May 8, 2018
How to calculate the value of your time
And so it always amazes me when people don't factor in their time when they talk about making money. Typically, people factor in the cost of gas, the cost of materials, that sort of thing. If, for example, someone tells me that they made $100 selling a painting, I'm always curious what they're basing that on. It may be that they spent $50 on materials, and sold it for $150. But I've rarely heard anyone say that they spent a certain number of hours on it.
I've long since forgotten the particulars of the business classes that I took in college, but I distinctly remember that your time is something that needed to be factored in when calculating the cost of doing business. So, when I hear people talking about how much money they're making, I do a quick calculation in my head and figure that they're not even making minimum wage. No, I don't say anything, not out loud. That's why I'm writing it here.
Now don't get me wrong, there are many things that are a labor of love. Calculating your time while you're lovingly restoring a classic car just seems kinda silly. And it is. I've spent endless hours doing just that, and working in my garden. And of course it's all about what you could be doing with your time otherwise.
I've had a professional hourly rate since my twenties. If you want to hire me, I will do a firm quote, and stick to it. If you want me to work for free, the answer is probably going to be no, unless I choose to donate my time to a cause, or for a friend. If yours is a commercial project, I expect to get paid, as you should do, too. If you have failed to put a value on your time, I'm sorry, you've made a mistake. You're more valuable than nothing, and so am I.
Since I went from a minimum-wage job directly into freelancing Graphic Design, that's how I calculated the value of my time. I figured that if I was going to be making minimum wage or less, I'd be better off staying with a minimum wage job. And when I first started out, I know that I was making about that, although my hourly rate was higher. And that's just because I hadn't learned how to estimate time correctly. I'd quote two hours, and a project would take seven. Over the years I learned, got better at estimating, and made more money with my time.
As I got more successful at my business, I started turning to as many labor-saving things in my life as I could find - I hired people to help free up my time, doing things that I could pay for with less money than I could earn professionally. I considered these people to be part of my team.
I'm still very fussy about my time. I don't drive over to Walmart, walk around there, pick up paper towels, carry it out to a truck, and drive home. I order online, and that makes UPS, USPS, and FedEx part of my team now.
Your time is valuable. If you haven't thought about it before, I recommend that you think about it now.
Posted by Brad Hall