When You Want to Increase Your Income, What to Look at First Is the Format, Not the Quantity

I want to increase my income. Once that is thought, candidates come up at once. Raise the unit price, raise the job count, extend into a new field, put assets to work. None of them looks wrong, and which to take up first is the only thing that does not settle.

What fails to settle is not settled by the number of candidates. It is that the candidates lined up belong to two separate groups. Moves that shift quantity, and moves that shift format. The two differ in how they tell, in how long they take to tell, and in how they meet the ceiling. While they sit in the same list, there is no axis on which to compare them.

Moves on the side of quantity produce an effect immediately and then reach a plateau. Moves on the side of format produce an effect late and change the position of the ceiling itself. And the two do not advance together. Time spent on one is subtracted from the other.

So what is decided first is not the method. It is which phase you are currently in. Move to format while room remains in quantity and you discard the fast move for the slow one. Keep playing quantity moves once the ceiling in quantity has been reached and the playing itself is what wears you down.

And a mistaken reading of the phase does not announce itself for a long while. Unless the number that can settle it is being watched, the total moves in the same way whichever kind of move is being played.

What is assumed here is not a state of zero income. It is a state where income exists from something and you want the figure to rise. At the stage of making one out of zero, the options are few to begin with and there is little to hesitate over. Hesitation appears once several moves have become usable.

What makes this awkward is that which phase you are in does not appear in the number you look at most. The number that can settle it sits elsewhere, and unless that one is being watched, the change of phase is not observed at all.

The methods on the list are each genuinely used and genuinely tell. Pay rises, moving employer, side work, skill, cutting spending, investing. What they answer, though, is how to move the figure, not whether that move tells in the present phase. The kinds of answer are different.

What follows divides which group the advertised methods fall into and looks at the plateau of the quantity move in four stages. After that it goes as far as the trough that always accompanies a format move, and the mechanism by which that trough distorts judgement. No target figure appears. What is handled is the material for reading, yourself, which phase you are in.

Almost All the Advertised Methods Sit on the Side of Quantity

The methods listed fall into six shapes.

Raise your terms through a pay rise or promotion. Move somewhere with better conditions. Start a side business and increase the pillars of income. Raise your skill and improve efficiency and experience. Reduce spending and increase what remains to hand. Put assets to work and grow them.

All six genuinely move the figure. The fifth in particular, reducing spending, is the strongest move in point of certainty, because unlike income it involves no judgement by another party.

And the six are generally set out flat. The side setting them out has no material for deciding an order of priority. Without knowing the reader’s phase, which to place at the top does not settle either. So the list takes the form of putting everything at the same height.

With that said, divide the six into two groups. The criterion is whether, after executing that move, the relation between the time you put in and your income has changed.

In the first through fourth, the relation does not change. Terms improve, a move is made, side work is added, skill rises, and the figure is still paid against the time put in or the volume worked. What changed is the rate of conversion, not the relation of conversion itself.

The fifth is not even a matter of income. It is a matter of what remains to hand. This is an effective move, and the axis it handles is a different one.

Only the sixth changes the relation. Income from assets arises independently of the time put in. Its size, however, is proportional to the size of the capital, so at a stage where the capital is small it does not reach a size that changes how you live.

A fair question arises here. Is changing the rate not enough? Double the hourly figure and the same income should arrive in half the time.

It does. And this is a move that genuinely works. The trouble is that changes of rate are finite, and that the time that opens up goes somewhere.

The rate has a ceiling. The distribution of figures offered in that field is decided from outside, and while movement upwards within the distribution is possible, movement outside it is not. Once the top of the distribution is reached, there is no next move.

None of this makes the quantity move inferior. Where much room remains within the distribution, the quantity move is the most efficient choice. It moves the figure faster and more reliably than changing format. Only its fitness changes with the phase.

Working quickly does have a reverse face, though. Telling fast, it erases the occasion for examining the format move at all.

The work of raising the rate has no end. The next negotiation, the next move, the next skill. A little higher is always in view, so no reason arises to examine another axis now. And that the top of the distribution has been reached is knowable only after it has been reached.

Look Precisely at the Mechanism by Which the Quantity Move Plateaus

The plateau tends to be spoken of as arriving suddenly, and in fact it comes in stages.

At the first stage, changes of rate turn straightforwardly into income. Twenty per cent on the unit price is twenty per cent on the income. At this stage the time put in does not change.

At the second stage, conditions begin to attach to changes of rate. Work at a high unit price demands a high level and adds stages of confirmation and proposal. Hours of work fall and the number of judgements rises. The figure has risen, and what is tied up is the same or more.

