Know Thy Worth and Be Thy Boss

JUNE 07, 2016
Dr. Wise Money

I've been asked many times, by (prospective) employers, colleagues, business partners, and potential clients, "How do you manage to charge $388 per hour for tutoring?"  My answer is always, "It's a simple matter of supply and demand."
 

supply and demand


My hourly rate is determined by a track record of success and straight-forward economicssupply and demand dictates the equilibrium price. I believe that the most precious commodity along the path of pursuing medicine, or life in general, is time: the only irrecoverable resource. So efficiency is my number one priority when I'm my own boss. I often advise students against tutoring more hours with me beyond the point when I think they are ready. Prospective students simply need to decide between working with another tutor for six to 10 hours or working with me for one hour.
 



I started tutoring at 10 years old. Initially, I tutored for free. It was fun for me. I love the moments when the "light bulb goes on" in my peers' minds. I find learning so much more interesting when other people's welfare—not just my ownis at stake. I guess that was an early sign that medicine would appeal to me. I relish the challenge and the privilege of having someone else's well-being weighing on my shoulders. It somehow made what I did more meaningful than if I had done it solely for myself.


Then in 10th grade, I started charging $10 per hourr for tutoring AP sciences. I loved it. I was the favorite of teachers and parents, many of whom confided in me all their worries about their kids' academic performance and future prospects. I felt that not only was I helping the student ace their AP tests, but I was also somehow part of their household harmony.
 



I continued to tutor in college. I worked for tutoring companies at first, ecstatic at the prospect of $23 per hour when I saw the newspaper ad. Then I learned that I was expected to drive to the students' homes, in Bay Area traffic, pay for gas and maintenance for my car, and foot the occasional car accident bills because I was so tired and distracted by all the driving.


In the end, my net earnings were about $5 per hour, way worse then when I was my own boss in high school. Back then, I made a solid $10 per hour, plus I had free rides, free food, and made my own schedule. The worst thing about working for others (tutoring companies) was finding out that my students paid my boss $65 per hour while I got $5 per hour.
 



 

Then I said to myself, "Screw this. I'm not going to let some talker business man live large while I'm the one doing all the hard work." So I quit all my jobs where I was not my own boss. I put my credentials, experiences, tutoring results, student testimonials, and CV on craigslist. Before long, I was getting tutoring requests left and right at $23 per hour, with students coming to me (so no driving, no getting lost, no parking tickets, no car accidents). I tutored the hours I wanted; I made the curriculum myself.


Shortly after my craigslist advertisement went up, I could not keep up with the demand of tutoring requests. So I said to myself, instead of working like a dog to fulfill every tutoring request, I'm going to raise my hourly rate, until I can comfortably satisfy the demand and still take care of my other responsibilities and still go out with my friends and have a life.
 



I continued to tutor because I love teaching and being my own boss. After Mini was born, students came straight to my house, paid me $100/hr, and were so understanding towards my role as a mother that I could put Mini in a front sleeper/carrier and tutor at the same time.


Did I mention I love being my own boss?


I continued to tutor throughout medical school and into residency, as I took on more responsibilities in my medical training, and Mini demanded more intellectual engagement, I had fewer and fewer hours to allot to tutoring. Yet, I still had lots of demand... more than I could fill.


So I kept increasing my hourly rate, to the peak of $420/hr while still in California. Now, I'm perfectly content with the equilibrium price of $388 for the past two years.
 


 

image courtesy of pintrest
Image courtesy of Pinterest


This was my journey of discovering how wonderful it is to be my own boss. I like getting paid for what I think my time is worth.
 

How about you? Have you ever felt overworked and underpaid like I did when I made $5 per hour working hard?


Would you like to work smart and be your own boss, at least in a side gig (if you main job is a W2 job like me)? What product or service would you render?

Comment below!
 



P.S. Don't get me wrong, I didn't make $100,000 last year tutoring. I just made about $10,000... which was just 26 hours of tutoring, averaging one hour every other week tutoring. That's where I am happy. So if demand goes up at this price, I'd increase my hourly rate. If my time becomes even more limited, I'd increase my rate too :) If you or someone you know wants a rockstar tutor/standardized test strategist, you can find out more about my service here. Ace that test!


This article is for informational purposes only and not intended as a substitute for professional advice. Please consult a professional accountant, financial adviser or lawyer, before making financial decisions.



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