Case Study: How Glen raised his rates over 120% by getting into his clients’ heads

Ramit Sethi

Today, a story about one of my students, Glen, who was already earning over $100,000 / year, but is now poised to leave that job to work on his own passions.

Here’s what he did.

First, he realized a critically important psychological lesson: People don’t care HOW you do it, they simply want the results.

For example, nobody cares about keeping a budget…but they do want to be rich. (Something most personal-finance books miss.)

Nobody cares about the technical way to do myotatic crunches…they just want six-pack abs.

Yet the vast majority of people trying to earn more money never sit down and think about what their clients really want.

Once Glen internalized this, he immediately increased his rates from $45/hour to $100/hour.

Second, he realized he’d have to pick the right people to work with. In other words, “act as if” — act as if he was already selective, in order to become selective. Compare this to most people starting off earning more, who are so desperate to make any money, that they accept anyone and everyone — and quickly plateau.

Using these two simple techniques, but implementing them brilliantly, Glen is quitting his $100,000+ / year job and going to work for himself.

Here’s how he did it.

“I needed work I could do from a hotel room.”

Glen was a busy guy. On top flying around the world for his job as a software architect, Glen was getting married and preparing to move. Considering that his salary was $100,000 before commission, you might think doing some extra work on the side was the last thing on his mind. Not the case.

“I was doing well, but the economy wasn’t really good,” Glen recalled. “Earning money on the side started as an insurance policy.”

Glen knew that no matter how high his salary was, being an employee meant he was still at the whim of just one employer. Even a large, international employer like his. But if he worked for himself and had multiple clients, he could spread the risk around.

“Plus, I wanted to get off the road. I wanted to know who my neighbors were.”

To start, though, Glen knew he needed work he could do from a hotel room. Given his tech background and limited availability, he thought web design and hosting would be a perfect fit. He set his price at $45 an hour. A little low, he thought,, but he still felt apologetic about charging that much.

One year later, he had earned $1,000, mostly from hosting fees.

Glen had an MBA but still didn’t know how to translate his business knowledge into actionable steps that would grow his business. That’s when he read I Will Teach You To Be Rich.

“I balked at the price first…”

“I first heard about I Will Teach You To Be Rich when the book was first published. I read the sample chapter and liked it. Then read the book,” said Glen. He then gave the book to his wife, a former CPA. “She read it and said, ‘You know, this makes sense.’ We started following the lessons, like using credit cards so you can track your expenses.

When Earn1K launched, Glen knew it could help him grow his side business.

“I balked at the price at first, but the course comes with a great guarantee. That cut down on my anxiety. And really, Ramit had already presented so much information ahead of time. There was a several week lead up full of examples of what the course would be like. People complain about the cost. It seems like a lot, but you can earn that money back before the course is over. Everything after that is pure profit.”

It took Glen six weeks to earn back his investment. Of course, he was moving at the time.

Glen’s first mistake…

Glen knew that if his side business was going to succeed, he needed to raise his rates. He dove into the material on pricing, including a 29-minute Earn1K video on how to choose your rates.

“I learned that even though what I find what I do easy, it isn’t like that for everyone else. That means there’s an opportunity there. There’s money to be made. Anyone can change their own oil or do their own taxes, but at a certain point it’s not worth your time to crawl under your car or figure out your own tax numbers. I mean, if everyone’s jumping at your rate, it’s probably too low.”

Glen raised his rates to $100 an hour. More than double his initial rates. And he quickly signed his first $100/hour client. That’s when things started to go downhill.

“He was a friend of a friend. I was trying to help him out. He just needed tech support, which I wasn’t really trying to focus on at the time,” said Glen. “I’m there, on site, working, and the clock’s running. The client didn’t know how long the tasks were going to take. Then scope creep kicked in. The original three things he asked for turned into ten. What should have been 90 minutes of work ballooned to six hours. Needless to say, the client wasn’t happy.”

Luckily, Glen had the foresight to know the problem wasn’t his rate. It was that client. Glen knew he needed to niche down and really define what it was he was doing and for whom.

“If I can’t differentiate myself from the thousands of competitors doing the same thing, how will my clients?”

Glen set to work defining his Ideal Client Profile. He used a 37-minute video and step-by-step worksheet from Earn1K and a little trial-and-error.

