The key to your compensation as an employee — how much do customers want what you provide

Do you have a job?

Good. Here’s something you might not know. But you need to.

You are a business.

And your knowledge, experience and skills are the product. You ultimately have one customer — the organisation which pays you. The market is the number of other possible customers and your competition is everyone who can provide the same product you do.

How is a job different to self-employment, partnership or incorporation?

Mainly conditions and approach. Without an employment contract you have less security, but you might be able to charge higher prices. Though you’ll also spend a chunk of time looking for the next customer.

The economics are similar — which means market size and competition is the key to your compensation.

If you have many competitors — other people who can do the same job you do — the price you can charge is low. That’s because your customers — your employer and their competitors — can go elsewhere. If you have a lot of competitors but only a few customers, your plight will be even worse.

Then you’ll have to take what you’re given.

If you have few competitors and customers, you’re either in an emerging market or a dying one. Either way, unless those customers can’t survive without your product, the price you can charge will be limited. Which leaves only one way to a lot of compensation.

Have few competitors but enough customers willing to pay.

That’s hard to do, because the main way to make what you provide different is to specialise. And, in general, the more specialised or expert you are, the smaller the market. If you can’t be different, then your compensation will have a ceiling.

Unless you can find a way to make your customers want more of what you provide.



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