How do I change my mindset/morality to be more aggressive towards earning money?

Question

For some reason, I cannot ask for more. When applying for a job, I only ask a slight increase compared to my previous job. When I am selling something, I only charge a little bit more than what I spend for capital. I dunno, I kinda feel guilty asking for more, I feel guilty that I am taking advantage of the buyer's ignorance of the original price. Maybe this is because of my upbringing being fair and all that.

This mindset really did messed up my decisions. There were a lot for opportunities for me but I let them slip away because of this mentality.

For example, my current job. When I applied, I was asking for 60k a month (I'm in ASIA). I passed all the exams and all that stuff, then towards the end before I do my final interview with the manager, the recruiter who was very nice gave me a tip to ask for 65k instead of 60k. Then when I talked to the manager, he asks if I'd go with 60k and I know this is stupid but I agreed.

Another example, we have a small store. When selling items, I always charge customers with the suggested retail price by the manufacturers and my mom kept telling not to do that. I dunno, I felt it wasn't fair for the customers to be charged a little bit more compared to what is suggested by the manufacturer.

I don't want to feel this guilt anymore, I would like to earn more. How do I overcome this?

I don't want to earn just enough, I would like to earn more.

Answer 1

Your mistake is to assume that the direct input costs (other than your efforts) are the only meaningful component of the price charged. That fits with your feeling that charging more is "taking advantage of the buyer's ignorance of the original price".

What really happens when you invest your time and labor is different from the cost of the materials plus "a little extra":

1. What is the value of the product?

This is the biggest one. If you create a product that gives me $X's worth of enjoyment, or saves me $X's worth of time or effort, then I should value it at about $X (whether or not that's what I'm willing to pay is more complicated, but the value proposition is simple). If you charge less than that, then I get all the value plus the surplus. If you are running a store, the value you add is choosing items to offer, ordering them, stocking them, bearing the costs until goods are sold, and providing assistance and service to customers.

There is no particular reason that all of that surplus should go to the buyer, and none to you. It's not about what the material components of the thing are, it's what value the thing produces for me that determines the price. There are definitely situations where you can gouge people (charging more than the input costs plus added value, charging prices that are ruinously high for consumers when there are lower prices that are still profitable, and more), but those are not automatically in effect.

Example: I like video games, and my standard for value is roughly $1/hour or entertainment. So my heuristic for buying a specific title at a given price is "do I think I'll get X hours' worth of fun out of a game priced at $X?". I don't care very much about the profits of the company that made the game, I care about what I get out of the transaction.

2. What is your time worth?

Without you to convert raw materials into a product, those raw materials would stay as they are. (1) above covers the value added by making a product out of the materials, and out of that added value you get compensated for your time and effort. If you add enough value that you can reap a larger profit, it's not automatically "unfair" for you to actually do so.

Remember that the time and effort you put into something is time and effort you can't put into anything else, and so it's not unreasonable to want at least as much in compensation for the next-most-valuable investment of your time and effort you could make.

3. You might not be the best judge of value.

This especially applies when working for a company that is run by other people. The decision-makers (ideally) have a good idea what value you add, how rare your skills are, and what they'll need to offer in compensation to keep you from working somewhere else. It's not always as easy to see how your efforts pay off in the bigger picture of the company's overall operations. If your employer is comfortable paying you $65k, then they feel that your work is worth at least that much to them. So let them pay you what you're worth!

As in (1), there is no reason that all of any surplus value needs to go the other party.

Answer 2

It's never unethical to ask for more money

In all transactions, any amount both the seller and buyer agree to is a morally sound amount. When you sell something, the amount doesn't have to be fair to the buyer. They'll be the judge of that. It has to be fair to you.

Ethics are useful when selling gauges to the injured but absolutely useless when selling Linux Administration Services to Your Employer. Your Employer is in the business of Making Money. Happily this is the same business you're in, you just go about it a different way. You're asking your employer (or client, same thing, you're providing a Valued Service) to share a bit of the profit they make because of Your Services. Nothing wrong with that.

Next time you feel guilty about a number, remember that it's their job to decide it's fair, and yours to decide if it's something they're willing to go for.

How do you counter for a better salary?

Easy. Instead of agreeing to a small number, ask for a bigger number.

Your client has a Need and you have a Solution. The client values the solution at 100 Galactic Credits, but will start at 30 Galactic Credits because this is something you might agree to. When this happens, you will counter with a greater number (60? 80? 90? Do your research!) because this is something they might agree to. I won't go into negotiation tactics here because a) it's off topic and b) there are better resources available (more on that later).

You do not have to justify your price to anyone. This is extremely uncomfortable if you've been brought up with a mindset that promotes fairness, which is a concept designed to limit the number of loan-sharks in a given community.

That particular decision path in your brain misfires whenever you're faced with a negotiation, and that's what's causing you trouble.

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Further Reading

• Salary Negotiation: Make More Money, Be More Valued
• Kalzumeus Podcast Episode 12: Salary Negotiation with Josh Doody
• Ramit Sethi (look him up, read his stuff, watch his videos)

Answer 3

Just by your human nature you are always going to feel guilty, this is shown by the way you react to being fair.

In the end, it depends on your choice. You want to make more money or you want to be fair. You've stated you want to make more money, its normal to have guilt but you still have to put your foot down and make sure you remember when negotiating that it's your future you're prioritising not your customers.

If the buyer/employer want to invest, they will buy the product or hire you if they want to, they will be none the wiser of the price and if its an employer then if you suggest 65k for example, then they will either say yes or no but you still have to try negotiate otherwise you're not going to "make more money" as you wish.

Answer 4

I think you're confusing stealing with bargaining. For example, in your mom's store, what is the price she paid for the items vs the MSRP of said item? How much profit do you pocket after selling an item? Is it 5%? 10%? 15% or doubled? In general, you want to make 100% of the value you put into a product (doubling your invested amount), or at the very least, 100% of the value you put in the item.

I think you should look at it that way, rather than seeing it as "stealing" because it's at the suggested retail price.

As far as jobs, it's smarter to look at your current area and how much a typical person makes and the cost of living. You can even do an analysis of this yourself by monitoring prices of apartments and houses. If you make 60k, can you reliably pay all your bills, live in a typical apartment there, and have money left over to save? It is typically recommended to follow the 50/30/20 rule in money. If you cannot follow that rule because 60k is too little, then ask appropriately until you can assuming that you can follow this rule without overspending into debt (and having to get more money to pay off debt before you can follow said rule). Then of course there is your value to add in. Are you worth just at the baseline rule or are your skills worth more?