Following my breakup letter to Benjamin Franklin, I was asked about exchanging time for money “according to market principles.” It’s a concept that I have touched on before and one that I did not understand well in the past.
After a period of post-grad school unemployment, I was working as the Marketing Manager for the Utah Symphony earning $26,000 per year and not making it financially. I realized that I while I had found a buyer for 40 hours of my time each week, I still had 128 hours that I could offer for sale.
I went into the marketplace, found a buyer for an additional 21 or so hours, and began delivering the morning paper for about $500 a month. Had I not been so tired, I would probably done the maths and realized that I was selling those additional 21 hours for little less than $6 per hour.
(Ridiculous? It gets worse. A few years later—when I was again short of cash—I went back to delivering papers.)
While I had understood that I could sell my time into the marketplace, I had not realized that there were multiple marketplaces and that the market into which we sell has a huge impact on the price we can charge.
Different markets have different rules and expectations
We live in an age of many, many markets; the Amazon Kindle Store is one, so is the NASDAQ, so is a swap meet. Each of these markets has expectations and rules:
- You expect the Kindle Store to sell eBooks, and because of Amazon’s price incentives you expect those books to cost no more than $9.99.
- You expect the NASDAQ to sell equities in tech companies and other financial products. You expect these to be complicated, expensive, and to require knowledgeable assistance.
- You expect the swap meet to sell a lot of crap that people don’t want anymore. Because most of the stuff at the swap meet has been pre-defined as being unwanted, you expect to pay under a dollar for everything.
Commodities markets are driven by price
I sold my time into the only marketplace I knew about—the want ads. Not only is this market the employment version of a swap meet, it is also a commodities market. By entering the want ads marketplace, I was selling a commodity—raw hours. Like corn, pork bellies, and white tee shirts, sellers of hours compete primarily on price and the buyers have all power.
Avoiding a commodities market
I later learned that my neighbor, who cut lawns all summer, made more money than I did even though I had a graduate degree and he was in seventh grade. This struck me as the just punishment for a poor career choice. Had I stopped moping about being such a loser and looked closer, I would have seen the lesson: we were not selling in the same marketplace.
While I was selling raw hours in a commodities market, he was packaging his hours into a finished product: lawn care. While still having an element of commoditization, the “lawn cutting” package allowed him to include some market differentiation factors such as personal accountability, local sourcing, edging, clipping disposal, etc. He was selling into a services market.
So, how can we avoid selling into a commodities market? The simple answer is, don’t sell a commodity (something that cannot be distinguished from what someone else is selling.) Take some time and look at how you can add value and turn your time into a finished product. Here are some examples:
- Apply your educational background to your raw hours and package them as “tutoring” in an educational services market.
- Apply your knowledge of a second language to your raw hours and package them as “translation” in an international services market.
- Apply your knowledge of a certain area, culture, or hobby to your raw hours and package them as a guidebook that can be sold on Amazon.
Now here’s a question for you? What skill do you have that can turn your time from a raw commodity to a finished product? Share your answer in the comments below.