This article is partly self-therapy - but also targeted towards some of my friends.

Whenever I tell people how much I make, they are almost always surprised and disappointed. They expect me to be making way more.

Here is the core driver of this reaction:

How much you charge directly signals the capability you hold and the quality of your work/execution you deliver.

When they find out how much my salary is, it creates a huge mismatch in their mind between my capability and how much I'm paid for it.

I've almost finished polishing up this thought. So, here is the note on it.

Pricing signals quality

Example 1 - hiring

Imagine you’re on a freelancing platform, and a developer reaches out to you. You see that this person charges $4 per hour.

Now tell me honestly - what’s your instinct? Would you feel confident that this person can deliver quality work reliably?

I wouldn’t. I’d run away from this person as fast as I could.

Why? Because pricing is one of the strongest signals of quality we have.

We’re instinctively wary of things that are too cheap, especially when we’re looking for quality. If something claims to be high quality but comes cheap, it feels too good to be true. Something feels off - and rightly so.

A higher rate works as borrowed trust from the market. It says: “If others are willing to pay this much for this person’s time/attention, they must be quite good.”

This is how human intuition works within a capitalistic system.

Example 2 - Open source

Let’s say you're running an open-source project. Your life has gotten very busy - too busy to manage this project. So, you decide to onboard one contributor.

Two people reach out to you:

• Dev one - charges $4/hour
• Dev two - charges $100/hour

Who do you think you'll pick?

The sensible choice is to pick the $100/hour developer - even if both are volunteering for free and the cost is the same for you - zero.

Why? Because the market has already priced the second person higher, which means their work is likely to be more reliable and of higher quality.

Your going rate communicates your capability, the quality of your output, and the reliability of your work - even before you say a word.

Example 3 - Joining a new company

Suppose you are changing jobs, and have ended up with offers from 2 companies. Both are offering the same salary+benefits to you. Both have similar culture, work life balance etc.

So, you do some digging around and find out:

• Company one: Everyone there is paid almost the same as you, and it is quite a bit above market rate.
• Company two: Everyone there is underpaid. You are an exception.

Now tell me: which company will you join?

The answer has to be company 1.

The reasoning is - in company 2, since all the engineers are underpaid, it speaks a lot about the overall quality of engineering within the company, and the health of the business.

"They're being paid so much more, so they must be better"

The good devs don't stay underpaid for long. They either get their rates corrected, or they quickly get the hell out of the company into a better paying one.

So, company 1 is naturally the winner.

The higher rates are signaling:

• More competent colleagues
• Healthier business

The "too good to be true"

We are instinctively weary of cheap things that claiming to be of high quality.

It naturally feels too good to be true.

Here are some examples to drive in the point:

• You go to a dealer to look at cars. There you find a car that's priced at 50% of what it should cost. You instantly become very alert and the "something is wrong" thought takes over your brain
• You have found a "high quality engineer", but when you talk, you out that throughout their career they've been making 50% less compared to what they should have been making.

The low price that signals low quality directly punches the claim of high quality in the face.

The uphill battle against the first impression

When a person finds out your low rates, they create a first impression of low quality. That's the default assumption.

Now hereon, everything you do has to actively fight that first impression.

You can do 10 things right. But the moment you do 11th thing wrong, their mind immediately goes "Yeah, I thought so". One mistake, one slip up, and you cement their first opinion.

Compare that to the default first impression of high quality through high rates.

Now, even if you're doing a mediocre job, it will as if you're doing the right thing. And when you slip up and do something wrong, they will think "That's a slip up. These things happen. I'm sure this engineer will fit it up well".

It takes a very short amount of time to cement a bad first impression.

Comparatively, it takes much longer to ruin a good first impression.

When charging low, make sure you're already known to charge high

If you charge less, sure - go ahead. But then, you’d better be well-known already.

Because in that case, people will understand that you’re charging less intentionally. Maybe to help out your friend's company. Or maybe to support a cause.

People will come up with the justification by themselves.

“Oh, he usually charges $100/hour, but right now he’s only charging $25. So, must be giving a discount to help these people out.”

But if you’re not known for high quality or high rates, and you charge too little, it’s going to be one of the worst first impression you can give.

Positives

You get taken more seriously

I'm assuming that you like engineering. And as a result, have gotten rather good at it.

When someone who makes markedly higher speaks up, the chance that the person is listened to is much higher.

Talk to the consultants you know. They'll tell you the same thing.

This is because the brain says "This person charges $xxxx for this. That's wayy above what I charge. There must be a reason for it. Let me listen."

McKinsey's advice wouldn't get much weight if they were charging $10/hour.

Charging more sharpens you

In a capitalist market, a superior resource naturally starts charging more - because it creates more value.

But there’s another, deeper reason to charge more: When you max out your rate, your only option is to solve more valuable problems.

That means you’ll start getting closer to:

• Important problems that truly matter to the business
• Executives and decision-makers who drive impact
• Large-scale/large-impact problems that push your limits

And this journey naturally sharpens you. It’s a self-reinforcing loop - more value, higher rates, bigger problems, sharper skills.

It’s a beautiful and enjoyable process.

So, charge more!