How to Put a Price on Work You Actually Love to Do
Your unique interests and abilities are worth more than you think — if you can help your customers see their value
The 20th century was defined by a simple binary, with money, stability, and routinization on one side and passion, personal expression, and financial uncertainty on the other. Today, that is no longer the case. Technology and trade have destroyed the widget economy of the last century to give birth to what I call the Passion Economy. To succeed financially in this economy we must embrace our unique passions — those interests and abilities that make each of us different — while also seeking out novel ways to match our particular set of passions with those people who most value them.
I wrote a book about this idea, inspired by the people I met who have figured this out — from a boutique accountant overturning his industry and refusing to charge by the hour, to low-tech innovators in the Amish farming community — all of whom combine clear financial goals with personal passion and joy, and whose stories I tell in my book. In the process of studying how these people find success, I learned that they follow a set of pricing rules that completely upend traditional notions of how prices should be determined. Here are the new rules of passion pricing, when what you sell is what you’re passionate about:
Price should drive costs, not the other way around. We are wired to think that price is connected to cost. You calculate the cost of the raw materials you use, the time it takes to produce a good or service, you add some amount for profit, and that’s your price. With intangibles, like our time, we look to competitors and charge around whatever it is they do.
This is precisely backward. Think of making a luxury car. You would prefer to have a sense of how much people would pay for a certain degree of luxury before you began choosing the materials to go into the vehicle. You determine the price point, and then you reverse engineer the vehicle in line with those costs that can justify the price. You include the smooth leather but recognize that hand-tooling might bump the car’s cost beyond your optimal price.