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Side hustle pricing. What's the value of your free time?

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CONAN

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Nov 1, 2019
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Hi,
I work as a full time programmer for a company and I'm presented with the opportunity to do a side project which will be done offhours for a specific time (not for the same company).
The side project would also involve programming in similar technology and difficulty.
Is it fair to say that you would price your additional hours, outside work, more than what you get for your day job. Reason being it's your free time and it is , since your day is now even more limited, more valuable. And I feel like it is more valuable to me.
So is this reasoning fair and correct?
 

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B.Cotter

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A company isn't going to care that it's your free time. That doesn't make your time more valuable to them. Figure out what kind of value you are bringing to the table for them; producing for them. What do they believe this project would mean for their bottom line? Work backwards from there.

Example:

If they believe your product will drive an extra $250,000 to their bottom line the first year, and you estimate that you'll need to bill 100 hours at $100/hr, that's only $10,000. As a head of a company, I'd be willing to pay more than $10k for that kind of projected return in one year. But I also wouldn't be opposed to paying only $10k if that was your proposal.

The above is just an example. Yes, you need to consider the hours you estimate you'll work so it makes sense for you, but you should also approach it from an angle looking at the value you'll be providing them.

Just my two cents.
 

CONAN

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Nov 1, 2019
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A company isn't going to care that it's your free time. That doesn't make your time more valuable to them. Figure out what kind of value you are bringing to the table for them; producing for them. What do they believe this project would mean for their bottom line? Work backwards from there.

Example:

If they believe your product will drive an extra $250,000 to their bottom line the first year, and you estimate that you'll need to bill 100 hours at $100/hr, that's only $10,000. As a head of a company, I'd be willing to pay more than $10k for that kind of projected return in one year. But I also wouldn't be opposed to paying only $10k if that was your proposal.

The above is just an example. Yes, you need to consider the hours you estimate you'll work so it makes sense for you, but you should also approach it from an angle looking at the value you'll be providing them.

Just my two cents.
Sure but much of the time you have no idea what's the plan for the company and how much they make. In this case company is another digital agency that sells its work to others.
What I was thinking more is
"why should I work after hours for less if I can do overtime on my job if I really need the money"
of course money does not always need to be the main criteria which then complicates the situation a bit
 

B.Cotter

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"why should I work after hours for less if I can do overtime on my job if I really need the money"
of course money does not always need to be the main criteria which then complicates the situation a bit
Then just work for someone else your entire life and when you need more money, work overtime if they let you.

Or I assume you're on the forum because entrepreneurship is something you're considering pursuing. Regardless of what business you start on the side, you may work for less at first to build your reputation and portfolio. You may be paid less, but you're building something that's your own which ideally will have unlimited earning potential down the road.

You have a job currently, so money doesn't seem to be an issue. You just need to find a value for your time that you're comfortable with, but I think an apples to apples comparison to your current job's hourly rate is the wrong way to view it. Your side hustle is more than just an hourly rate of income, it's all of the things moving you closer to your entrepreneurial goal. Take action and move forward, getting hung up on what the value of your free time should be seems more like analysis paralysis.
 

astr0

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Yes, you have to consider both the value you bring to them and hours on your side.

On your side, it's completely clear and you do have to charge more than what's you get paid on 9-5.

From their perspective, everything isn't that simple. Besides the value they will get from the results of your work they also have other options besides you. They can hire someone in-house if that's something they would have to support in the future or hire another freelancer. So for example, it would be a bit hard to charge $30k if you know that many developers would do that for $15k and they know it too.

From another perspective, you have reasons to be more expensive for them as a contractor than a full-time employee:
  1. They don't have to provide you with office space, workplace, and all the perks
  2. They probably pay taxes for the employees, but that depends on the laws in your country
  3. Hiring someone good is quite hard and expensive
  4. You can work on-demand while they need to have a steady workload for an employee, cause they pay him monthly
  5. They don't pay you on holidays, vacations, and sick leaves
And many more.

Personally, when I was working on 9-5 I never took side hustles for less than 2x if it's quite big and tried to go fixed price that translates to up to 10x for smaller projects.

