Know Thy Worth and Be Thy Boss
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."
My hourly rate is determined by a track record of success and straight-forward economics—supply 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 own—is 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.
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?
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.