The Business Lesson I Discovered Washing Dishes for $6/hour

The first job I ever had was as a paperboy - a position that doesn't even exist anymore. I would deliver paper seven days a week and then once a month go around and collect as much as I could from the subscribers. 

I had a fixed amount I had to pay the paper, the rest was mine to keep. So when customers weren't home or didn't pay, that came out of my end. Probably some good lessons in business there, but I was eleven at the time, so I missed them. 

The first real job I had with a time clock and a boss was working at a catering event company where they would host events in one of their four ballrooms. I would fill waters, serve food, bring coffee, and clean up afterward. Part of that was washing out all the coffee carafes. 

As I stood there, bent over the sink, washing out old coffee and getting smelly and sweaty, I used to think that it was a pretty hard job (I've since recalibrated a bit on what a hard job is). 

And I used to wonder - how is it that there are people who get paid $100 or $500 or even $1000 an hour for doing stuff that probably wasn't much harder than scrubbing the coffee pots. 

It's not like they could have cleaned the pots 10 times faster or even twice as fast as I was. 

So what was the difference between the amount they got paid for work and the amount I was getting paid for work if the difficulty of the work was not the explanation? 

What I later realized explained it turned out to be pretty simple and yet really key to understanding everything about business. 

You've probably already guessed, but here is the key to the whole thing: value delivered. 

How Understanding Value is the Key to Winning at Business

The reason I only got paid $6/hour for washing dishes (in 1990) was that was about what it was worth. No one would pay me $100/hour to wash dishes because there were better options to get them clean than paying a ridiculous hourly rate. 

Value is what something is worth to someone. It doesn't consider the cost to deliver it. And that's the thing to understand. 

If you can deliver a lot of value in a way that doesn't cost much, you've got a great business. On the flip side, if what you have to offer isn't valued much then people aren't going to be willing to pay much - maybe even less than it costs to put out there!

People get confused by this all the time and as a result misprice things, both high and low and they also fail to understand what to do to make something more valuable to the person they're trying to sell it to. 

As a business owner, what you want to try and do is make sure you are offering as much value as possible to your customers so they are happy to buy from you and keep doing so even if a competitor comes along and even if that competitor offers a lower price. 

The way a person can charge $500 an hour is to offer something for $5000 which takes them ten hours of work that the person receiving it feels is worth $10,000. It may even take less time. It may only take the person ten minutes to do. But as we said - value has nothing to do with cost. 

So think about what your business does and what value that customer gets from it. Then ask yourself how can make that more valuable for them. List all the things you could add to what you already offer. 

It could be actual items, it could be services, it could be more choices, it could be customization, it could be a guarantee or warranty, etc. Then compare the value those things would add (and make sure it's value the customer sees not just value that you feel is added) against the cost of adding each thing. 

The biggest wins are from things the customer values a lot but which may not cost you anything or hardly anything. The least good are things that cost you a lot but the customer may not care too much about. 

For example, with our accounting service, we offer professional quality service, but every one offers that (or claims to!). We stack on top of that fast response times, friendly customer service, tons of experience, lots of great referrals and references, month-to-month pricing, flat rate quotes, a money-back guarantee, and more. 

We've stacked the value so that our prices seem like a really good deal and the value we offer far outweighs that which the competition provides. As a result, we keep growing. 

And we keep looking for more ways we can continue to add value and make it even better for our clients. 

The more value you can pack in the more pricing power you have and the more growth your business will experience. Your customers will become more sticky - less likely to leave you for a better offer because better offers will be much harder to find!

Even better, your margins should improve because you are adding low or no-cost additions that allow you to price higher because of the higher value delivered and improve your profitability. 

If you can't think of how to add value to your business or you have no idea what your customers would find valuable them you have a real problem! This likely means you are a commodity or close to it and it won't take much for someone to get your customers to switch. 

The bottom line is if you understand what your customers find the most value in and deliver that to them - value real or perceived well in excess of the price they pay and the cost it takes to deliver you'll have a great business. 

If you can figure out how to deliver great value that your customers appreciate, you'll never be stuck just washing dishes for $6/hour!