At the third stage, the rate stops moving. Positioned near the top of the distribution, anything further exceeds the frame of the other side’s budget. The only remaining means of increasing income is the job count.

At the fourth stage, the job count strikes its physical ceiling. This is the plateau. And only at this point is quantity does not increase it observed.

Does employing people not move the ceiling on the job count? The question comes up at this point.

It moves it. This is an effective move. It belongs, however, to a change of format, because the relation between your own time and income is cut. And being a change of format, it carries a trough.

There are cases, though, where employing people stays within the quantity move: where you win the jobs, you manage them, and only the work is handed to others. Here what produces the ceiling is the quantity of your own management, so the position of the ceiling moves while the structure of there being a ceiling does not.

This stage also has an obscurity of its own. The plateau is not observed as a plateau.

The state of having entered the fourth stage is outwardly busy and income not growing. This form is the same as the form at the first stage when the execution was poor. Having the same form, it draws the same explanation — it will grow if done better.

And the move made under that explanation is another quantity move. Reaching the ceiling of quantity is dealt with by a move in quantity. This back and forth intensifies after the ceiling is reached, because the information it is not growing arrives more strongly.

The two are distinguishable. Line up the figure per unit of time over the last two years.

At the first stage this number rises. At the second the rise slows. At the third it stops, and at the fourth it can even fall. In total income this progression is not visible, because total income rises when time is increased, so even at the fourth stage it displays as increasing.

That is, the plateau cannot be detected in the total. It appears only in the number arrived at after dividing. And what most people are following is the total. The number being followed does not display the change most worth knowing — this is the direct reason the plateau is noticed late.

The Format Move Shifts the Position of the Ceiling Itself

To move format is to cut the relation between the time put in and income.

Concretely it is one of the following. Make what is built once sell repeatedly. Make other people’s time produce income. Make the figure be decided by something other than volume of work.

All three line up on one point: what was done this month works next month too. In the quantity move, this month’s income comes out of this month’s hours worked. In the format move, past work is mixed into this month’s income.

This difference tells directly on the position of the ceiling. In the quantity move, the ceiling is decided by time available × maximum rate. In the format move, what decides the ceiling is not time but the size of the range that format reaches.

Changing format still requires time to build.

It does. What differs is that the time to build and the number of times it sells are cut apart. Whether what is built once sells ten times or a hundred, the time spent building is the same. This non-proportionality decides the position of the ceiling.

Still, changing format does not abolish the ceiling. It only moves its position. The range reached is limited, and that range is decided by the breadth of the route. So a change of format tells only in combination with work on the route. Change the format alone while the route stays the same and the number of people reached is unchanged, so income does not move much either.

This is easily overlooked. Most experiences of a format move failing are cases where the route stayed the same. If what is built is in a format that remains and the buyers are searched for from zero each time, only one side is accumulating.

This format carries one price. The interval between taking it up and the first result is long.

With a quantity move, the figure moves the month after the negotiation. With a format move, building, delivering, watching the response and correcting — one round of this takes months. And the first round often fails to produce the expected result.

The length of this interval makes judgement difficult, because whether it did not work or has not yet worked cannot be distinguished midway. Let a state of not being able to distinguish continue for months and the material for judgement runs out.

What happens when the material runs out is settled. Judgement is replaced by something other than income.

Concretely: the reactions of those around you, your condition on the day, other people’s successes. None of it is information about whether that format is working. With no other material, however, these become the inputs to judgement.

So beginning a format move means deciding the observation points other than income in advance. The number of people reached, the number of responses returned, whether a second transaction occurred. Numbers standing nearer than the figure move earlier than the figure. Without watching the numbers that move early, a state of knowing nothing continues until the round ends.

In the Transition, Income Falls, or at Least Does Not Rise

The format move always has a trough. Leave it out of the design and judgement breaks midway.

The work of changing format does not produce this month’s revenue, because what is being built sells later. The time for that work is subtracted from present hours worked.

That is, two things occur at once in the transition. The hours producing present income fall, and the new format is not yet producing income. Income falls, or at best holds level.

The depth of the trough is decided by two things: how much of the present income has been cut loose from hours worked, and how long the new format takes to produce its first income.

The trough can be avoided by stacking the new format without dropping present hours — and in practice that is the standard way of proceeding.

That is how it is actually done. In that case, however, the trough appears in time rather than in income. New work is added without dropping hours, so the pressure on time deepens.

The trough, that is, cannot be abolished. It is paid either in income or in time. And which is chosen. Where the conditions of the household allow, paying in income is faster; where they do not, it is paid in time. Without making this choice deliberately, one generally drifts to paying in time and is worn down there.

