How Much Are You Worth?

calculate how much an hour of your time is worth

One of the most important calculations you can do in your business is to calculate what an hour of your time is worth. If you make the mistake of NOT figuring out what your time is worth, you will never place appropriate value on your time.

Think about how much time is wasted on unscheduled phone calls, unscheduled meetings, having coffee with a “prospect” who just wants to “pick your brain”, cleaning your desk, or whatever task you are doing that does not directly lead to increased revenue in your business.

The main reason people spend time on the wrong things is that they do not value their time. Quick question…if you were making $100 per hour, would you still spend an hour during prime time (between the hours of 9:00 AM and 4:00 AM) that could be used for prospecting, making sales calls, marketing, scaling your business, or on other money making tasks. I am assuming the answer is no!

What I am about to show you is a very simplistic example, but I’m sure you will get the gist of what I am trying to get across …

So how do you know what an hour of your time is worth? To make it easy, let’s assume you want to make $100,000 per year. The typical calculation is to take 100,000 and divide it by 2000. This is the number of hours (assuming a 40 hour week minus 2 weeks vacation) the average person works per year. With this calculation, your time is worth $50 per hour. But it doesn’t end there!

I can guarantee you will not be productive for 40 hours every week. Life will happen, fires will need to be extinguished, and personal responsibilities will keep you from having a productive 40-hour week. Research suggests the average worker is productive for around three hours per day. But let’s say you will be a little more productive than the average worker. Let’s assume you will be productive 4 hours per day. That drastically changes our initial calculation. Now an hour of your time is worth $100 if you want an annual income of $100,000. (100,000 / 1000).

As you can see, your time is more valuable than what you initially thought. So if you want to gross six-figures, then you have to ask yourself a few questions…Is what I am doing now producing the $100 per hour I need to make $100,000? Is what I am doing now the best use of my time? Is what I am doing now productive time or unproductive time? Productive time is making follow-up phone calls, marketing, working on tasks that scale your business, etc. Non-productive time is cleaning your desk, surfing the internet, chatting with friends, spending time with low-quality prospects, reading about your friends’ perfect vacation on Facebook, etc.

Financial advisors say you have to tell you money where to go. If you don’t tell your money where to go, spend more than you make, and spend money on needless items…then you will be broke. As a business owner, you have to tell your time where to go. If you don’t tell your time where to go, spend too much time on unproductive tasks, and not enough time on productive tasks…you will be broke. So plan your day in advance to make sure you make the best use of the time you have available so you can reach that six-figure income goal sooner rather than later.