Do You Know What Your Time Is Worth?
I opened my first business in 2002. Pawsitively Pretty Mobile Grooming Salon is still going strong today. I had already been the highest priced shop groomer in my area and raised my prices even higher when I went mobile.
I was sitting in the kitchen of a client that followed me from the shop. Her price went up $20. Based on the average price in the area, I was about $30 higher or almost double for most breeds.
I felt comfortable enough with this client to ask how she really felt about my pricing. At the time, mobile grooming was unheard of and had several people call me and express sticker shock. She just looked at me and said that I just gave her back 2 hours of her day. That’s the time she spent driving back and forth to the shop where I worked. Those two hours were worth the extra cost.
That was kind of an eye opener for me. My time has value. So, in the back of my mind was this vague notion of what I thought my time was worth.
But that’s just what it was: vague. So, lets change that.
Okay ladies and gents, time for some math!
I want to earn $100,000 for the year. Last year my business expenses were $30,000. The total income I need is 130,000 to clear that $100,000. I plan to work 48 weeks of the year. Mustn’t forget my vacation time.
$130, 000/ 48 = $2708 a week
$2708/40 = $67.70. I’ll round it up to $68 an hour over the course of a 40-work week.
I’m worth $68 an hour.
Puts a different light on things when you’re futzing around on Facebook during the time you are supposed to be working. If I’m not making $68 every hour, then I’m losing it. Once you are out of your workweek, your spare time is up to you. Spend it with your family, play and network on Facebook, or read a book. It’s not billable hours anymore.
Lets take this article. If it takes me two hours to write it, the cost to me is $136. If I write a little, run over to FB, and now it takes me two hours, my investment to my business jumps to $272. I doubled my expenses. The financial goal of a business is to keep expenses to a minimum while producing quality products. Will this article generate the cost of my investment? Time will tell, but a $136 investment is easier to recoup than $272.
I use the word investment rather than loss of time. Investment is a business expense and is factored into my cost of doing business.
Now I want to introduce another principle called Deliberate Practice.
I first heard this term in the book “ Badass Making Users Awesome” by Kathy Sierra. The intent of Deliberate Practice is to make the most of the value assigned to your time. Deliberate Practice is when you work on one particular skill until you master it and then move forward with the next. Many times, entrepreneurs in their quest to be the best in their field, overwhelm themselves with trying to learn several things at once. What happens is you might be adequate in those skills, but you don’t master them.
Instead of being Badass, you are meh.
Say I want to develop a one-hour e-course, and I need training in developing the program and how to write an effective sales page. Because currently what I’m doing is not working. Scenario 1 is I buy both courses at $100 each and learn both at the same time. The sales page is taking me 6 hours and the program development is 4 hours. At my $68, I have invested $880 in this e-course. And its meh because I haven’t mastered any of these skills and the generated income will suffer for it. I eventually get the time down to 3 hours for the sales page and my costs drop to $476. Your mileage may vary. But I’m still not mastering these skills.
But what if I took the time to master each skill.
Statistics show that when Deliberate Practice is effective, it should take three sessions to master. If it is taking longer than 3 sessions, you need to re-evaluate your learning process. If I reduce the time spent on sales pages and program development to an hour and two hours respectively, the program costs is now $204.
The purchase of a training program, plus the time it takes to learn it is also a business expense. Instead of just buying whatever program you run across, take the time, (in my case $68 an hour) to find the most effective one on the market. Ask recommendations from people who are already successful because of the program they bought. For sales pages, hands down, it’s Amethyst Mahoney’s NO BS Sales Pages.
When you know precisely what your time is worth, you can make better decisions that propel your business forward rather than just spinning your wheels.