The trough is sometimes shallow: where the present business and the new format can use the same customers and the same route. Here the work on the route can be omitted, so the round is shorter. Conversely, moving to an entirely different field means building the route from zero, and the trough becomes deep and long.

From this comes one practical guideline. Choosing the destination from where your present customers already are is faster. Choose by strength of interest or by future promise and the work on the route is added whole. And work on the route takes longer than work on the format.

The trough has one further unpleasant property. At its bottom, the quantity move looks correct.

In a state of falling income there is one method that reliably restores the figure: restore the hours. And this genuinely works. Income recovers the following month.

At that point the format work is suspended. Suspended work is generally not resumed, because resuming requires entering the trough again. Having once seen the trough, entering a second time is harder than the first.

And the suspension is not recorded as suspension. Outwardly it is the main work was busy this month. A month of suspension looks rational to anyone. So does the second month. Any single month being defensible, the year turns without a verdict that it has stopped.

Reducing Spending Is the Only Thing That Directly Changes the Depth of the Trough

One move changes the depth of the trough itself: the reduction of spending.

As a means of increasing the figure, reducing spending is not even a matter of income, an axis of its own. As a means of increasing the figure, just so. Placed in the context of the transition, however, its position changes entirely.

Stated precisely, what actually tells for the depth of the trough is the difference between the fallen income and the necessary spending. Income can fall by thirty thousand and, if necessary spending has fallen by more, no trough holds.

That is, the level of spending decides the position of the bottom. And spending, unlike income, involves no judgement by another party. No negotiation, no market, no route is required. Decide, and it changes from next month.

What can be cut is limited, and whether it is worth lowering the quality of life is a fair question.

It is limited. And lowering the quality of life is not in itself the object. What is said is that the level of spending directly decides the length of the period available for the transition.

It comes out as a division. If necessary spending is three hundred thousand a month, the period available is the reserve divided by three hundred thousand. At two hundred and fifty thousand, the same reserve stretches the period by twenty per cent. And the format move needs a round to produce a result. If the period falls short, it is suspended before the round ends.

Reducing spending does not move the ceiling of the quantity move, because what produces the ceiling is format and not spending. Reducing spending tells only in the phase of creating the period for a transition. Cut spending with no transition planned and it produces only a different effect: more remaining to hand.

Cutting spending also tells in the reverse direction. Reduce it and the reserve for continuing the present format increases at the same time.

This is an unexpected direction. As spending falls, the hours required fall too. Then life turns even in the present format. Once it turns, the reason to change format weakens.

Reducing spending, that is, both aids the transition and erases the motive for it. Which way it works is decided by what the margin produced by the cut is allocated to. Allocate it to reducing hours and things get easier, and that state becomes the new reference point. Allocate it to the work of transition and the trough grows shallower. The same cut produces opposite results according to where it is allocated.

How the Trough Distorts Judgement — The Same Sum Up and Down Is Not Weighted the Same

Why does judgement break at the bottom of the trough? There is a well-studied mechanism here.

The psychologists Daniel Kahneman and Amos Tversky showed, in a paper published in 1979, that people evaluate value not as absolute levels but as changes from a reference point, and that comparing a gain and a loss of the same size, the loss is weighted more heavily (Kahneman & Tversky, 1979, Econometrica, 47(2), 263–291).

The premise of the reference point itself, and what happens when a writer moves it, are handled in Knowledge of loss aversion divides by which direction it is used in. What is looked at here is only what happens when the reference point is your own income.

Apply these two to the transition.

The reference point is present income. A fall of thirty thousand during the transition is evaluated as minus thirty thousand from the reference point. And what the change of format will earn in future is still outside the reference point.

That is, what is being compared is a certain minus thirty thousand against an uncertain plus something. And heavy weight falls on the loss side. Under this condition, in most cases, not making the transition looks rational.

If the future figure is large enough, the transition becomes advantageous even allowing for the weighting.

By calculation, yes. The trouble is that the future figure cannot be calculated. Income after the format is changed is decided by the range reached, and the range reached is unknown until the route has been built.

That is, one side of the comparison has a concrete number and the other has none. In a comparison of this shape, the side holding a number tends to tell more strongly.

This distortion does not mean the judgement is wrong. Discounting the uncertain is sound in many situations. All that can be said is that the discount is applied twice: once as uncertainty, and again as the weight on loss.

And the reference point itself moves. When it does, the same sum carries a different meaning.

Let the transitional income continue for six months and that level becomes the new reference point. A return to the original level then comes to be evaluated as a gain. And gains being treated more lightly than losses, the motive for returning weakens.

This works in the direction of aiding the transition and of hindering it alike. Aiding: growing used to the trough allows the format work to continue. Hindering: the lowered level becomes ordinary and ceases to be treated as a problem. Which way it falls is changed by whether the length of the trough was decided at the outset.

