How to Go From Making $15/hr to $5k/hr
One of the most profitable lessons I’ve ever learned during my professional work life (thus far) is the difference between time & value. When a person understands this, they can completely transform their ability to earn an respective income or competitive wage in the marketplace.
An economy that is built on the basis of individuals or companies buying goods and services and also selling the same. There are many reasons why people buy things, but a great way to summarize it would be: People buy something that they believe has value. What someone is willing to pay for a product or service is directly associated to what they believe it’s worth a.k.a perceived value.
This is a very important note to make: The person will pay what they ‘believe’ it’s worth.
This doesn’t mean that this is in fact it’s true value, but this is the perceived value and thus it is given a certain price. Sometimes this works in the sellers favour and sometimes it does not.
How You Earn Money
When it comes to how much a person is compensated for their work, there are many similarities to the general marketplace breakdown above. A person does a job or provides a service and the company, client or business (marketplace) pays that individual a certain wage for their work, based on the perceived value of that job or task.
There are two ways or methods in which a person is paid:
TFM (Time For Money) - In this method, a person trades their time/hours for money.
VFM (Value For Money) - In this method a person shares their value/experience/skill for money.
When you look at the two definitions above, there are two words that really standout, ’trade’ and ’share.' With the TFM (Time For Money) earning method, a person trades something (time) in other words they have to give something away that they cannot get back in order to receive compensation. With the VFM (Value For Money) method, the person is sharing something (value/experience/skill) this means they continue to possess it, they're only sharing it at that time. This makes a huge difference in an individual’s earning potential.
TFM (TIME FOR MONEY)
When a person trades their time for money, the “marketplace” will only compensate the person for their time, not what they’ve accomplished in that time. This is usually not a true reflection of the work a person has completed, but rather a fixed price dictated by the marketplace. These rates are usually set by, industry standards, complexity of the task, accounting benchmarks and other methods used by the business.
In the TFM method, the marketplace can determine that this job or position is worth $15 every hour or $20 every hour in which case the person must work within that time frame to earn that set wage. Because you are being paid based on time, once the time stops (breaks, time off, etc) then it is understood that the wages also stop, until the person ‘clocks’ back in and then the payment for time continues.
I spent many years working according to the TFM method because it was all I knew and understood, however once I started to become more valuable to the marketplace by learning new skills and gaining more experience, I noticed that I was immediately offered more compensation. In other words, the marketplace was willing to offer me more money if I was able to offer more value. Whether this was based on what I was able to contribute to a company, or the knowledge I gained in growing my own business. I had now learned what it meant to be compensated for value not time. Value demands a higher wage than time.
VFM (Value For Money)
Insert the VFM method. According to this earning method, a person has built up some kind of value or has acquired useful experiences or skills and people (the marketplace) finds these skills, experience, knowledge and information very valuable. Once an individual is seen as having value, they can now request to be compensated based on something they have not something they do. If in one hour you can teach a group of 50 people how to do something that will enable them to become more valuable or knowledgable or skillful in their respective field, you would not expect to be compensated $15 for that hour. This would not reflect the value given. Depending on the industry, and expertise, you could rightfully request to be compensated $1k for the hour or $5k, $50K or as former President Obama has in the past earned anywhere from $400K to $800K for a single speech.
In the case of former U.S President Obama, had he only been compensated for his time (TFM) he may have only received $300-$500 which would have seemed “reasonable" for a person to earn in one hour, with the average U.S hourly wage at $29.96/hr at the time of writing this article.
So you see, the marketplace only recognizes these two methods of compensation or earning: Time For Money or Value For Money. Once I learned these two concepts, I stopped focusing on simply 'working' at my job(s) or 'working' on my business and I focused on becoming more valuable and offering more value.
How do I become more valuable?
The answer to this question will of course depend on the specific field you’re trying to offer value to, however in most cases, becoming more valuable has a lot to do with your personal and professional development. In short, read the right books, take the courses, find the mentors, take the right notes, try things, learn things, read the articles, share what you’ve learned, educate others, speak on issues, master topics, practice, learn from the failures, talk about it, help others. All these actions will equip you with experience and knowledge and skills and information that the marketplace will find useful, and your ability to pass on this information and share it with others or teach others will allow you to rightfully request a higher compensation, where you are paid for the value you give, not the time you put in.
As the late Jim Rohn so beautifully quoted, “We get paid for bringing value to the marketplace. It takes time,... but we get paid for the value, not the time.”
I hope this helps you on your journey to become the best you can in whatever you do!
Are you currently in the TFM or VFM side of the marketplace?
Please share your thoughts and perspectives on this topic in the comment section below.