What Factors Affect Your Income?
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What Factors Affect Your Income?

What are the factors that determine your earnings? Is it your skills, experience, competence, diligence, luck, profession, your network and contacts or your greed?

Some people always seem to get more material rewards out of life than others. Many companies have fixed salaries, take it or leave it. Some have job grades with small margins for negotiations, while for some jobs you can negotiate with large margins.

Have you ever thought who or what determines how much you earn?

Is it your employer, the customers, the industry average, the government or some mysterious ‘market force’ or is it your skills, experience or your connections?

Factors Determining Your Income

No matter how highly you price yourself, three factors determine the material compensation (meaning money or equivalent) you get for your work.

How others value what you do – people who are paying you for your services put a certain measurable value on your contribution. Your skills, experience and the value you add to the buyer of your services or your employer, determine the material compensation you get. This value may be very subjective as some people are more skilful in convincing others that their contribution should be valued higher than that of others.

How well you do what you do – This is trickier. It doesn’t mean that if you do your job better than a colleague doing similar tasks at the same workplace, you will automatically earn more. The money value of what you do depends on the context and how you can leverage your contribution. The chef at a cheap diner, no matter how well she cooks, will certainly earn less than a chef at a five star Michelin restaurant. A welder with short training might earn much more than an experienced nurse with two university masters degrees. But the employer paying the welder more views his (or her) contribution as being more valuable and thus pays more. Human relationship skills play a great role here. Customers typically favour entrepreneurs whom they like, if they feel that they have a personal connection and if the price is not too far away from the competition.

How difficult it is to replace you – If there are five equally qualified and motivated people waiting for you to quit so that they can do your job equally well, you have very low leverage in bargaining a good salary. If, on the other hand, if it would take your employer months and months to get someone even half as qualified and experienced to do your job as well as you do it, your employer has to pay you a very high compensation.

How You Can Earn Higher Incomes

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This is a question, which hundreds of millions of people ask themselves all the time. Some people would tell you to get higher education and improve your skills. But, with so many experienced and highly skilled people without jobs, this is no guarantee.

Find yourself in the right industry – Now what is the ‘right’ industry! This can be a good solution for some people, but in a recession even vital industries like energy production and healthcare downsize and throw people out. Then what is the ‘right’ or booming industry today may not be ‘right’ in ten years.


Doing something what no one else wants to do – This is very difficult to generalise. People working on oil riggs off the coast of Norway earn fabulous incomes but cleaners on subways in Western countries work on a pittance.

Move to a rich area – Many places make it very difficult for people from poorer countries to move in. Besides, there are many unemployed people in rich countries.


Keep closer to the core functions of any business or organization - Sacking you means shutting down the functions of the organization. This usually works for most of the time, but organizations can outsource even parts of the core functions so no one can be 100% safe.

‘Leveraging’ yourself with smooth talk, bootlicking and ‘creating’ results when you achieve very little – you might find many people doing this to survive and flourish in larger organisations. This is not a very rewarding strategy in the long run as someone is bound to outwit you in the dirty game. And, you will not be very happy either.

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The best alternative is to acquire a plasticity of mind so that you are ready to check your premises and mindsets regularly. As the realities of the job market changes, you are prepared to change, upgrade your skills and do different things than before in new skill combinations. You also need to align your ambition with your skills package so that you feel excited by what you are doing all the while learning new things. This way you bring passion to your work and that will more likely increase your productivity and bring you higher material compensation. Even if you don’t earn more money, at least your job satisfaction rate will probably remain higher.

Do People Earn Enough?

If you would ask them, very few people will admit that they earn enough or are fairly compensated for their work efforts. Most people would say that they should earn more or be compensated more for their work.

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Only 7% of the high earning people in rich Qatar (earning on average about $10,000 per month) feel satisfied with their earning according to one survey

Earning high incomes don’t automatically make people happy. Would you rather be rich yet unhappy or happy with enough to get by?

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Comments (11)
Javier D

Nice and thought provoking article. It is not so simple how our income is decided.

Great tips in this article

Very well said my friend. Ah, money...the root of all evils, isn't it?

I don't know why my above comment appears without my name...

This happened me too already several times; sometimes you are not logged in anymore and have to log in again. The picture in this article is also funny.

Sergei F

Good stuff. But I still wonder how some people can make 100 million dollars a ayear. Are they really that efficient?

Very informative write, Rana. It is difficult to find justice at work. For example I had the dirtiest job yet I don't get the the highest pay. In some, there are much cumbersome tasks but the ones who whistles every minute just to pass time gets the permanent position. Nobody could blame me if I try to find relief in the lottery. I don't win all the time but someday the numbers will seek me out.

Very thought provoking article! Terrific work, a very enjoyable read! Of it would be nice to make a large income each month but I am happy to get by I suppose. Sometimes greed plays a factor here and the more you make the more you want. What is income if you do not have health but sometimes with money you can buy health or a great health plan! I agree with Will I buy a lotto once in a while but he sure does a much better perspective than me, someday the numbers might seek me out if I am in the right place at the right time.

I believe what matters here is you enjoy your work and do your best. We can always find ways and means to improve our life. We just have to think what really is our purpose in life. Is it not that the ultimate satisfaction is to be derived from giving unselfish service to the people?

Amazing article and thanks to provide such information.

What an interesting article, really enjoyed it. I know money is important but I think some people spend too much time chasing it and not realising what they already have. Nice post!