Deciding the length means writing down, before entering, by when and in what state the judgement will be reviewed. It cannot be decided after entering, because the one deciding would then be you with the reference point already moved.

Placing “Increasing Income” Again, From a Matter of Figures to a Matter of Rights

This re-placing is not a shortcut to a larger figure. It puts in a separate axis: how far you are involved in deciding the figure at all.

Is what you want to increase the figure, or the right to decide the figure?

To increase the figure alone, the quantity move is the shortest path. Increase the hours, raise the rate, and it moves from next month. The increased figure, however, depends on the judgement of the party who increased it.

To increase the right is to increase the proportion in which you take part in deciding the figure. Even at the same income, something holding at a figure you presented and something taken at a figure presented to you differ in character.

This difference tells on next year’s income. A figure presented to you falls with the other party’s circumstances. A figure you presented does not fall unless you lower it.

Presenting is meaningless if it does not pass, so the other party is deciding after all.

Whether it passes is decided by the other party. What is presented, however, is decided by you. And the result of not passing returns as information. As seen in the previous article, this information cannot be read without gathering several cases, and gathered, it can be read.

In a state of not presenting, this information never once returns. Whether the figure was sound or too low remains unknown.

Increasing the right does not necessarily increase the figure. Move to the presenting side and the number of refusals rises, and income can fall in the short term. Figure and right do not necessarily rise together.

Placing it this way also costs something. A target for how much to earn becomes hard to set.

With a figure, a target can be set. So much a month is decidable. A right is hard to turn into a number and its attainment is vague. So, for the reason that it is hard to treat as a target, the discussion returns to figures.

To avoid this, assign the right an observable indicator too. Of recent transactions, how many had the figure presented by you. This can be counted. What can be counted can be treated as a target.

And this indicator has a property that quantity targets lack. It does not vanish on attainment.

A monthly revenue target returns to zero the month after it is attained. Stacked again from zero each month, the position does not change on attainment. The proportion of cases presented begins the next month from wherever it rose to, because the mechanism changed.

That is, the choice of which number to follow itself decides whether quantity or format is being advanced. A state of following only numbers that return to zero every month is a state of being on the side of quantity. This can be judged by what is being watched, before asking what is being done.

Where You Are Can Be Measured; the Timing of the Move Cannot

The judgement rests on three materials. No benchmark figures are given, because their meaning changes with the conditions of the household and the stage of the business, and to hand over a figure would be to make the judgement itself in your place.

First, look at whether room remains in the rate. Where does the present unit price sit in the distribution of figures offered in that field? If it is positioned near the top and negotiations to raise it no longer pass, the room in quantity is exhausted. If it sits low, room to raise the rate is still the most efficient choice.

The reason for making this judgement first is that the format move is not superior to the quantity move. Leave room in the distribution and move to format, and you set aside the move that acts fast to begin with the slow one.

Second, look at whether you hold a form in which the trough can be paid.

To pay in income, how many months of room are there? To pay in time, is there time that can be added now? If neither, the work of building a form that can pay comes first. This is done with the quantity move. The quantity move, that is, also works as the stage before the format move.

Third, look at the proportion of present income that arrives at zero hours worked.

This proportion shows directly how far the change of format has progressed. And this number can be followed month by month. If it is rising, it is progressing; if it is unchanged, the work being done is on the side of quantity.

None of the three says you should transition now. What is being measured is where you stand, not where to go. Even with the room in quantity exhausted, if there is no form in which the trough can be paid, now is not the time for the transition. Measurement and decision are separate stages.

Candidates come up at once, and only which to take up first fails to settle. What produced that state was not a shortage of candidates. It was having only one axis to line them up on. On the axis of the figure, all six methods stand at the same height as ways of raising the figure. Add a second axis and the same six split into two groups.

Nor were the six wrong. As ways of moving the figure, all six hold. What it did not answer was whether the move tells in the present phase. A list of methods and a reading of the phase are needed separately. With one axis, only one of them is available.

What remains is how to read a result that comes out as still on the side of quantity. That does not mean your progress is slow. It means being in the phase where the quantity move is the most efficient choice.

On the negotiation of the rate itself, how the figure is decided has to be seen first; that is handled in Before negotiating a higher rate, know how the figure is decided. Where the ceiling on quantity comes from is in Getting out of the labour-intensive form, and the design that brings the right to decide the figure over to your side is handled more directly in Do not start pricing from cost. What happens when one more quantity move is added is handled in A side business does not earn because it adds a second form of selling time, and the procedure for counting the causes of a figure not moving before reaching ability in Counting the reasons for not earning from somewhere other than ability.