Why $100,000 a year won’t make you rich

Updated to Business on December 27, 2022.

Has this title got your attention?

Most experts I consult with would love to earn six-figures. I don’t blame them. The average income in North America is about $50,000. Earning $100,000 puts you in the top 15% income bracket. Not bad.

But, here’s the rub.

As an entrepreneur when you earn more, it costs more. This is the nasty truth of growing your expert enterprise that often gets overlooked in the rush to get your numbers up.

“As an entrepreneur when you earn more, it costs more.”

When you are just starting out you created your own one-page web site for free on WordPress, didn’t subscribe to an email management tools, or CRM, or video hosting. You didn’t belong to a professional association, go to an annual conference, or need a virtual assistant to help post your blog,  or update social media, and do the occasional research project. Life was pretty simple (and cheap).

Then you started to grow your business. And costs go up.

I want to show you how this happens and how you can, with just a bit of work, leverage off your core business, and become richer.


Let’s use a simple contractor scenario: Lynn teaches communication skills as an independent contractor, has been in business for five years, and has a pretty stable client list.

Her fees average $3,500 for a partial for full day contract of teaching and she does 26 engagements a year ($91,000). Of course, you might do more or less than this, but this will give you an idea of my logic.

She also offers coaching at $185/hour. And she averages 72 hours of coaching a year ($9,000).
Her total income is $100,000, before any expenses.

Her monthly costs add up to $21,140 annually for Internet hosting, email management service (like Mail Chimp), Webinar hosting, allowance for annual web site upgrades, virtual assistant, insurance, attending one professional development conference, travel to clients, membership to a professional association, etc. This is probably low (about 21% of gross income), there could also be outsourcing costs, design work, advertising, printing, etc.

Assuming a 25% income tax (to keep it simple I’ll assume she operates as a sole-proprietor and doesn’t have corporate tax and there are no personal allowances or deductions for home office, etc.), she will pay $19,715 in tax.

She is left with $59,145. That’s a pretty good net income (about $5,000 a month after tax) if you were a teacher, or middle manager in some office job. Get the full spreadsheet here.

But Lynn has to create this income every month. She has no pension, no medical, no holiday or vacation pay. Nada, nyet, zero, nothing. And what about investments? Home improvements, A new car every five years, clothing allowance, mortgage, putting a child through university, or any of those other fun things?

“She has no pension, no medical, no holiday or vacation pay. Nada, nyet, zero, nothing.”

She is on her own. Get sick, break a leg, need to take care of Mom? She is out of luck.

Lynn is doing a great job working as a laborer (work more hours, get paid more), but not building an expert enterprise.


Anne ran her business with income simply from speaking and coaching, like Lynn, for a number of years, but realized she wasn’t getting ahead. So she wrote a workbook.

Let’s assume that one half the clients (1/2 of 26 engagements=13) buy the workbook to go along with the seminar and pay $18. Anne nets $12, and with an average of 20 people in the room, that’s a net return of $3,120. Not huge, but revenues goes up the more Anne presents and there is no impact on operating expenses – it all goes to her bottom line.

Then she wrote and self-published a book. It wasn’t intended to be a bestseller – it was more for her clients. Her clients use the book as a gift for their clients or staff and often pre-purchase them with her events. Anne sells a modest 2,000 books a year and nets $30,000. She also sells the book on Amazon Kindle, but let’s assume all book sales are directly from clients.

Twice a year, Anne advertises a four-week on-line course that sells for $497. To keep it simple, let’s assume that she uses her webinar hosting service (like Zoom or Webex) to deliver the course. With just 14 registrants per course (28 for the year) she nets another $13,916. This is a nice alternative program for clients and proceeds go straight to her bottom line.

Now, here’s the neat part. Anne’s monthly operating expenses are the same as Lynn’s. The only difference is that she has $47,036 more income that flows directly to her bottom line. Even allowing for more income taxes, she is netting $35,277 (60%) more income! Get the full spreadsheet here.

“The only difference is that she has $47,036 more income that flows directly to her bottom line.”


These two scenarios demonstrate a basic accounting principle: fixed and variable costs. Fixed costs are: lights, heat, insurance, and mortgage interest. They don’t go up and down with income – they are a reality you have to pay for. Variable costs change with income.

In these scenarios, both Lynn and Anne have $21,140 in fixed costs (some accountants would argue that virtual assistant and phone are variable, but I’m keeping it simple). Those don’t go away. And they don’t go up if you make more money.

Anne’s workbook, book, and on-line courses ($47,036 in net revenue) don’t change her fixed costs – net proceeds go directly to her bottom line and the more she sells, the more she makes.

What about you? Do you have sales of products that spin off your core business? With a little effort you can have an audio recording, recorded webinar lesson, workbook, ebook, or monthly membership that provides better service for your clients and brings in more revenues every year.


You’re going to work hard. That’s the “fixed cost” of being an entrepreneur. You have to deal with the uncertainty, marketing, outsourcing, delivery, and customer service that goes with enjoying the freedom of having your own business. You should also enjoy the benefits.

“You’re going to work hard. That’s the “fixed cost” of being an entrepreneur.”

More money in my bottom line means I can take writing retreats, holidays with my family, go to conferences, and continually improve how I serve my clients. I also need to invest for my future. I’m working hard – I deserve to also become richer. And so do you.

I also want to share that I knew all of this, but didn’t do anything about it for the first 18 years of my career. Don’t wait, like I did.


Anne’s example gives you some ideas to add to your offering. But the place to start is with your client’s problems. Start by asking: “What problem do I know I can solve?”

  • If they have trouble applying what you teach them, create a workbook.
  • If it’s too expensive to come to your training, create an on-line course.
  • If they need help understanding a concept you teach, create a series of videos.
  • If they want more details, create an ebook.

Choose one product you can complete within one month and get started. You’ll be glad you did. So will your accountant.

Money photo from Tracy O