If you read my last post, then you already know your real survival number. But that’s just getting by, keeping creditors at bay. That’s not the thrival number.

Numbers = Mental Drag

To press in and really wrap your head around true, historical numbers proves difficult when 1) you don’t enjoy math, 2) Excel spreadsheets make you feel stupid, and 3) you’ve got a sneaking suspicion that your finances aren’t as healthy as they could be.

I know too well the ostrich-and-sand approach to sales pipeline, accounts receivable, and revenue projections. I certainly don’t get my jollies from math.

Those of us who try to keep passion front and center often go about our work with blind (and often fatal) optimism. We don’t face the reality of school loans, credit card debt, and other pressing financial concerns. We sidestep the onerous work.

But when we’re honest, we admit that ignoring our liabilities doesn’t stop anxiety from creeping in.

  • Do you ever feel stuck?
  • Does thinking about money makes you grit your teeth?
  • Do you look at friends who seem to be prospering and wonder what you’re doing wrong?
  • Do you hear other freelancers say, “That’s just the way freelancing is”?

I’d like to help you take that vague sense of menace by the horns. I’d like to help you aggressively pay off your debt (if you’ve got any). I’d like to help you turn your business into a very sweet thing.

I can promise you this: put in the work of identifying your thrival number now, and this year will go much, much better for you. For my part, I’ll try to keep this process as painless as possible. In fact, take ten minutes right now to do the work with me.

What do you dream about?

What would you do with money if you had it? Would you go to Florence and sketch statues? Would you spoil your parents, learn Spanish, or take sailing lessons? Would you figure out how to work only six months out of the year and volunteer at an orphanage the rest of the time?

The best businesses bankroll the desired lifestyle of their owners.

Setting revenue targets is about more than grabbing all you can for yourself. You can use your business as a fishing rod to reel in your dreams and those of others.

In fact, a profitable business will increase your own capacity to flourish and give. Thomas J. Stanley and William D. Danko share this insight in The Millionaire Next Door (page 46 in my edition):

“Financially independent are happier than those in their same income/age cohort who are not financially secure.”

Financial independence can boost your happiness, but keep in mind that more stuff can as quickly kill it. In their 2005 study, “Are Psychological and Ecological Well-Being Compatible? The Role of Values, Mindfulness, and Lifestyle,” Tim Kasser and Kirk Warren Brown found that people tend to be happier if they live more simply than other people in their income bracket.

The book Your Money or Your Life had similar findings: In a poll of over 1,000 people from both the United States and Canada, reported happiness was less than a 3 out of 10, whether the person made less than $1500 a month or over $6000 a month.

Financial independence can contribute to your happiness. Simplicity can contribute to your happiness. Giving money away can contribute to your happiness.

But once you move beyond survival, the degree of happiness and contentment you experience has more to do with values like simplicity, generosity, and gratitude, than with your bank balances.

More money won’t necessarily make you happy, but neither will living paycheck to paycheck.

Are you charging enough?

This conversation orbiting around surviving versus thriving isn’t about your current rates, whether or not you feel satisfied with them. What I want to help you figure out is whether or not your current rates enable you to meet financial and lifestyle goals. Once have a spring-water clear sense of your needs and desires, your business operating costs, and the “inventory” available to sell, you can determine what you have to charge.

(A side benefit of this process is a clear rationale that can guide any conversations you have with clients about rate increases.)

I hope you’re already saying, “Yeah, that’s not me. I moved past survival mode a long time ago. I’ve been thriving for years.” But just in case you’re one of the millions of freelancers, consultants, designers, writers, and creatives who undervalue their work, let’s get real for a moment. Zero in your sights on a “time and materials” or competitive pricing model, and you’ll miss the biggest trophy: your desired lifestyle.

What you charge should not depend on what the competition is doing. A lot of people struggle to find a “competitive rate.” What if you stopped thinking about “the competition” and focused on what you want to do with your one wild and precious life?

What you charge should not be limited by what the market can bear. Some people will pay $5000 for a logo even though they can get one for $5 on Fiverrr. Clearly, the market can bear huge price discrepancies.

What you charge should not plateau based on what you feel like you can justify to your clients. Taking whatever your clients can pay will ensure that you get stuck in the chronic feast or famine cycle of earning. If your current client base doesn’t like and trust you enough to pay higher rates to keep you, then start looking for new clients to replace your current ones. Now.

A word to the wise: You may want (and need) to ratchet up to your thrival number in increments. I certainly wouldn’t recommend that you email your clients tomorrow and spring a 200% increase on them.

Let’s break you out of survival mode.

thrival numberPhoto Credit: Angela Benito via Unsplash

What is your thrival number?