Sure but much of the time you have no idea what's the plan for the company and how much they make. In this case company is another digital agency that sells its work to others.
So it's subcontracting? Then they'll need to have a margin on top of that or at least break even if that's an important client they want to keep.

What I was thinking more is
"why should I work after hours for less if I can do overtime on my job if I really need the money"
of course money does not always need to be the main criteria which then complicates the situation a bit
It's not only about the money.

To build some non-employee skills, like sales and pricing your work that the whole topic is all about.
Maybe new connections and an item for the portfolio would be helpful too.
 
Last edited:

Johnny boy

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If your time is valuable then stop selling it!

Sell a product or service and then get it done quickly or by someone else.

I get paid $300 an hour for my work. I don’t have a law degree. I dropped out of community collage a couple years ago.

You are thinking like an employee still.
 

CONAN

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Nov 1, 2019
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Then just work for someone else your entire life and when you need more money, work overtime if they let you.

Or I assume you're on the forum because entrepreneurship is something you're considering pursuing. Regardless of what business you start on the side, you may work for less at first to build your reputation and portfolio. You may be paid less, but you're building something that's your own which ideally will have unlimited earning potential down the road.

You have a job currently, so money doesn't seem to be an issue. You just need to find a value for your time that you're comfortable with, but I think an apples to apples comparison to your current job's hourly rate is the wrong way to view it. Your side hustle is more than just an hourly rate of income, it's all of the things moving you closer to your entrepreneurial goal. Take action and move forward, getting hung up on what the value of your free time should be seems more like analysis paralysis.
I agree with you. If I was to work on the side for a project that will be my own or I would own part of it and that will have the potential to earn down the road I would work even for free (since no one would be there to pay me anyway).
But this situation is where I am hired to work a project that I do not own, and I only get paid to get it working and thats it, since the agency that is hired to do this project does not have a person inhouse for this technology. So like subcontractor.. In this I do not see any enterpreneural opportunity since I'm still selling my time for money or am I not seeing something?
 

CONAN

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Nov 1, 2019
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Personally, when I was working on 9-5 I never took side hustles for less than 2x if it's quite big and tried to go fixed price that translates to up to 10x for smaller projects.
So while you were working side jobs did you feel that it strays you away from doing something truly entrepreneurial like starting your own service or product?
I feel like having a side job that is basically the same as your main as a sort of a step back from where I want to be. But currently I do not have an actionable idea I would like to persue so the dillma is does taking side jobs sort of takes you even more away from your goal since now you're less focused.

And I get your point on non-employee skills and connecting but I dont know if this is applicable since I personally know the person that would hire me for a side job.
 

astr0

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So while you were working side jobs did you feel that it strays you away from doing something truly entrepreneurial like starting your own service or product?
I feel like having a side job that is basically the same as your main as a sort of a step back from where I want to be. But currently I do not have an actionable idea I would like to persue so the dillma is does taking side jobs sort of takes you even more away from your goal since now you're less focused.
I was pretty far from thinking about something entrepreneurial back then, so it didn't bother me. The motivation mostly was to help friends, and/or get some quick cash. Only in the last project, I've actually negotiated a % of the equity besides the payment. That was after reading both TMF and Unscripted and few months before a planned date to start our company.

The side job still might offer a great learning experience or at least a view on things from a different angle. For example, I was stuck on 9-5 programming quite cool and complex trading platform for years. The side-project was a small startup, so I got an opportunity to see it from inside.

Now, in our company, we deal with many small startups and it's fun and a great learning experience to watch their progress. Who could think the world needs yet another weather portal in 2020? Well, we have two clients doing that.
 

Dark Water

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I work as a full time programmer for a company and I'm presented with the opportunity to do a side project which will be done offhours for a specific time (not for the same company).
The side project would also involve programming in similar technology and difficulty.
Is it fair to say that you would price your additional hours, outside work, more than what you get for your day job. Reason being it's your free time and it is , since your day is now even more limited, more valuable. And I feel like it is more valuable to me.

