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Based on the numbers you provided, you're currently charging your services 0% of what you should be charging.
This is leading to a loss of $0 in annual revenue.
To reach your targeted revenue, you'll need to increase your hourly rate 0. If you don't increase the hours spent on building your business, you'll experience a loss of $0 in annual revenue.
If you Google “pricing calculator,” you’ll find over 129,000,000 results. The sad thing is that each one pretty much tells you to do the same thing: take your desired annual income and divide by the number of hours you can to work.
Could 129,000,000 results be wrong? F*ck yeah!
The biggest flaw with this calculator is that it treats every hour equally. And we know this isn’t the case.
There’s the time you need to work in your business and the time you need to work on your business.
Each one of these is valuable, but they do very different things.
The simplest differentiation is that “working in your business” is what makes you money while “working on your business” is how you support your business to make money. One can’t live without the other, but weirdly enough, most people do their damnedest to replace the latter by doing more of the former.
People think they want to make more money until they see what that money costs them, so people end up gladly giving up more revenue for a taste of freedom. (We know because we both did the same thing.)
Pop quiz, Hotshot – would you rather:
- Have 50 clients who pay $2,000 each OR
- Have 5 clients who pay $20,000 each
[The clock is ticking.]
If the math hurts your head, we’ll help you out – both scenarios lead to $100,000. However, one requires a shit ton of work and effort, while the other saves you a ton of time.
Ask yourself, what would I lose if I were on the wrong side of both these scenarios? Instead of going out and getting more business, going on vacay, putting together the Lego Death Star, or just catching reruns of Seinfeld, you’d be stuck working for a bunch of clients at next to nothing.
Rather than focusing on increased revenue, let’s focus on what truly matters – your freedom. If the goal is freedom, then we can work backward to determine the price of freedom.
If the standard pricing calculator doesn’t factor in “work on” vs “work in” business time, you’d be damn sure they don’t calculate freedom. In order to determine the price of freedom, we developed our pricing model we can 50/50 Time.
Using 50/50 Time, you give yourself an accurate view of what it takes to create a business that affords you financial and lifestyle freedom. The 50/50 Time model differs significantly from these calculators because of:
- Factors in the “work in” and “work on” time
- Accounts for freedom time
Using the same target income and work hours, we calculate that out of 20 hours of work a week, you can only bill for (aka work in your business) 10 of them. The other 10 hours will be spent working on your business. See how this already differs from the standard model?
By reducing the number of billable hours by 50%, you end up increasing the value of your hourly rate. Using the 50/50 Time model, your hourly rate would be $100,000/ (52*10) = $192.
When you don’t use the 50/50 Time approach, you undervalue your hourly rate. And when you do, you undercharge, which leads to more hours of work, and fewer hours to be spent enjoying your freedom.
Knowing the price of freedom allows you to take control of your business and your life.