Finding your Thrival Number will enable you to draw a line in the sand and say to a client, “Here’s what I have to make.” You’ll know exactly what you have to make because you’ve reverse engineered your own goals. What you charge will proceed directly from what you need to make in order to achieve your financial and lifestyle goals. Start now. Finish sooner.

Put into practice what you learn here, and you can start earning what you’re worth.

The survival number for my family of four living in Knoxville, Tennessee, is $5875. Better would be $9000 per month.

$9000 per month would be thriving. I’d have more money to save, invest, and give. I could enjoy my hobbies and travel without having to pinch pennies. I could even afford dry cleaning!

What about you? You too may want to add an extra $3000 to your baseline for other things that would contribute to your long-term health and prosperity: everything from saving and investing to a gym membership and a massage once a quarter.

(Human beings weren’t made to spend hours a day hunched over small laptops like with a T-Rex.)

What’s on your wishlist? Here are some things from mine:

  • Investing (ROTH IRA)
  • Disability Insurance
  • Hobbies
  • Health & Wellness
  • Saving
  • Giving
  • Travel
  • Paying down debt aggressively
  • Opportunity fund

Now for a quick detour into human frailty. As a creative, your ability to run a design, photography, video, or writing business is inextricably linked to your creativity, your intelligence, and even your heart and outlook on life. What if you got in a car accident and hit your head? What if your personality changed? What if depression set in? If you’re suddenly not able to do the work that you were able to do just a week ago, how would you pay your mortgage? Disability insurance is something that every creative professional and consultant should consider.

Maybe you’ve heard of that crazy thing called saving money. You could build up what I call “an opportunity fund.” If you’ve got money in the bank and a friend is starting a company and you want to invest, you could.

Next steps

  1. Take out pen and paper.
  2. Spend a couple of minutes writing down all the things you wish you could afford.
  3. Calculate the approximate cost of each of those items. (Be a pal to yourself and suspend your disbelief. Like I said, you’ll likely need to ratchet up your budget to cover these expenses over several months!)
  4. Calculate the monthly cost of each of those items. For some, such as a bucket list trip, you may need to amortize a larger sum of money over a twelve-month period.
  5. Add up all of the monthly numbers.
  6. Add that monthly total to your survival number.

Now you’ve got your personal Thrival Number. Well done, you.

Circle it, and set aside your pen and paper for another moment.

Next, calculate operating costs for your business.

Up to this point, we have only covered personal expenses. But doing business costs money. Here are some expenses common to creatives:

  • Coffee, Food & Entertainment
  • Design & Marketing
  • Advertising
  • Apps & Other Tech
  • Computer
  • Software
  • Equipment
  • Travel
  • Transportation
  • Office Space

Have you ever taken one of your clients out to lunch? Have you bought coffee for a prospect? What about having drinks with the owner of the agency who occasionally farms out projects to you?

You probably spend money on design and marketing and website maintenance and updates. Maybe you want to run Facebook ads for a new guide, course, or product. Maybe you want to sponsor at a local meetup or a conference. Maybe you’re like me and you use a bunch of web apps: ConvertKit for email stuff, Harvest for invoicing and time-tracking, as well as Dropbox, Evernote, and SumoMe.

Next Steps

  1. Take out pen and paper or create a new Excel or Google spreadsheet.
  2. Log in to your online banking account, and download last month’s statement.
  3. Also, download statements for any credit cards you use for business.
  4. Write down every expense.
  5. Brainstorm a list of other expenses that aren’t monthly. For example, I pay for web hosting every six months.
  6. Organize all those expenses into categories.
  7. Calculate totals for each category.
  8. Calculate your grand total for each month.
  9. Add the sum of your monthly operating expenses to your personal Thrival Number.

Now you’ve got your monthly sales target—that is, gross revenues you need to hit each month. Brilliant! You’re in a rarified atmosphere where few creatives doth dare to tread.

Your personal Thrival Number is the salary your business pays you. Your business obviously needs to pay for itself and for your salary.

An excellent long-term goal is to save up at least 90 days worth of operating expenses in a dedicated business account. That three-month cushion will ensure that you don’t have to cut your salary if revenues dip one month. Also, your personal Thrival Number includes savings, right? So each month you can add to your emergency fund. Once you’ve got three to six months of full salary socked away in an emergency fund, you’ll really be poised for growth. You can go get in the way of opportunity, as one of my mentors likes to say.

At this point, you should have your Survival Number, your personal Thrival Number, and your monthly sales target.

In the next post, I’ll walk you through another step-by-step exercise. You’ll take your new numbers and use them to set your freelancing and consulting rates. You’ll then use those internal rates to structure your “public” pricing.

Stay tuned…