Case Study: How Greg went from asking for 6-packs of beer…to charging $100/hour
March 29th, 2013 - 8 Comments
Witness the futile rage of anyone who knows anything about computers. How many of you have friends call you, saying, “Hey, can you fix this weird thing on my computer?” Then, when you go over and fix it (which takes 3 hours), you get a phone call two weeks later blaming you for breaking their printer (“It doesn’t connect to Google any more”).
In fact, how many of us have skills that our friends — and even clients — want to take advantage of for free?
- You’re good with tech stuff, so everyone calls you with their computer problems
- You have a professional skill, so friends and family ask you for a little bit of “advice”
- You have a flexible schedule, so friends and neighbors ask you to watch their kids for a couple of hours (“You’re already home!”)
These are are all common situations where people expect that you’ll give your service for free — or close to it.
And many of us have an invisible script that says it’s not okay to charge family and friends for our time. And besides, It’s “just” half an hour.
But the time adds up, and by the end of the year the difference between freebies and charging for your time can easily amount to thousands of dollars. When you have a conscious spending plan, that extra money has a significant impact on your student debt, down payment, or ability to live a Rich Life. Plus, as you’ll see, the simple act of charging a fair price can actually make them value your services more.
Now, let’s be clear. I’m Indian, so if a family member wants me to help them with anything — money stuff, interviewing prep, writing an application — of course I’m going to do this for free. I’m not talking about gouging, or even necessarily charging, your family members. But I do want to share how so many of us (especially creatives) undervalue ourselves, give away our best services for free, then feel guilty and angry for not standing up for ourselves.
Today I’ll share with you how one of my students used my course material to take the same skills he was giving away free — and start charging $100/hour for them.
This is a fascinating case study in not just tactics, but mental growth. Below, see if you can figure out where he overcame his own scripts.
“Give me a 6-pack and we will call it even.”
Greg, 28, remembers his university years as being pretty busy. “I was taking a full course load in materials engineering, and working 35-40 hours a week managing the computer labs on campus. Plus homework and everything else. I was a very busy guy.”
Still, when friends asked for help fixing their computers Greg was happy to do it. “I was the typical nerd, so I’d help friends out with their computers. Nothing about money though. It’s tough to charge family and friends. They’d just give me a 6 pack and we would call it even. Or it would be like ‘I’ll fix your laptop, but you are going to help me move in a month.’” [Note from Ramit: There’s nothing wrong with this. I used to barter services a lot. But at a certain point, it’s not worth it, and you want to “grow up” into charging like a real business person.]
Greg found IWTYTBR via my book. “I got an ebook copy for my NOOK and devoured it. I did as much automation as I could and it reduced a lot of stress. I didn’t have to worry about late fees because it just makes sure everything goes where it is supposed to go. And Ramit’s tonality in his writing is right up my alley. No nonsense. No fluff. He tells it like it is. I like that. There was a reason I went into engineering, not english.”
Since he was following IWT, Greg knew he could earn more money, but needed some help with the specific steps. Earn1K was the perfect fit. “I knew I had the skills there to do it because people were calling me about something computer related all the time. So I figured, why not? I’d see if I can earn some real money from that. And it was nice to have the money back guarantee. When I was in college money was a lot tighter, but I figured this could be an investment.”
He signed up, and used Module 2: Lesson 3 on “Choosing Your Pricing” to start charging $100 per hour.
Here’s how he did it.
“$50 to fix something on a laptop. That was A LOT more than I was charging before.”
Before Earn1K, potential clients were already seeking out Greg for his computer skills, but he needed to reframe the conversation. “My funnel wasn’t online. It wasn’t on craigslist. It was my parents. People in my parents neighborhood knew who I was, and if they needed help my parents would ask me to take a couple of minutes to call them up.”
Here’s how Greg went from offering his services for free to charging $100 an hour.
“These people my parents knew. Their kids had cracked their laptop screens. It happened twice actually. I remember Ramit said in the module on raising your rates that you can charge in different ways, like how you could go on craigslist or wherever and see what other people are charging for similar tasks. Another way was value. So I told them for parts and labor I could have your computer working for you again, which will cost much less than to go out and buy a whole new computer. I got really specific. It was $50-$70 for a new screen online, and my time was $50 for a half hour. I couched it in those terms. Here are your options, buy a bottom end machine from Best Buy for $500 to $600 or fix what you have.”
People didn’t mind paying at all. They weren’t spending money, they were saving it. Even though Greg didn’t want to prioritize his side business, he was now being paid what he deserved for work that he would have done anyways.
“A few hundred here, a few hundred there. Over a couple months it adds up. And I got a lot of value out of it.” [Note from Ramit: The positioning change he made seems deceptively simple. Think about how you would position your services -- whether it’s a personal organizer, a Powerpoint designer, a freelance writer, or a photographer. Think about 3 different ways to position it. What’s most compelling? What do other people do? What could you do differently?”]
6 pack or $100 per hour?
“So for half an hour I was charging $50 to fix something on a laptop. 6 packs are maybe $8 to $10 for a nice craft beer. That was a big jump in what I was charging people.”
By reframing the conversation from a personal request to a value proposition, Greg was able to earn a lot more for his time — about 500% more. And now that Greg knows this sophisticated technique, he’ll lock it in and will reap the rewards whenever he does client work for the rest of his life.
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