Entrepreneurs: follow this one simple principle to avoid wasting your hard-earned profit

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For those of you who, like me, used to work for someone else, you know what it’s like to beg for updated software, hardware, printer ink, and design-specific supplies. At the thought of turning freelance, my heart went pitter-patter at the thought of finally having the tools and resources I wanted.

So when I finally had enough money to make one of those coveted purchases, my heart seized when this thought crossed my mind – “Is it worth it?”

When you can afford it, SHOULD you?

How “worth it” are larger monitors?

Are Pantone color books really going to be that useful?

Will a new portfolio case land you that new client?

That new purchase may seem awesome now, but will you regret spending that money in the next slim month?

No doubt about it, measuring “worth it” is hard. How can you gauge what will have the best ROI (return on investment)?

The Simple Principle

It works for EVERY purchase, from a toothbrush to a new computer to expensive shoes to pricey font packages.

I call it the “$3 per use principle.”

Simply ask yourself this question when making any purchase, “Will this purchase cost me $3 or less per use (or per hour, if that makes more sense)?”

If you can honestly answer “yes,” then it’s a good purchase.

Example 1: You want to buy new monitors for a total of $300. Will you use them more than 100 hours (at 5 hours per day, 20 days)? Most likely you’ll be using them for thousands of hours – they’re a great purchase.

Example 2: You want a $2700 wide-format printer. Are you going to print 900 jobs from it? For me, not a great purchase…but maybe for you, it’s a steal.

The Catch

The “$3 per use principle” has one catch…and I already told you. Did you miss it? Reread the title again (I’ll wait. *hums softly*) That’s right, I said profit. Not income; profit. Those monitors or that printer may very well be a great purchase, but not if you can’t pay the utility bills!

Do you have a purchasing principle when it comes to your business?

How do you determine if your next purchase is “worth it?” Leave a comment on this post and let me know!

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About April Greer

April is the content manager here at Millo.co. She’s also a go-to freelance designer with a rare combination of creative expertise and technical savvy. April is available for subcontracting and speaking engagements – visit Greer Genius for more information.

 

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  • http://sydrenasmith.com Sydrena Smith

    This is an interesting piece. I never thought about breaking down my purchases to a cost per use method.

    I can actually use this method on many aspects of my freelancing, especially when comes to marketing. Will purchasing more marketing materials increase my profit by “X” amount?

    Thank you.

    • http://www.be.net/agreer April Greer

      Sydrena,

      You’re welcome, and sorry for my belated response – I’ve been on vacation!

      I’ve found this method works well on nearly any purchase, business or personal. Of course there are a few things that you splurge on just because they make you smile, but when you’ve got 10 ways to spend your money, this can help you make the best purchase.

  • http://designwithrahat.blogspot.co.uk/ Rahat

    Though I am not a freelancer (YET!), I think that it depends on how people think and what kind of situation they are in. Since I am still a full time graphic design student, I decide by first asking myself, will this be able to help me get a job?

    For instance, if I need to print and bind a portfolio piece, I need to know whether or not it will help me at least get an interview. If I design something I believe is great then I will happily spend the money creating it.

    I also ask myself, will this prepare me to design my work better?

    For example, if I need to purchase a book about types of folding methods but I cannot find it in the library then I will try and purchase it for the lowest amount. This is because it will hopefully allow me to grow as a designer and better my work.

    • http://www.be.net/agreer April Greer

      Rahat,

      So true – you don’t have to be a freelancer to take this advice. Really, it is useful in any career path and even in your personal life!

      Since time is money, using this principle to decide what avenues to devote your time to is also very wise.

      Thanks for your insights, and sorry about the delayed response – I’ve been on vacation.

  • Eliza

    Excellent blog you’ve got here.. It’s hard to find excellent writing like yours these days. I seriously appreciate people like you! Take care!!
    my web page :: Camilla PAtruno

    • http://www.be.net/agreer April Greer

      Eliza,

      Thanks for your kind words! I’m just a regular blogger, but I’m sure Preston read and appreciated your comment, too.

      Glad we could help! If you ever come across a question you think we might be able to answer in a blog post, let us know!

  • Mom

    Ok, so I should return the 75 cent new Hershey bar. . . oh, wait, it’s already been eaten!

    • http://www.be.net/agreer April Greer

      Mom,

      No, you got one use out of it for less than $3…good purchase!!! :)

  • http://www.morganandme.net Morgan & Me Creative

    Hey April, this is a wonderful piece of advice. We’re actually thinking of getting some new gear in the office, maybe kinda like spoiling ourselves a little. Now this $3 thing has become thought provoking…hmm…maybe we should just save the money.

    • http://www.be.net/agreer April Greer

      Morgan & Me:

      Thanks! You’re allowed to spoil yourselves once in a while; just make sure you’re really going to love the purchase (which often means you’ll probably use it a lot, and hit that $3 per use/hour…but not always…).

      For example: art. I have a few pieces of art and wall hangings that really, I don’t use or stare at and contemplate…but they make me smile or remind me of the trip I took to the beach or a weekend in Vancouver, etc. (We’re talking like $100 or less per piece here…not thousands of dollars of art.)

      My dad always used to say, “All work and no play makes April a dull Greer.” Translated into business-only speak, I think a business “plays” a bit by getting something that boosts morale – invaluable! even if it is your own.

      All that said, saving is never a bad choice, especially if you forecast a big but very useful and wise purchase in the future.

      Good luck in your decision!

  • http://www.zmgcreative.com JasonG

    I’m a little behind on the blog, and late commenting (and I’m not expecting a response); but I just had to chime in to let you know how simply brilliant the $3 rule is! Such a simple way to think about things, yet it makes perfect sense. I’ll be applying this line of thinking to all my future purchasing decisions.

    • Preston D Lee

      JasonG,
      Welcome to the blog and thanks for the comment! Hope to see you in the comments more often!

    • http://www.greergenius.com April Greer

      Jason,

      Thanks! Glad I’ve been able to provide you with long-term, useful advice!

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  • Russ

    Hi, April.

    Just stumbled upon your blog via LinkedIn.
    Thank you! Great, practical tips. I went freelance two years ago, about the same time I bought a two-bedroom townhouse. The second bedroom is for my kids, so now I’m regretting not buying a three-bedroom townhouse! I have a tiny desk in my bedroom, and it’s not cutting it. Might have to renovate the space in the kitchen for a home office.

    -Russ

    • http://www.greergenius.com April Greer

      Russ,

      Yes, definitely carving out a bit of space for you is key to being productive. You might try to go with a mobile-style office and rolling organizer(s) where you can spread out in the dining area (with a comfy office chair) and then pick up everything and have it organized when it’s time to have a dining room table again.

      Just a thought!

      April

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