The Three Methods of Making Money

Corey —  August 9, 2010

       I’ve been thinking lately about ways people make money. And I have what I believe may be a Grand Unified Theory of Making Money. It still needs some refinement, but here it is: There are three ways to make money: selling time, selling a product, investing, or some combination of these.

       That’s extremely simplified, so let me elaborate a little.

Selling Time

       This is probably the most common way people make money. If you work for someone else and get paid by the hour or a yearly salary, you’re essentially selling your time. But having a “regular” job isn’t the only way to make money selling time. There are several ways:

  • Sell Your Time to an Employer – This is your typical job. You’re hired by an employer to do a job, and they pay you an hourly wage or a salary.
  • Sell Your Time to Consumers/Clients – This is freelancing, contract work, or certain types of self-employment. You’re hired by clients (essentially, many employers) to do a job/jobs, and they pay you an hourly wage or set fee.
  • Sell Other People’s Time to an Employer – Think of temp agencies or a company that hires people and then fills an employment contract for another business. These aren’t extremely common, but you’re seeing more of them.
  • Sell Other People’s Time to Consumers/Clients – This is what a lot of businesses do, especially in service industries or professional companies (like CPAs, investment firms, law firms, etc.). They hire employees at a certain rate/salary, and then sell their services at a higher rate.

       Clearly, the problem with this strategy for making money is the limitation of time. There’s only so much time available – even when you’re selling other people’s time. Sure, you can raise rates, but only to a point. However, there’s a big difference in the limit between the first two examples and the last two.

Selling a Product

       Next up is selling a product. This can be any kind of product – basically anything that isn’t “time”. Again, there are several different ways to make money by selling a product:

  • Sell a Product for Someone Else – If you’re in a sales position where you get paid by commission, you fall in this category. Also, think of bloggers using affiliate deals or multi-level marketing (MLM) schmucks who haven’t developed their “downline”.
  • Sell Your Own Product – Farmers with road-side stands, bloggers with their own books for sale, and people selling a product they create/manufacture themselves are all in this group.
  • Get People to Sell Someone Else’s Product – Think retail businesses or MLM schmucks who found suckers to join their downline. Also, affiliate marketing networks (like Commission Junction) would be in this crowd.
  • Get People to Sell Your Own Product – Businesses that create or manufacture their own product and then hire people to sell that product fall into this group. In the online world, this would include businesses with affiliate marketing programs or bloggers who create their own products and offer a cut to anyone who will sell it for them (via affiliate links).

       Depending on which strategy you’re using here, you could be limited by your own time or abilities or the sky could be the limit. The only problem here is that you need to have people willing to buy. But that’s not necessarily a problem if you have a good, useful product and/or you’re a good salesperson.


       Investing is a way to leverage your own or others’ money-making efforts. You can:

  • Invest Your Own Money – If you’re buying securities or other investments or if you’re starting your own business with your own money, you’re in this crowd.
  • Invest Other People’s Money (OPM) – If you’re borrowing money to invest or if you’re managing someone else’s money and taking a cut (think mutual funds), you’re in this group.

       Again, there can be a variety of limitations here: your resources, others’ resources, your time, availability of good opportunities, etc. However, this is probably the one area where people have made ridiculous amounts of money – especially when they combine it with any of the other methods.

Any Combination of the Methods

       I won’t even go into the possibilities here as they’re simply too numerous. But in reality, this is what many people/businesses do. Take my wife’s grandfather for instance. He started an agribusiness, which has become quite successful. In the whole process of starting/growing his business, he has:

  1. Sold his time to clients by combining, spraying, chopping, etc.
  2. Sold other people’s time to clients by hiring them to combine, spray, chop, maintain equipment, etc.
  3. Sold products for other people/businesses like fertilizers, insecticides, pesticides, and herbicides, etc.
  4. Hired other people to sell others’ products
  5. Sold his own products (mainly corn)
  6. Hired other people to sell/produce his own products
  7. Invested his own money in his business
  8. Invested other people’s money in his business through prudent borrowing

       You can probably take any business and break it down into some combination of these methods.

Why in the World Does This Matter?

       Well, beyond the interesting theoretical implications, this matters because it can help you figure out how to make more money! Take a look at what you’re doing now. What are your limitations? How can you expand your opportunities to make money by looking at other methods? Maybe you’ve never considered any of these options beyond what you’re currently doing.

       If you want (or need) to make more money, thinking about the various methods might help spark a new idea for you. And that seems like a good enough reason to write about it!

I Need Your Help!

       As I said before, I feel like this Grand Unified Theory of Making Money needs some refinement. Which methods did I leave out? Can I simplify the statement: “There are three ways to make money: selling time, selling a product, investing, or some combination of these.“? What do you think about this theory? How will you apply it to your situation?

       Share your thoughts in the comments below!



Corey is currently pursuing a Master of Arts degree in religion. While he enjoys learning and writing about Christianity, another one of his new passions is writing about personal finances in order to help others make wise decisions with their money.

13 responses to The Three Methods of Making Money

  1. Conceptually, I agree with the ways of earning money. I have done all of the above. I’ve got 20+ years of experience chasing the answer to “expanding my opportunities” to earn more. I have lived too long in the world of trying to figure out ways to earn more money.

    Now I am trying to keep my focus on asking how can I take part in what God is doing? How can I love God and my neighbor more? How can I know God better and be content trusting him to provide what is right?

    It was a lot easier coming up with answers to the questions I was asking about ways to earn money. But the joy and moments of rest when “I get it” are a lot more peaceful with the new questions I’m asking.

