I recently read an article in Forbes called “Your ‘Happy Price’ vs. Your ‘Sad Price’: How to Charge an Amount That Motivates You” by Michael Ellsberg. I’m a big proponent of listening to your gut, your intuition, (as I wrote in another blog), and Ellsberg’s article speaks to that same theme.
The concept is simple: There’s a wage that we’ll work for, although it makes us feel resentful; an amount of money that we would do work for but feel “meh” about in an “okay, that will do” sort of way; and a price that makes us truly delighted to do our best work and feel amply compensated. We should always strive to charge our happy price, whether we’re a consultant or a regular-hire employee.
Ellsberg says we need to charge our happy price, “…because that’s the minimum you need to be happy doing that work. If you charge less, you’ll resent the work, and it will show in your quality of delivery, earning you a bad reputation and low-or-zero word-of-mouth.” In other words, your job performance rises to your salary level.
Following is the “Happy Price” concept as it plays out in the workplace.
The Performance Review:
- When your boss presents you with your annual pay increase, does the amount make you feel undervalued? If so, it’s likely having the dangerous reverse effect of demotivating your performance.
- If the amount meets your, “meh” price, the additional money has a neutral effect of neither demotivating performance nor motivating new activity. The raise simply feels expected or adequate.
- When a raise is beyond expectations, it feels amazing and propels you to a higher level of engagement.
Not all corporate cultures are supportive of people negotiating their raises, but in smaller organizations, where there are fewer layers of bureaucracy, there’s usually an opportunity to discuss and negotiate your raise. I’ve done this. Multiple times. It can work.
I recall one time when my manager read my body language and noticed how my annual raise demotivated me. She asked if I was happy, and I told her the truth. The raise she’d presented made me feel “meh.” I reviewed my previous year accomplishments and built a case on why I felt I had earned more.
In turn, she wanted to know what my happy price was (although she didn’t word it like that). When I told her, she said that she’d have to get senior-management approval to give me more.
The end result: she was able to advocate for a larger raise for me, and I was back to a high level of motivation—and ready to match or surpass that year’s success in the coming months.
If you’re in such an environment, and you’ve not received your happy raise, let your manager know. Perhaps something can be altered.
The Job Offer:
- What’s the salary that you’d take for a job because you need to pay the bills—but the job doesn’t make you feel great about yourself, and you’re likely to keep looking? That’s your resentful price.
- What’s the price that feels just “okay” and “good enough”? That’s your “meh”
- What’s the price that would make you feel amazing? That’s your happy price.
Do you wonder how much to negotiate when the offer is okay or fair? Negotiate to amazing. If the first offer is terrific, don’t be greedy.
The “Happy Price” at Home…or Anywhere
Getting your happy price works well in situations outside of the workplace. Here’s an example from outside of the workplace: When my husband and I decided to move back to Illinois, we put our house up for sale by owner. A specific asking price kept coming up for both of us. In a case of synchronized happy, we had stumbled upon our perfect price.
When the first person (a developer) knocked on our door just five hours after we put the “For Sale” sign in the yard, I told him our price. The sale was made without any negotiating. It was easy to get a quick offer because the level of redevelopment occurring in our neighborhood was leading to quick turns, but my husband and I intuited the same number and we knew it just felt right.
We know that because we sold so fast, we likely could have gotten more money, but we feel no regret because our happy price was met.
How does the happy price concept translate for you? Explore the concepts of Michael Ellsberg’s Forbes article, and I bet that like me, you’ll be forwarding it to friends and family to continue this discussion.