4 ms·

Don't sell your time. Instead, generate value.

by douglaswlance 8y ago

mancerayder 8y ago
That sounds like a kernel of something profound, but leaves one hanging. Can you elaborate?
- sp527 8y ago
  He probably means a lot of things, but close to the top might be "bill for the project instead of time spent". If you bill by units of time, you will like under-exploit the information and skill asymmetry between yourself and the client, and leave a lot of money on the table. You should instead price as a meaningful fraction of the value you're creating. You may not know that number, but the client will more or less signal it to you in negotiations if you're canny. Something that's relatively easy for you to do (that might take a month, for example) could generate millions in revenue for the client. You're entitled to a large chunk of that. It's in fact this approach that can make consulting extremely lucrative: someone has already gone through the work of acquiring leverage by building a business and you're coming in with the rocket fuel. You arguably should never take a contract where this isn't clearly the case, since committing to a project has an opportunity cost in your own time.
  - LyndsySimon 8y ago
    “Entitled” may not be the right word, but I agree with this. There’s a huge difference between someone able to build what a business needs and someone who understands the business’s needs and can work hand-in-hand with them to explore their needs and optimize to that. It’s very much worth the difference in cost to the business.
    - sp527 8y ago
      You're right that "entitled" is a bit strong and it was quite perceptive of you to point that out. That word choice was born out of my personal frustration at how many developers either get shorted in negotiations or never even understand how much value they could capture for their work. It is in some ways highly exploitative, in my opinion.
- LyndsySimon 8y ago
  Working hourly is the worst form of income for most people - you’re literally trading your self for money. Working salary is a step up, if you set reasonable goals and keep your commitments in check. You can work 20-30 hours and make the same money as if you were working 40-60, as long as you have the skills to generate enough value in that time and negotiate a truly results-based position. Working for yourself and contracting to others is like salaried with more flexibility. That can cut both ways - you can overcommit and work yourself to death for a pittance if you aren’t careful. The real magic seems to happen when you’re no longer trading your skills and time for money. That’s typically through dividends of some sort. That could be stock dividends, patent licensing, franchising, a subscription app... whatever. I’ve not been able to make this happen for myself yet but I feel like I have a good understanding of how to do it when my kids are a bit older and I am willing to invest my time to make it happen.
  - mancerayder 8y ago
    I tend to agree with the other comment below by sp about value in project results (at least that's my reading) over simply a money-for-time exchange. But after a decade and a half in the industry, my personal experience has been that trading hours for cash has been far less stressful, and more lucrative for me, and I've even been more appreciated, than the salaried work I did for so long. Perhaps it goes something like this: Simple hourly wage work / unskilled or apprentice-type work --> Salaried skilled work --> hourly skilled work as consulting services --> project-based (results-oriented) skilled work as described below.

Don't sell your time. Instead, generate value.

mancerayder 8y ago

That sounds like a kernel of something profound, but leaves one hanging. Can you elaborate?

sp527 8y ago
He probably means a lot of things, but close to the top might be "bill for the project instead of time spent". If you bill by units of time, you will like under-exploit the information and skill asymmetry between yourself and the client, and leave a lot of money on the table. You should instead price as a meaningful fraction of the value you're creating. You may not know that number, but the client will more or less signal it to you in negotiations if you're canny. Something that's relatively easy for you to do (that might take a month, for example) could generate millions in revenue for the client. You're entitled to a large chunk of that. It's in fact this approach that can make consulting extremely lucrative: someone has already gone through the work of acquiring leverage by building a business and you're coming in with the rocket fuel. You arguably should never take a contract where this isn't clearly the case, since committing to a project has an opportunity cost in your own time.
- LyndsySimon 8y ago
  “Entitled” may not be the right word, but I agree with this. There’s a huge difference between someone able to build what a business needs and someone who understands the business’s needs and can work hand-in-hand with them to explore their needs and optimize to that. It’s very much worth the difference in cost to the business.
  - sp527 8y ago
    You're right that "entitled" is a bit strong and it was quite perceptive of you to point that out. That word choice was born out of my personal frustration at how many developers either get shorted in negotiations or never even understand how much value they could capture for their work. It is in some ways highly exploitative, in my opinion.
LyndsySimon 8y ago
Working hourly is the worst form of income for most people - you’re literally trading your self for money. Working salary is a step up, if you set reasonable goals and keep your commitments in check. You can work 20-30 hours and make the same money as if you were working 40-60, as long as you have the skills to generate enough value in that time and negotiate a truly results-based position. Working for yourself and contracting to others is like salaried with more flexibility. That can cut both ways - you can overcommit and work yourself to death for a pittance if you aren’t careful. The real magic seems to happen when you’re no longer trading your skills and time for money. That’s typically through dividends of some sort. That could be stock dividends, patent licensing, franchising, a subscription app... whatever. I’ve not been able to make this happen for myself yet but I feel like I have a good understanding of how to do it when my kids are a bit older and I am willing to invest my time to make it happen.
- mancerayder 8y ago
  I tend to agree with the other comment below by sp about value in project results (at least that's my reading) over simply a money-for-time exchange. But after a decade and a half in the industry, my personal experience has been that trading hours for cash has been far less stressful, and more lucrative for me, and I've even been more appreciated, than the salaried work I did for so long. Perhaps it goes something like this: Simple hourly wage work / unskilled or apprentice-type work --> Salaried skilled work --> hourly skilled work as consulting services --> project-based (results-oriented) skilled work as described below.