How much do you get paid?
by Jeanette S Cates, PhD
Internet Strategist for Small Business
Every year Parade magazine conducts a survey on how much people get paid in different professions. It's one of their most popular issues. One year I even shared in the fun with a front page feature for our local newspaper to tie in with Parade's special issue.
When you work for someone else it's easy to figure out how much you make. They tell you! But when you're self-employed it's a little harder.
There are complex formulas you can use to calculate how much to charge for your professional services, for example. And there are guidelines on when to raise your fees. But that all assumes you have clients to pay those fees.
What about those of us who sell products online? It takes time to set up a site and even longer to market it. How can you calculate what you're getting paid? Sure, you may have another $100 in your pocket. But if it took you 20 hours to get that $100 - you might consider a fast food career.
What we really want to know is - what is the Return on Investment (ROI) on our time? And to do that we first need to know where our breakeven point is.
Here's a quick way to do the math:
1. Decide on your hourly rate. For example, if you want to make $100,000 per year, that's about $50 per hour. ($100,000 divided by 2000 work hours - that's 50 weeks x 40 hours.)
2. Calculate the number of hours you plan to invest in creating and marketing the site. For example, for a recent affiliate name capture project, I calculated it would take
- 1 hour to create the mini site
- 2 hours to write a special report to go on the site
- 1 hour to write an article to market the site
- 1 hour to write the autoresponder follow-up series
- 1 hour to set up a pay-per-click campaign.
That's a total of 6 hours.
3. Determine the number of units you will need to sell to cover your hourly costs. For this project I was referring visitors to an ebook. For each ebook sold through my affiliate link I earn $15. My "labor" cost to set up the site was $300 (6 hours x $50), so I need to sell 20 copies of the ebook in order to break even.
Once I have this information I'm in a position to decide whether or not to proceed with my project. In order to do this I ask a series of questions:
- Am I likely to sell that number of copies?
- How long will it take to break even?
- Could I outsource this project and recover my investment more quickly?
- What else can I sell on the backend to make this more profitable?
- Is this the fastest and best ROI of all the projects I am considering?
And the questions could go on.
The bottom line is that many online entrepreneurs work aimlessly on one project after another, never stopping to consider the ROI on their investment. You would never do that with your 401K. Don't do it with your time. Know what you can reasonably expect to make and how much you're getting paid to build your Online Success.
P.S. - As I outlined the process for the affiliate site described in the article, I thought you might like to "look over my shoulder" as I do all of the steps of the process. If you'd like to participate I'd appreciate your completing
the short 3-question survey at http://www.surveymonkey.com/s.asp?u=21622980566
I've outlined my 5-day plan (just spending one hour per day) at Affiliate Income QuickStart.
------------------------------
Dr. Jeanette Cates is an Internet strategist who works with independent professionals who are ready to turn their knowledge and their websites into Gold. Her reputation as a speaker and trainer has earned her the title of "The Technology Tamer." Jeanette shares her tips and expertise at www.YourInternetStrategist.com
Internet Strategist for Small Business
Every year Parade magazine conducts a survey on how much people get paid in different professions. It's one of their most popular issues. One year I even shared in the fun with a front page feature for our local newspaper to tie in with Parade's special issue.
When you work for someone else it's easy to figure out how much you make. They tell you! But when you're self-employed it's a little harder.
There are complex formulas you can use to calculate how much to charge for your professional services, for example. And there are guidelines on when to raise your fees. But that all assumes you have clients to pay those fees.
What about those of us who sell products online? It takes time to set up a site and even longer to market it. How can you calculate what you're getting paid? Sure, you may have another $100 in your pocket. But if it took you 20 hours to get that $100 - you might consider a fast food career.
What we really want to know is - what is the Return on Investment (ROI) on our time? And to do that we first need to know where our breakeven point is.
Here's a quick way to do the math:
1. Decide on your hourly rate. For example, if you want to make $100,000 per year, that's about $50 per hour. ($100,000 divided by 2000 work hours - that's 50 weeks x 40 hours.)
2. Calculate the number of hours you plan to invest in creating and marketing the site. For example, for a recent affiliate name capture project, I calculated it would take
- 1 hour to create the mini site
- 2 hours to write a special report to go on the site
- 1 hour to write an article to market the site
- 1 hour to write the autoresponder follow-up series
- 1 hour to set up a pay-per-click campaign.
That's a total of 6 hours.
3. Determine the number of units you will need to sell to cover your hourly costs. For this project I was referring visitors to an ebook. For each ebook sold through my affiliate link I earn $15. My "labor" cost to set up the site was $300 (6 hours x $50), so I need to sell 20 copies of the ebook in order to break even.
Once I have this information I'm in a position to decide whether or not to proceed with my project. In order to do this I ask a series of questions:
- Am I likely to sell that number of copies?
- How long will it take to break even?
- Could I outsource this project and recover my investment more quickly?
- What else can I sell on the backend to make this more profitable?
- Is this the fastest and best ROI of all the projects I am considering?
And the questions could go on.
The bottom line is that many online entrepreneurs work aimlessly on one project after another, never stopping to consider the ROI on their investment. You would never do that with your 401K. Don't do it with your time. Know what you can reasonably expect to make and how much you're getting paid to build your Online Success.
P.S. - As I outlined the process for the affiliate site described in the article, I thought you might like to "look over my shoulder" as I do all of the steps of the process. If you'd like to participate I'd appreciate your completing
the short 3-question survey at http://www.surveymonkey.com/s.asp?u=21622980566
I've outlined my 5-day plan (just spending one hour per day) at Affiliate Income QuickStart.
------------------------------
Dr. Jeanette Cates is an Internet strategist who works with independent professionals who are ready to turn their knowledge and their websites into Gold. Her reputation as a speaker and trainer has earned her the title of "The Technology Tamer." Jeanette shares her tips and expertise at www.YourInternetStrategist.com
2 Comments:
Howdy! I got thinking about the article and I have some simple answers and some complex ones. As far as my fees go I charge $1/minute for Massage, Tarot readings and Silver wire wrapping semi-precious stones. drum lessons are $20/hour as is creating webpages and working on sick computers for friends. For those who cannot afford my regular massage fees, I will go down to 1/2 the price. At $60 I am still inexpensive, yet competitive. The profit margin is high on massage and the readings because the cards and my massage chair are already paid for, I just have to take my time into consideration. If I am charging friends $20/I should be pulling in at least $10/hour for stuff I do for myself. When I have no sales, It makes it hard to keep going, but then "Bam" you get several days in a row of great sales. The consistancy factor is what works for me in the down times. Am I getting as much as I am worth? No, but I am getting there. Good topic. Michael J. Kaer www.kaerenterprises.com and www.kaerenterprises.com/3Q4U.htm
michaelkaer@yahoo.ca
Very interesting perspective, Michael. Thanks for getting us thinking in a different way.
I agree - it's the consistency factor - the cashflow - which gives small business owners the biggest challenge. I listened to T. Harv Ecker at the Big Seminar last weekend. He talked about the ups and downs of income.
Seems Harv's dad was a builder. They'd go into debt to finance a project and be "poor" while it was being built - then be really "rich" as it was sold. Then the cycle would repeat itself.
When he grew up Harv found himself repeating this up and down cycle as part of his "money blueprint". He'd make a lot, then lose it all. Repeat. It took a lot of work personally for him to break the cycle.
Thanks for your contribution!
Jeanette
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