It is a small thing that makes the difference.
And the good part is that everyone can do that small thing.
There is a huge disparity of wages throughout the world. Minimum wages range on low end of cents per hour in the poorest of countries, to the $8 per hour minimum wages in United States.
On the other end of the spectrum attorneys and other professionals earn around $300 per hour or more.
And at the very far end of the bell curve are the celebrities you can hire for obscene, but justifiable amounts of money.
So what differentiates these high paid people from the low paid and how can you immediately increase your own earnings?
The answer is very simple, but very few people understand or are able to apply it. The secret, and it really does remain a secret, is that low paid people are stuck believing you’re paid for the hour you work, but the high paid people understand that time is irrelevant. The only thing that matters to high earners, and those who hire them, is the amount of value they deliver in exchange for the money they receive.
When would someone be worth $150,000 per hour? According to Nathalie Feset, Paris Hilton earns $150,000 just to appear at a social gathering. Notice the word is appearance, not, per hour. Does this seem outrageous? Perhaps it’s a good deal and let me explain how a change of perspective can completely change your own earning potential.
If a company such a restaurant, clothing store or night club launches a grand opening or other big promotional event they may do traditional marketing such as television, radio, print and direct mail advertising. All of this marketing can cost a lot of money and usually loses much of its value shortly after the campaign is over.
But what is the value of the word of mouth marketing campaign of Paris Hilton making an appearance at your local business? And then what is the lasting value of photos of Paris at your business that can then be used in future advertisements? And don’t forget the power of social media. How many people will share photos they took of Paris at your business? As long as Paris Hilton’s appearance results in more than $150,000 in business, then she was worth more than $150,000 an hour.
I hope I’ve made a case that it’s not necessarily the time that you are there, but more importantly the value you provide in exchange for the value you offer, but now how does that affect you and I. We’re not all Paris Hilton.
Regardless whether you’re self employed or not, forget the hourly model and begin thinking how you can add more value to your customers in a shorter amount of time and charge accordingly for it. It’s a benefit for both you AND the customer.
Let’s consider the following example. Imagine your Lexus LS Sedan has an electrical problem and intermittently will not start. It doesn’t always happen, but it seems it won’t start at just at the worst possible time, like when you’re already late to a meeting with an important client
So you finally decide to take it to the mechanic but you’ve got two mechanics to choose from. Mechanic A has 6 years of experience and happened to spend those years working exclusively for a Lexus dealership before opening his own shop.
Or Mechanic B who has 30 years of general experience. Both are great mechanics. Mechanic A is a younger and a less experienced mechanic, but has a lot of specific training related to your vehicle. Mechanic B is a very experienced and well qualified mechanic and has seen it all in his career.
When shopping for a mechanic you don’t have all of this information, but discover that one mechanic has 24 years of experience over the relatively less experienced mechanic and consider that in your decision. And maybe you consider their billing.
Suppose one says they bill by the hour and the other says they use “flat rate” billing. Flat rate billing in the automotive world is a predetermined set of hours for common repairs. For example, the hypothetical replacement of a water pump is 3 hours. So a shop will charge 3 hours even if a mechanic can replace it in as short as 2 hours or as long as 4.
So you first walk into Mechanic A’s shop and discuss your problem. The front desk receptionist is not familiar with your problem and explains how they bill by the hour and she has no idea how many hours it will take to repair your problem because it is an intermittent problem. This leaves you with a bit of uncertainty and you fear you could be leaving the mechanic with a signed blank check so you decide to look elsewhere.
Next you find yourself at Mechanic B’s shop and you feel very comfortable with him. Mechanic B is a very pleasant man who obviously knows his way around a car because it’s obvious he’s been doing this for a very long time. He tells you he will fix it for $500 and get it done by the following day. You don’t like the sound of $500, but there’s some comfort about the certainty of “tomorrow” and a firm dollar figure.
That was until “tomorrow” comes around and they have not called. After several calls, the car is not finished. Three days later they still cannot figure out the problem. Eventually, the car is towed back to Mechanic A’s shop because Mechanic B suggested that Mechanic A is an expert at repairing these type of cars.
So you walk into Mechanic A’s office, fill out the paperwork, he opens the hood, turns a screw, closes the hood, and the problem is solved in only 20 minutes. Mechanic A charges by the hour at a rate of $60. Your total bill was only $20 for the 20 minutes.
But how does this story relate to value and increasing your wages? Mechanic A has spent the past 6 years working specifically on Lexus’s, attended numerous trainings on these cars, read all of the factory training updates and knew the minute you walked in exactly what the problem was with your car. Because he was able to fix your car in 20 minutes does not mean he should only be compensated for twenty minutes of his time.
It took him 6 years of time and money to learn how to solve your problem in 20 minutes, and it is that 6 years he should be paid for, not the 20 minutes. He also had the skills that the other mechanic could not solve in three days. He also solved a very big problem in your life and a problem that was only made worse by the other mechanic who took your car away from you unnecessarily for three days.
At a minimum mechanic A should be paid the $500 that mechanic B would have received for the same solution, but I suggest an even higher fee for two reasons. The first is that because Mechanic A can do the job faster than Mechanic B, you are without your car for less time which justifies an even higher price. Second, since Mechanic B was unable to do the job, Mechanic A is even more valuable and thus worth more money.
The lesson here is how can you convert your job or business into something that more closely resembles what Paris Hilton offers and less of what mechanic B and the majority of service providers are doing? At the end of the story, a smart person would have gladly paid $800 or more to mechanic B directly if you knew what the outcome was going to be.
So as a business owner, or even an employee, this becomes entirely a marketing dilemma. It’s critical how you deliver your message so your customers, or employer, will understand the greater value you provide and thus appreciate your higher fees.
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Photo: Adam Cole