How to break through the $100K ceiling
Many solopreneurs struggle with boosting their business above $100,000. Here's why you keep hitting that ceiling, and ways to earn more.
This past week, I had three conversations with solopreneurs battling the same challenge: Why is it so difficult to earn more than $100,000 selling services as a solopreneur?
Most solopreneurs run into this revenue ceiling when selling consulting and other services by the hour.
A revealing calculation
This limitation was puzzling to me for many years. But after working with hundreds of solopreneurs, I realized the problem’s source: It comes down to math. And no, I’m not talking about complex equations.
The $100K ceiling persists because of the inherent limitations of one-person service businesses.
Let’s run the numbers.
There are about 2000 hours per year (50 weeks x 40 hours).
By a (very) rough calculation, half of those hours are spent delivering the work. The other half is consumed by finding, securing, and managing the work — activities that are not billable hours.
Once services jump above $100 per hour, customers often balk. Of course, as you gain expertise, your hourly rate may rise. But the $100/hour threshold is what I’ve seen in countless solo businesses.
The result? Working 1,000 hours a year for $100 per hour means you bump into the $100k ceiling.
Designing the solution
Now, I admit, these are wide-ranging generalizations, and you may argue that your business is different. But I’ve seen this equation play out so often that it can’t be ignored.
Two broad approaches to tackling the ceiling conundrum exist: refine or supplement.
By refining your operations, you can increase your revenue. This might come from tactics such as:
Closing sales more effectively (increasing the speed and conversion rate)
Becoming more efficient in administrative tasks
Hiring contractors at a lower hourly rate and pocketing the difference
Establishing a reliable pipeline of ongoing work so your time spent marketing decreases
The aim here is to fine-tune your operations to free up your time — your most precious resource as a solopreneur — so you can increase your bucket of billable hours.
Supplement digitally
The other approach is to create offerings that do not require your direct involvement for delivery. These are typically digitally created and delivered. They are high-margin products with a low (sometimes zero) cost of goods.
Incorporating these offerings also enables you to diversify your income sources — a key strategy for breaking the $100K barrier.
Here are a few possibilities for digital offerings:
Assessments or digital learning tools
Books, ebooks, and audiobooks
Online courses, webinars, and masterclasses
Affiliate programs that pay you referral fees
Sponsorships and advertising
An online community or forum
Analyze and mimic
If you analyze solopreneurial companies that have exceeded the $100K annual revenue mark, you’ll likely find a suite of digital offerings contributing to their success. They generally have one flagship offering. Two examples are Justin Welsh’s LinkedIn OS online course and Jay Clouse’s Creator Science online community, The Lab.
Many have then developed entire ecosystems, ranging from YouTube channels with advertising to individual and group coaching services, online courses and communities, and more.
While your goals may differ, I encourage you to analyze your current revenue sources and explore how to refine and supplement them.
To supplement, you can begin with one simple digital product that aligns with your current offerings. Can you provide something digitally that your clients and customers keep requesting? Create, test, and polish it until it becomes a reliable supplement (even modest) to your other revenue.
Banking on Swiss dollars
Just as technology has enabled solopreneurs to compete with companies many times our size, digital products allow us to go beyond hourly billing.
Your aim is to generate what a colleague playfully calls “Swiss dollars — Sales While I Sleep Soundly.
Swiss dollars allow you to extend yourself, your expertise, and your value in digital form.
These types of digital products keep working (and earning) even when we’re not. And for a solopreneur, that’s an excellent handoff of time and effort.
To be continued…
I realize this is a big topic, and I’ve only scratched the surface. In future issues, I’ll dig into how to avoid the hourly billing trap altogether. Plus, I’ll walk you through creating your first digital product as a “small bet.”
Until then, brainstorm ways to fine-tune your operations and how to bring Swiss dollars into your solopreneur bank account.
And if you have other suggestions for breaking through that pesky $100,000 ceiling, I’d enjoy hearing them. You can share them in the comments via the link below.
Thanks for being a reader!
PS: Thanks to the many folks who led new solopreneur subscribers my way this past week. Weak ties work!
If you know other solopreneurs who want to level up their solo businesses, do them a favor and share this newsletter.