A year ago I would have said it’s impossible for me.
The businesses I run interact with a complex marketplace driven by software and algorithms. Some of these systems serve me, serve the marketplace, and/or serve the customer. Most of the time, all three at once. However, sometimes I get to be the one eating shit pie.
For years figuring out proper pricing was a spreadsheet affair. Pull your COGS, tariffs and freight, apply a margin to make payroll, taxes, and keep the lights on and that was your price. Now, you must compete on the algorithm. Machinery and software, equivalent to one of the best quant hedge funds, is trying to match customers and products. The customer does much less work to find what they want (despite how they may feel about it). Inside this algorithm is a penitentiary. If you make an edit to your own product that the algorithm deems not good, your product is de-listed. It doesn’t matter if Trump made it a requirement to raise prices by 30% overnight, tough luck.
In this new age, I do not have to sit idly by and eat the shit pie. In this case, the shit pie isn’t a matter of having a smaller life. It is a matter of closing the business and giving 100% of it over to the Chinese, which is what the tariffs have done for many small commodity USA based brands.
Now, I can build my own quant hedge fund to work within the parameters and incentives handed to me by the marketplaces and the Executive Branch.
This year I built the tool. I built it for one of my businesses. It does one job, and it does that job well. My product pricing is like the floor of the NYSE. No more hand signals and pink sheets, the computers hum, crunch data, make decisions and my algorithm sets a new price 1-2 times per day on every product.
Something changed. The price of the software did not fall to zero. What fell is the wall between me and the capability. I no longer had to buy the expertise. I had to know what a good pricing system looked like, and sit with the thing until it produced one.
I had to be able to see possibilities that were entirely absent only a few months ago.
The list every operator keeps
If you have run a small business, you keep a list, even if you have never written it down and could only recite it if someone put you on the spot. It is the list of things you do not do, or cannot do.
Mine ran long. Legal reviews of every little thing. A more mature inventory forecasting tool. A quantitative advertising decision framework taking signals from all marketplaces and platforms. Professional videography and other media assets.
There just isn’t enough money. I would have gone out of business 20 times over doing all the ‘necessary’ things.
Every item on that list is some capability that would have made the business better, and it came bundled inside a person: a designer, a lawyer, a software developer. So the question was never whether I needed the thing. The question was whether I could afford the person or agency who did it, and usually I could not. I crossed the item off and moved on. Each of those decisions was right on the day I made it.
What actually moved
For most of the history of small business, a capability cost what the person who held it cost. Expertise came in person-sized units, with all the legal, compliance, and software to stay compliant costs attached. If you wanted the output, you rented the human, by the hour or by the salary. That is why the ceiling on what one operator could build sat exactly where his budget sat.
That changed. The expertise is now available in a form you can direct without hiring it. What decides how much of it you can use is no longer money. It is knowing what good looks like. The question moved from “can I afford a designer” to “can I tell a good design from a bad one.” From “can I afford to have this built” to “can I tell when it has been built right and sustainably.”
That is the strange part. The gate is now a judgment I can develop rather than a person I have to rent. Effort did not become free. The gate just stopped being priced in money I didn’t have.
The objection that will hold you back
Wider capability goes first to whoever was already inclined to learn. Some will complain it is going towards people already thriving. To those, I urge you to try harder. The level of democratization baked in here is high.
The operator who would have found a way now finds it faster and cheaper. I think this stands to rattle the upper middle class more than any other cohort. Those who spent the most money and time on credentials will find that proof of work has far outstripped the value of their tuition.
One phrase carries the weight in every hopeful sentence here: “if they care to learn.” I can’t measure that, and I am not going to bury it under the parts I can measure. It may be the real argument. The tools took away the excuse. What is left is whether a person knows what good looks like, and whether they care enough to go find out.
The starter
Everything so far is about an operator who already has a business. There is a second person this is even truer for, and I have less proof about her.
It is the person starting now, who begins with a range of capability a solo founder could not have assembled at any price a few years ago. Most attempts at anything don’t produce income, and most never have; the median one-person business nets close to nothing, and that was true long before any of this. The narrower claim, the one worth making, is harder to dismiss. The attempt that fails now still leaves the person holding a wider set of proven capabilities than the same attempt left them holding in 2019. The venture can die and the person walk away more capable than they started, carrying that into whatever comes next. The attempt has become a kind of credential.
Again, proof of work.
What is left
The container that held expertise broke. The size of an operator’s budget, which used to set the limit on his reach, stopped setting it.
None of this hands you an outcome. The rent is real and it may rise. The reader is not guaranteed. No tool will hand you taste, or hand you the patience to build it. What changed is narrow, and it is more than enough.
I built the pricing tool because I can. Previously, someone else owned me. The list of things I cannot do is shorter than it was, and I am betting it keeps shrinking. Go look at your own list. See how much of it is still priced at 2019.
Sources and Inspiration
IRS Statistics of Income — Nonfarm Sole Proprietorship (Schedule C) Statistics: median net income per return.
U.S. Census Bureau — Nonemployer Statistics: the stock and churn of one-person businesses.