How do I teach my 12 year old about earning money the right way?

My boy's been asking for the latest gaming console and I told him he needs to earn it. I want him to understand that good things come from hard work, not handouts. I'm thinking about having him do yard work and chores beyond what he normally does. Any of you guys have a system that worked for your sons? I want to make sure I'm doing this right and not just being cheap, you know?