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Putting a financial value on your time can be difficult and scary. Jasper Lyons has plenty of practice as a founder of three starts ups and has helped lots of others in his role as an accelerator mentor.

In this episode Jasper refers to Patrick MacKenzie’s advice on charging more. He’s a software guy, but his advice is worth reading whatever your field. This is his piece on salary negotiation. He’s also on Hacker News as patio11.

Jasper says non-violent communication can help you in conversations about raising your salary/price/day rate. You can learn more about that here.

We refer back to our episode on the sunk cost fallacy, which is here.

Jasper’s (and our) tips:

• Don’t assume that your manager knows what your salary should be, if it’s below the market rate they may not realise but HR should, if they don’t then you can point this out to them.

• To find out where you are now, think holistically about the costs of your work as well as your income from it. Do you have special clothes and shoes and do these need to be cleaned in a special way? How do you travel to work and what does that cost? Where do you eat at work and does that cost more than you would spend to eat the same meal at home? How much does childcare cost? etc

• Consider the time you spend travelling to work and work out your real hourly wage including that time. There’s a nice calculator for that here.

• If you’re struggling with asking for more because if you are turned down it will feel like a judgement on you as a person, remember you’re not your job. A rejection doesn’t even necessarily mean that you aren’t worth more money somewhere else, it’s just that this company or organisation isn’t going to give you that.

Key point:

• Don’t set your salary/day rate/hourly rate based on your living expenses and costs, it’s not about you! It’s about your employer/customer/client.

The question shouldn’t be, ‘what do you live and a little bit more than that to be comfortable’ the question should be ‘how much value do you deliver to the company and what discount are you willing to provide them on that value for your time’.

• Your costs and hours worked determine whether the price your setting is worth working for, they don’t determine the price itself.

• A good rule of thumb for the ideal price is one where your employer/client/customer is complaining but still paying!

• People make assumptions about quality based on price, in the absence of other information. Charging more can actually win you more and better customers.

You don’t want to be the £5 freelancer.

• Be selective about your customers. (if you can! We get that some marketplaces are more competitive than others.)

• If you have a cheap price people expect a lot from you and value your time less. So you spend a lot of time serving customers for very little money.

• If one reason for not setting a higher price is the fear of not living up to that price, but you can turn that fear into a challenge to yourself to be excellent in your work.

• See your customers/clients/employer as a partner in your work, you both have the same goal of you delivering value for them, part of how they can help you do that is to pay you appropriately.

• Consider other benefits to you of working with a specific customer such as time or location flexibility.

• If you’re self-employed and a customer can’t pay you more, can they offer you fewer hours at a higher rate so you can find other customers.

Assuming you’re working with an organisation that you want to keep working with and that will deal fairly with you consider these

• Prepare thoroughly for discussions about getting an increase in pay by, for example:

  • collecting evidence of the value you’re providing to your employer/customer/client;

  • bench-marking your pay against others in your industry;

  • be ready to ask what their perception of your value is;

  • thinking about what you want and why you want those things;

  • taking a moment to understand your feelings about the upcoming conversation and get into a good frame of mind;

  • planning what you want to say;

• Present your goals to your employer/customer/client and ask how they can help you achieve those goals, some of that might be more money, some of it might be other types of support you hadn’t considered, for example if you’re freelance they might help you grow your business.

• If you get some unexpected feedback that you aren’t providing the value you thought you were, treat this as an opportunity to find out together what you need to do to get better and get a confirmation that if you do so a pay increase will be on the table.