07 Apr Escaping the Hourly Rate
As digital content providers, our business model is one where we essentially charge for our time. Whether it’s SEO consulting, usability advice or doing the actual copywriting, one of our biggest challenges with Black Mountain is how to get around the fact that if we’re not putting in the time, we’re not making the money.
To put this into context, compare us with a business that sells a product online. They can set up a website and payment facility and then – provided there’s a market to buy what they’re selling – essentially have a passive income stream after they’ve put in the initial time investment. In his book “The Four Hour Work Week“, author Tim Ferris speaks about how he went from earning $40,000 per year working 80 hours per week to earning $40,000 per month working four hours a week, all because he changed his thinking. In what way? He no longer believed in the fallacy that you have to put in the time to earn the money.
The problem with this is that the most effective way of doing this is to earn a passive income stream, where you’re charging for a product rather than for time.
So does this mean that as consultants we’re essentially tied to our desks in order to make a living forever? Not necessarily. A major goal of ours has been to try and figure out ways we can still earn income while we’re not physically working. This does two things: it gives us more free time, and it allows us to work on more projects, so essentially upping the income we make in that reduced time. So how do we do this? Here are some of our initial ideas:
1. Training. Holding training sessions means we impart our proprietary knowledge to a group of people, which means we can charge an appropriate training fee that builds in that fact. In other words, instead of charging our normal hourly rate for a four hour training session, we can charge more because we’re imparting our industry knowledge that the company will then, in turn, use to increase their own revenue.
2. eBooks. We’re copywriters so this is a natural fit for us, and it’s a very straightforward way of transferring our knowledge into a product that we can then sell on an ongoing basis.
3. Charging differently. Instead of charging per hour, another option is to charge a project fee instead. This incorporates the thinking that the value of the whole we’re contributing to is greater than the sum of the individual parts. Charging in this way also lets us account for multiple sets of reverts and changes for which we may not have estimated initially.
4. Referral/affiliate fees. We’re often asked to recommend related suppliers to clients, such as web designers, developers or video producers. Another potential income stream is to take a commission or a referral fee from these suppliers if they end up working for our clients.
These are just some of our initial ideas, and we’ve by no means perfected the art yet – but it’s a start! Do you have any other ideas as to how to generate revenue without being bound to time? We’d love to hear them.