This note is split into two parts due to length. Part 2 will be published next week.

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I recently had two emotions & finance conversations with women who are hourly solopreneurs—one is a yoga teacher, and the other is a licensed therapist. Both came into the conversation feeling financially insecure and left it feeling resolute. The shift that happened for them was going from a feeling of guilt to a feeling of determination at the prospect of charging higher prices.

Hopefully this note helps you make that shift for yourself.

A Bit of Accounting First, Then Emotions

I am going to teach a bit of accounting in this note before we dive into the emotional stuff. My whole schtick is that understanding the logical context of a situation helps us understand emotions better, and understanding emotions helps us do left-brain problem solving better. Use the whole brain instead of half of it, etc.

When I teach finance, I always start with the two basic financial statements—the income statement and the balance sheet. The income statement shows how much profit a person or company made over a period of time. The simplest expression of the income statement is the following:

Revenue – Expenses = Net Profit

The threshold for financial security is different for everyone. But if a person feels financially insecure, there’s a good chance that the “net profit” number is so low that it feels scary. That was certainly the case for these two women.

If net profit is so low that it feels scary, how do we change that? Putting my management consultant hat on, there’s two ways:

1)      Cut expenses

2)      Raise revenue

Both the therapist and the yoga teacher didn’t live extravagantly, so there wasn’t a lot of cost-cutting to be had. That leaves raising revenue. Revenue, expressed simply, is:

# of Units Sold x Price/Unit = Revenue

To raise revenue, one of these two things must go up.

Yoga teachers and therapists work hourly, so there’s an upper limit to how many more “units” (their time) they can sell. They can do that but only up to a point. That leaves raising the price, which is where many people feel an emotional block.

Guilt: Charging More Money is Wrong

For these two women, the emotion getting in the way of charging higher prices was guilt. The words associated with the guilt were something like this:

“If I charge more, what about the people who can no longer afford my services?”

This guilt was tied to a feeling of abandoning and betraying others. These women were helping others—similarly situated, without a lot of money—who were already struggling to make ends meet and relied on the services provided by them. If they raised their prices, people would lose the support that they got from therapy and yoga classes. Abandoning people who depend on you feels morally wrong to most people and understandably produces the emotion of guilt.

What Might Make Charging More Morally Right?

I made two arguments to these women about why charging more for their services is morally just. The first—which they already understood but hadn’t fully internalized—I present below. The second, more novel one, I’ll present next week.

People in healing-type professions are often motivated by a desire to serve others. (I’ll play fast and loose with the definition of “healing” and lump teaching yoga into it for now.) The danger in having an orientation focused on serving others is that you can lose track of your own needs. Some therapists, social workers, etc., understand the need for self-care and do prioritize their own emotional and physical well-being. However, most people I’ve met in these types of fields fail to prioritize their financial well-being.

One moral argument for financial well-being—in this case charging more money—is the “put your own oxygen mask on first” argument. This is the notion that we lose our capacity to help others if we break down from our own lack of self-care. A therapist under constant financial stress (or any other kind of stress) may struggle to be calm and present with their patients. By contrast, a therapist who takes time to take care of her own needs will have more strength to serve others in the present and future. Helper/healer-types often have a hard time with this because they feel they are “supposed” to have unlimited capacity for service, and feel that doing anything for themselves is “selfish.”

The second moral argument deals with macroeconomics and the nature of capitalist societies, which I’ll cover in Part 2 of this note.

Exercise

Journal on the following or discuss with a friend.

1)      Internal Audit

Reflect on the amount of money you bring in each month, and subtract your expenses from it. To what extent does the amount left over feel safe or unsafe?

You may notice shame as you do this exercise. If you feel shame, recognize that emotion and park it for now. You will return to it in a future exercise.

2)      Challenge

Imagine you are receiving advice from a businessperson that you perceive as successful and ruthless. Where would this person challenge you to charge more for the services you already provide?

3)      Reflection

Imagine this ruthless and successful person telling you to raise your prices or ask for a higher salary. What emotion do you feel? Guilt, fear or something else?

If you feel guilt, what moral crime are you committing by charging more? Write the crime down in your journal or say out loud to your friend.

The action step will be in next week’s exercise.