Your day job is completely irrelevant to this endeavor. So is the fact that this is your free time. They do not care if you have to complete it at 6pm after working all day or if this is the only thing you do and you work on it during morning hours and then go to the beach for the rest of the day.

You are trying to price this job based on how much you value your own time. That is important for you to decide ultimately whether you want to take on the endeavor or not but it's not the right way to determining the price of a project. Taking this on independently means that you have addition costs, as others have mentioned, that have to be factored in after you come up with a price based on the value you are providing to the company.

If you are looking for a simple answer, the only way you will lose in this situation is if you undersell yourself and regret giving up your free time. Charge more, find the intersection of value provided and the value of them having access to you. It's more than your hourly salary.

Keep in mind your salary isn't representative of your worth. As your efficiency, knowledge, and skillset increases, your salary stays the same or only goes up marginally... the only thing that increases is the profits for the company you work for. This is yet another reason you need to not base a freelance project off of your salary as you will yet again undersell yourself.
 

Adgo

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Hi,
I work as a full time programmer for a company and I'm presented with the opportunity to do a side project which will be done offhours for a specific time (not for the same company).
The side project would also involve programming in similar technology and difficulty.
Is it fair to say that you would price your additional hours, outside work, more than what you get for your day job. Reason being it's your free time and it is , since your day is now even more limited, more valuable. And I feel like it is more valuable to me.
So is this reasoning fair and correct?
This reasoning is indeed fair and correct.
The less free time you have available, the more you will value it. That's how everybody would work. Let's say you need 8 hours of sleep and you only
have 9 hours of free time available in your day, someone will have to offer you a higher hourly wage than your 9-5 employer does if he wants you to spend that only hour of free time you have in your day working for him.

As an example, I fix iPhones as a side hustle, I'm targeting around 40-60€ per hour of work in put in that side work, while my employer pays me approx 17€ net per hour.
 

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B.Cotter

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In this I do not see any enterpreneural opportunity since I'm still selling my time for money or am I not seeing something?

My assumption was you were going to freelance and start your own company doing programming since you already have that skill.

There is opportunity all around, you just need to identify it. Regardless of the opportunity you pursue, almost all entrepreneurial endeavors begin with trading your time for money. You will be trading your time for money for a long time most likely. You will not be able to divorce the two immediately. The endgame of entrepreneurship is making money regardless of your time invested; if I remember correctly what MJ calls a money system.

Someone can be an entrepreneur for 30 years but still be trading all of their time for money. An entrepreneur is just someone who owns and operates a business. It really boils down to growing your business successfully to one day become or develop a money system.

But you will most likely start out trading A LOT of your time for money.
 

CONAN

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Nov 1, 2019
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My assumption was you were going to freelance and start your own company doing programming since you already have that skill.

There is opportunity all around, you just need to identify it. Regardless of the opportunity you pursue, almost all entrepreneurial endeavors begin with trading your time for money. You will be trading your time for money for a long time most likely. You will not be able to divorce the two immediately. The endgame of entrepreneurship is making money regardless of your time invested; if I remember correctly what MJ calls a money system.

Someone can be an entrepreneur for 30 years but still be trading all of their time for money. An entrepreneur is just someone who owns and operates a business. It really boils down to growing your business successfully to one day become or develop a money system.

But you will most likely start out trading A LOT of your time for money.
Thanks :thumbsup: I'll have that in mind so I don't pass on future opportunity just because it's a time trade
 

WJK

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Hi,
I work as a full time programmer for a company and I'm presented with the opportunity to do a side project which will be done offhours for a specific time (not for the same company).
The side project would also involve programming in similar technology and difficulty.
Is it fair to say that you would price your additional hours, outside work, more than what you get for your day job. Reason being it's your free time and it is , since your day is now even more limited, more valuable. And I feel like it is more valuable to me.
So is this reasoning fair and correct?
Like all answers -- it depends... Are you doing the side job to make extra money? to make a new contact? to showcase your skills? to learn a new skill? Your reason dictates your price.
 

