“Profits are better than wages.”
I heard this quote first from a recording of a Jim Rohn lecture. He learned it from his mentor Earl Schauff.
What is the difference really?
The difference is in the possibilities. Wages are based on time and there are only so many hours in a day, so many days in a week, weeks in a month, and months in a year.
24 hours x 7 days x 4 weeks x 12 months = One Year. People earn money working based on this model of compensation. $40,000 a year salary. $15.00 an hour. Now, some may have bonuses, stock plans and pension plans within their job’s compensation model, but in essence, the model for earning money based on time is limited to the numbers of time segments.
Profits however are not related to time, but to the number of products you sell, the price of the product, the margin of profit on a product, and the number of customers you have.
It is quite simple actually. If you can sell a bushel of apples to one store, then you can sell 10 bushels of apples to 10 stores. That multiplies your income by 10.
Then you can easily find 100 stores to sell a bushel of apples to and your number again increased 10 fold.
Apples cost something to grow, but nature grows them, and once you have the trees planted, they produce year after year without having to ever plant again. The trees grow every year anyway, so the number of apples they produce grows naturally. You are then simply taking care of the orchard.
So, it is really sweat equity that costs nothing with apples. So Your profit is nearly 100%. It is easier to sell a bushel of apples to a store than it is 1 apple to 125 individuals. Of course, you can ask more for the apple when you are selling retail, but it is also a lot harder to do. One pound of apples generally
When you sell 10 bushels to stores, you make $600. When you sell 100 bushels to stores, you make $6,000. If you can sell each store a bushel a month at 100 stores, then that is an income of $72,000.
Now, who knows if those numbers are accurate. I am using the apples to illustrate a point. You can easily multiply the number of items you sell, by increasing the number of items you sell to more and more people. It multiplies itself easily. You can upscale your income.
With wages, you have no chance to do that. It is impossible to make more time. But, you can grow and sell more apples