At the start, he knew he wanted to target small businesses and sole proprietors because they didn’t have an IT department. But why did they want his help? What was their real need?

Glen realized his clients didn’t care about the technical details, they just wanted to expand. Maybe they saw a competitor growing or offering online seminars. Now they wanted to do it, too. Or maybe they wanted to add a nice email newsletter so they could stay in touch with their customers. Glen saw the potential to shift from one-time web design and low-value hosting to a long-term, high-value relationship with his clients.

He also noted that many of his clients said they wanted websites they could edit themselves. “I’d set this up for them, but it would just sit there like unused exercise equipment in the basement. They’d soon realize that they don’t have the time or desire to even do the simple editing they asked for.” Glen saw an opportunity there, too.

Finally, Glen realized that not all small businesses and sole proprietors were equal. Some, like the friend of a friend, didn’t know really know what they really wanted and always wanted something for free. Others, though, were dream clients.

“I like to work with doctors, lawyers, counselors, consultants,” Glen concluded. “They charge $400 an hour…when they’re doing billable work. How much time can I save them by handling their web and IT needs? How can I make use of technology to cut down on their admin tasks so they can spend more time on their billable work? If I can save them one hour, that’s $400 to them. Paying me $100 is totally worth it, and that’s before they even see the value of all the work I can do for them.”

Glen had found his niche.

That’s when his side business really took off and Glen set a new goal: quitting his full-time job by the end of the summer.

“I’m jumping into the deep end. But now I know how to swim.”

In three months, Glen will quit his $100,000+ a year job and go into business for himself full-time.

To get ready, Glen took an extra leap and bought an old house for an office. He’s fixing it up into a coworking space he can share with other entrepreneurial and tech-minded people. “I needed a place to work. And I’m trying to build that network, that community. It will mean more leads, more possibilities.”

Glen is happy to be meeting all of his new neighbors. To shop locally. When asked what he does, he smiles: IT concierge.

“Earn1K makes it easier to start out on your own. You learn how to test the waters, you build your confidence first.  When the time comes, you’re ready.”

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  1. STRONGside

    Demonstrating value and managing expectations for your clients is definitely key. At $100 an hour, he better darn sure know that he is providing a quality service, but as long as his clients are happy with the final product and his services, then the sky is the limit. The 80/20 rule weeds out all of the people who balk at the $100 per hour rate and you can get one high worth client for the headaches of two clients at $47 per hour. Nice move.

  2. Steve O

    Great case study–obviously Glen has the skills to pay the bills, but this post shows how easy it can be to begin earning serious money on the side.

  3. Wes

    Charging more works more often than you’d think. I started doing freelance video productions three years ago when I happened to stumble into the position through a friend. My first major client needed long-term recurring work for a subscription based educational site and asked for my hourly rate. At the time I was 18 years old and working for minimum wage without any “real” qualifications or certification for the position I was about to take. I shot for the moon and listed $35, which they INSTANTLY accepted. I made $2,000 a month working on the side as a student from this one client alone. I still work with him today!

    While I’ve raised my rates since then, it’s worth aiming higher than you think is reasonable at first and seeing if they hesitate. Had I been “reasonable” I would have asked for something around $15 and could have cost myself tens of thousands of dollars.

  4. SB(One Cent At A Time)

    Case study is good, why don’t you writing something for salaried professionals, whose rates can not increase, but salary could. But salary increase can not be of mammoth magnitude like rate hike you mentioned

  5. MileCards

    Congrats to Glen. When you think about the average income of an American, and the multitude of opportunities on the side…it’s not that hard to work up to enough side income to be satisfied. Particularly if you’re already in a relatively low cost location.

  6. Greg Miliates

    Glen’s model is very similar to my consulting model, where I work with law firms who often charge several times my hourly rate–even though my rate is over $100/hour. But the automation and time-savings I provide to them is well worth the cost of my services, so they’re happy to pay.

    I followed a similar path to Glen, where I started my consulting business part-time, and as I built it up, found that the time I spent at my day job limited how much I could earn from consulting. So, that’s when I quit my day job to do consulting full-time, and have never looked back. I’ve steadily grown my business over 20% per year every year for the past 4 years.

    The transition from employee to business owner has truly changed my life and my worldview.