In my startup job, I worked a 9-hour, 6-day week. In my first year after quitting, I worked about 600 hours in the whole year and earned about 80% of my old salary.

That's under 12 hours a week on average. My hours fell to a fraction, and my pay fell by about a fifth.

So, how is your salary actually decided? Your salary is what a business pays for the value you create for it. That value comes from your skill multiplied by your effort, your tools, and how well your work fits what the business needs. Hours feed only one part of that multiplication, so working longer usually moves your pay very little.

(My book, Quit 9to5, comes out in January 2027. Join the Quit 9to5 waitlist to hear when it's out.)

Because effort is only one part of what your company pays for.

Yet most of us treat it as everything. We stay late, take on extra work, and wait every year for that 10% increment. When it arrives smaller than we hoped, it feels unfair.

To see why, start with money itself. It is a tool to exchange value: you create value for someone, and they pay you in money as proof. A salary is the value you receive for the value you create inside an organisation.

So the question becomes: what counts as value to the business paying you?

It pays you to solve its problems.

Value is anything that solves a problem or takes stress off someone. Take hunger: you could buy raw ingredients and cook, or buy a plate of ready pasta. The pasta is worth more because it solves a whole chain of smaller problems for you: getting the ingredients, cooking, serving and cleaning up.

The more of a customer's time and effort a solution saves, the more valuable it becomes.

A business breaks its big problems into smaller ones and hands them to employees. Your job is a bundle of those smaller problems, and your salary depends on how much value you create while solving them.

How much value one person creates follows a clear equation.

By multiplying a few parts, and any one of them can sink the result.

In my upcoming book, Quit 9to5, I call it the Value Creation Equation:

Value created = (Raw ingredients + Tools) x (Effort x Skill) x Context awareness

Back to the pasta. Ingredients and tools add no extra value on their own. The chef turns them into a meal with effort and skill, and the meal is worth something only if someone wants to eat it.

I use plus for the parts that add up and multiply for the parts that are essential. If any multiplied part is zero, the whole value is zero. A skilled chef who puts in no effort cooks nothing.

Start with the part most of us push hardest: hours.

Because effort is one factor among several, and it has the hardest limit.

Stretch your workday from 9 hours to 12 and you add a third more effort, at best, before tiredness eats into it. Skill and tools can make each of those hours produce many times more.

My first year after quitting showed this. I put in a fraction of my old hours and still earned most of my old pay, because of the value I had learned to create at the startup, where I owned everything.

So where does the extra pay come from?

Because their skill and tools let them create more value in those hours.

You can see it in how jobs developed. As businesses grew, they bought machines and tools. The people who could run complex tools asked for higher salaries, and businesses agreed, because those people created more value.

The same logic decides who earns more in your company today. If many people can create the value you create, the business can replace you easily and has little reason to pay you more. I wrote about getting out of that spot in How to Become Irreplaceable at Work.

Skill and tools still answer to one last multiplier, and it can cancel both.

Then your work is worth nothing to the business, however good it is.

If you aren't hungry, the best pasta in town is worth nothing to you.

You first have to understand the problem and the solution people want. That's context awareness.

Say two people in a team both work late. One polishes a report nobody reads. The other fixes the problem their manager worries about most. Both put in the effort, and only one created value the business wanted to pay for. People pay for the solution that fits their context best, and your employer is no different.

What can you do about your own equation?

Find the weakest part of your equation and raise it.

Building skill can even be worth a pay cut. In my second job, I accepted a salary about 30% lower to join an early-stage startup as its COO. I gave up salary for learning and earning potential, and it was totally worth it.

For the full chain, from how the world makes money to where your job fits, join the Quit 9to5 waitlist.

This view of pay also answers a bigger question.

No. Only the buyer changes.

In a job, one employer pays you for the value you create. Outside a job, clients or customers pay you for it directly.

That's how I could leave. Within 2 years of quitting, I crossed my previous salary while working only 2 to 3 hours a day.

That doesn't mean you should resign tomorrow. A job gives you a stable income, and a small business of your own usually can't match your salary on day one. Before deciding, read Should You Quit Your Job Without Another Offer? and work out How Much Savings Do You Need Before Quitting Your Job?

Your salary follows the value you create. Inside a job or outside one, raising that value is how you earn more on your own terms.

Thought exercise: Write down three parts of your own equation: your skill, your tools and your context. Score each from 1 to 10. Which is lowest, and what could you do this month to raise it by one point?

Want your pay to follow your value?

I've put everything I know into first-principles frameworks in Quit 9to5, my book coming out in January 2027: how value turns into money, and how to walk out of salaried work when you choose.

Join the Quit 9to5 waitlist so you don't miss the launch.