  2. Thanks for your comment, Kevin. You know I fully agree with you. I’ve written quite a bit about contentment and how important it is for us to seek contentment in Christ. I hope you understand that my intent in this article was not to downplay the importance of contentment. My goal was to illustrate the ways we can make money to help us generate ideas. If I’d had more space, I would have discussed motives. But I like to keep my articles below 1,500 words so people will actually read them. (Which is sad really…) This was already pushing 1,000 so I thought it best to focus on one idea here.

    Maybe I should have an article tomorrow about why Christians should even consider making more money and which motives can honor or dishonor God. Thanks again for taking the time to share your thoughts!

  3. very interesting point you bring up about whether or not we should strive to make more money. I have talked a lot on this subject with friends and family and have come to the conclusion that if we are doing what we should be i.e. following the commandments and living as God wants us to he will make sure we are comfortable.

    thats not to say that we don’t have to work.

    the LOVE of money is the root of all evil.

  4. I’m guessing you’re going somewhere with this post that’s longer term than the post itself, like maybe you’re framing either an ebook or a direction for a major blog series, so my comments will be in that vain…

    It looks like you’ve got the major categories covered, so the only thing left are the subsets.

    Under “selling time”, I think there’s a significant difference between an employee who sells his time to an employer, and a person who fixes things for a fee. He’s not so much selling his time as his expertise.

    Under “selling a product”, books, insurance and gift baskets are one way to do it, but I think the farmer who grows food from the ground rates a special place. He’s not just selling the food, he’s also creating it. A fisherman would be in the same category as the farmer.

    Can’t think of any subsets for investing though…maybe hoarders, speculators and patient capital? (I’m reaching here!)

  5. Thanks for your comments, Kevin (from Out of Your Rut). I wasn’t really planning anything with this. It’s just something I’ve thought I should write about more. It’s more challenging to write about making money than saving money – at least for me.

    I would say that the person selling his expertise by fixing things is still selling his time. The limiting factor is time. In order to make money, he has to give up his time to fix things. So essentially he’s still selling his time.

    I’m not so sure that a farmer is really all that different from, say, a carpenter. Maybe he’s just covering more of the production process himself, but he’s still producing a product. In a lot of ways, he’s still selling his time in terms of the time it takes him to create/produce the product. (Unless, of course, he outsources or hires employees…)

    I’ve had a hard time thinking of any business or profession that doesn’t quite fit in these categories (or combo of categories). That tells me that I’m at least on to something useful!

  6. @Dan T.: I agree that God will meet our needs as we follow Him, but there’s a clear place for our work. There are also good (and bad) reasons Christians could be earning more, but let’s save that discussion for tomorrow when it’s more on topic. Thanks for your comment!

  7. I would look at four or five ways of receiving income.

    1. Trading time for money. This is true whether I’m direct selling, employed, consulting, etc. I have fixed hours, and I use those hours to do something.

    2. Trading someone else’s time for money. I can do this by starting a business and I buy others time and produce something with it that I can exchange for more money than I pay them.

    3. Having my money earn money. Investing.

    4. Residual income where I have set something up so that the effort I have committed to it in order to earn the income is completed, but the stream continues. This would be a passive stream of income as opposed to a business I am actively involved in. It could also be royalties from a song, book, web article (through ad revenue), etc.

    5. What is given to me, i.e. I haven’t “earned” it. :-) It could come through any of the above channels when it is far greater than the effort expended or out of the blue. Had to throw that one in there because it’s the kind I am most grateful for and truthfully feel have received a lot of.

  8. Excellent summary, Kevin! I think that’s probably clearer than how I broke it down, because even selling a product as a salesperson is really a form of trading time for money.

    I wonder if #4 (residual income) is much different from #1. It looks different, but it requires putting in that initial time for money effort up front. It just has a much higher return over time because it keeps on producing more money.

    #5 fits if we’re talking about receiving money. And I guess it could fit if you’re talking about making money and one of your ways to make money is simply asking (panhandling, for instance). But I agree. We often receive more than we really should, and we ought to recognize that as a blessing from God.

  9. I’m curious as to where you would put rental property? Would that be investing? It’s not totally hands off if you’re managing the property, but in a worst case scenario you can sell the property I guess.

  10. I thought about that one when I was writing the article, Sandy. I think I’d put it in investing, since it’s a form of you trying to make money from your money and (usually) borrowing to invest other people’s money. But, as you pointed out, it could also include selling time (yours if you manage it, someone else’s if you hire a property manager). And in a way, you’re selling a product as well – housing.

    I think most businesses are a combination of these methods. I’m not sure you can find one that simply uses one. People, on the other hand, are well known for just selling their time, thus limiting the amount of money they can make.

  11. Alright, so as I’ve thought about Kevin (#1) and Dan’s (#3) comments, I’ve decided to do two more articles looking specifically at why Christians should or shouldn’t think about making more money. Check in tomorrow for the “why we shouldn’t” and Wednesday for the “why we should”.

  12. Investing does not mean “having my money earn money.” It means “taking a risk on behalf of another, for a share of the profits.” Lots of people have gotten into trouble thinking that investing doesn’t involve risk. Look at the people who “put their retirement fund in the stock market” as if it were a bank.

  13. Good point about the risks of investing, Michael. Nearly all forms of investing require risk. Many people say that investing in government backed bonds is risk-free. But with the way things are going, I’m not sure that’s the case! However, I always tell people who are worried about the government going bust (or the dollar) that money will be the least of their worries if it happens. Anyway, thanks for pointing out the fact that risk always comes with investing.