Zahida A. Khan

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Jun 11, 2020
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Toronto
But this situation is where I am hired to work a project that I do not own, and I only get paid to get it working and thats it, since the agency that is hired to do this project does not have a person inhouse for this technology. So like subcontractor.. In this I do not see any enterpreneural opportunity since I'm still selling my time for money or am I not seeing something?
Conan, this may be your 1st subcontract and think how many more you can get?

As well, if you know the market needs a solution to a particular problem, you can design the program, own it and sell it to other companies, thus stepping into the entrepreneurial world
 

WJK

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Conan, this may be your 1st subcontract and think how many more you can get?

As well, if you know the market needs a solution to a particular problem, you can design the program, own it and sell it to other companies, thus stepping into the entrepreneurial world
She's right. Adjust your glasses. This is your big chance to create an opportunity to become self-employed. You want to be the "go-to" person. Create your nitch. At that point, you can up your prices and chose your clients. When I retired, some of my clients had to hire 3 people to do the job I was doing for them. I turned down 2 or 3 jobs for everyone I did. And I skimmed the cream -- kept the best clients and turned down the ones I didn't want to work with. You can do it too.
 

Kevin88660

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Hi,
I work as a full time programmer for a company and I'm presented with the opportunity to do a side project which will be done offhours for a specific time (not for the same company).
The side project would also involve programming in similar technology and difficulty.
Is it fair to say that you would price your additional hours, outside work, more than what you get for your day job. Reason being it's your free time and it is , since your day is now even more limited, more valuable. And I feel like it is more valuable to me.
So is this reasoning fair and correct?
I will break down into two parts. From your pov it is only worth doing if you can get higher than your day job hourly rate. Your day job gives you the income security and benefits that your side hustle does not have.

From the client pov they are going to compare what others with similar experience are charging. This is more important because this is ultimately what your customer is willing to pay.

If they are willing to pay more than what you are willing to work, then deal. If not no deal.

But of course you might have other strategic objective if you are using it as a stepping stone for future personal business, then the hourly rate shouldn’t matter that much, especially when you are building your own customer base.
 

Zahida A. Khan

Contributor
Jun 11, 2020
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Toronto
She's right. Adjust your glasses. This is your big chance to create an opportunity to become self-employed. You want to be the "go-to" person. Create your nitch. At that point, you can up your prices and chose your clients. When I retired, some of my clients had to hire 3 people to do the job I was doing for them. I turned down 2 or 3 jobs for everyone I did. And I skimmed the cream -- kept the best clients and turned down the ones I didn't want to work with. You can do it too.
Thanks @WJK

Great position to be, to select the clients you want to work with

What service do you offer?
 

WJK

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Thanks @WJK

Great position to be, to select the clients you want to work with

What service do you offer?
Thanks for asking. I was an expert witness and I did litigation support, in the real estate field, in both the State and Federal Courts. I'm a retired Certified General (commerical) RE appraiser. I was a broker for 30 years. I went to law school at night and on the weekends when I was about 40 -- and my sons were grown. I got my Juris Doctorate to further my career. It really gave me a leg up.

I started out selling yucky little houses in my early 20s -- and I ended up writing my own ticket. It took years and years of working 50 to 60 hour weeks -- a lot of successes and a lot of failures. It took thousands of hours of professional classes and an education that includes multiple college degrees.
It was not a path for wimps!
 

Zahida A. Khan

Contributor
Jun 11, 2020
28
23
14
Toronto
Thanks for asking. I was an expert witness and I did litigation support, in the real estate field, in both the State and Federal Courts. I'm a retired Certified General (commerical) RE appraiser. I was a broker for 30 years. I went to law school at night and on the weekends when I was about 40 -- and my sons were grown. I got my Juris Doctorate to further my career. It really gave me a leg up.

I started out selling yucky little houses in my early 20s -- and I ended up writing my own ticket. It took years and years of working 50 to 60 hour weeks -- a lot of successes and a lot of failures. It took thousands of hours of professional classes and an education that includes multiple college degrees.
It was not a path for wimps!
You have quite a breadth of experience

If you could meet your younger self, what 1 advice would you give him?
 

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