bloody months of renovation expenses and income shrinking.
Over the weekend, I sent out $3800 in invoices. That alone is almost 40% of the goal. The problem is that this is work from the last couple months that has come home to roost in my bank account. A lot of that more will show up much later.
Combine my employment income, my partner’s income, a $2000 draw from my RRSP (like I said: bloody four months) and yeah: we hit the goal and then some.
I Cannot Earn $10k Per Month
Take my schedule and my billable hours: at $80/hr X 160 hrs, I could get to $12,800 per month. The problem is that half of my hours are non-billable. It’s not that I’m lazy: it’s that work takes prep work. “Full time” looks more like a mix of 100% billable time at $45h/hour and 50% billable at $80/hour. Translation: working full out, I can’t earn more than $6500-7000 for a sustained period of time. In Victoria, a household needs to bring in in excess of $100k per year to live alright. My best is going to be in the $78,000 per year by playing the game this way. People can earn more in my field, but how I am doing it tops me out at this low level. Why? It’s because I’m either honest or I think some pride in poverty.
Income Problems [SOLVED]
I have been billing hourly. If I sit and suffer for 60 minutes is that somehow more valuable to a client than if I give them the same solution in a few minutes? I have been billing based on effort. People are more interested in results. With 20 years in the business, I know how to do some complex things well and fast. If I do it well, I deserve to get paid. If I do it fast, I will be paid little. In other words, a flailing noob would earn more than me. Does that sound fair? If I can deliver it well, the client can use it quickly. Results and speed are each something. By charging hourly rates, I shoot myself in the foot. The way to make my work, well, work is to estimate how much something costs, factor in the market value of the work and then charge accordingly. On a speed course, I can get WordPress going well in an hour. What used to be 3 days and $1200 in 1997, is now an hour. The value is still there. I should charge something between the $1200 (three days) and the $80 that my work would merit with today’s time and rates. If I decided the median was the “right” rate, then the set-up would be $640 and ready tomorrow. If I can load up tasks and knock out 5 site deployments in a day that used to be $400. Now it would become $3200. That’s how I win: and elite practice tempered by good value.
This is an old lesson, but finally, the light went on. Bill based on results, not effort. In fact: take on work based on its likelihood to succeed and benefit the client.