You charge money for your services, but do you really know the value of your time? It can be one of the hardest things for an entrepreneur to understand.
“As a microbusiness owner, we tend to not really think about what the value is of our time. We understand what we charge for our time. Whether it’s $50 an hour, $100 an hour, $200 an hour. That’s what we bill. But it’s not what the value of our time is.”
This week, host Mary McCarthy tackles this topic herself, and talks about 5 points to consider when putting a value on your time. Mary is the President of Your Management Team, Inc., a small business consulting firm. She is also the Co-Founder of the Women’s Small Business Accelerator, Inc.
“The challenge of not understanding what the value of your time is, you don’t really know how to spend your time practically. You’re the leader of your organization, you’re the driver. So if you don’t value your time and use it wisely, quite often as you start to grow, others are not valuing your time as well.”
Mary talks about two formulas for determining the value of your time:
First, define what size business you want to be (the revenue you want to generate).
Take the amount of the revenue you want to generate divided by (The number of hours you want to work a week multiplied by the number of weeks you want to work a year) = The Value of your Time
Determine the roles you serve in your business. What would those salaries be in a year? (Examples: Comptroller, Sales Manager, Visionary, etc. Mary values “Visionary” as a $500,000/year job.)
Add up all the roles and divide by 2080 (that’s 40 hours a week working x 52 weeks in a year)= $ /hour
What is the hourly rate you come up with? Mary’s rate was $425/hour.