I hosted a group of my Mastermind clients recently, and took them through the exercise of calculating their own Hourly Value Rate.
I’ve also seen a couple of posts in Facebook groups asking for advice on how to handle clients who don’t respect your time, or people who ask to meet for coffee/lunch so they can “pick your brains”.
You may also be spending time doing tasks that you really don’t need to be doing, and without realising it, throwing away a ton of income yourself.
What is an “Hourly Value Rate”?
Every minute of your day has a price tag. It’s unlikely that you would class every hour as a “billable hour”, but it still does have a value. Let’s look at what that value represents, and how you can use this knowledge to make better business choices from now on.
Your Hourly Value Rate is calculated from your answers to the following 3 questions;
#1: What is your ideal annual income for the next 12 months?
(It doesn’t matter whether you can see a way that realistically achieve this income right now. Just make a note of the absolute ideal income goal)
#2: How many weeks do you ideally want to give to the business over the next 12 months?
(Perhaps in your ideal world, you’d like to take a 2 week holiday every 2 months? Then the answer to this question would be 40)
3: How many hours each week do you want to work in or on the business?
Example Hourly Rate:
Let’s say that your ideal income goal for the next 12 months = £250,000
And you’d like to take a week’s holiday every month = 40 working weeks
And you’d like to work 15 hours each week = 15
The calculation is;
250,000 / 40 / 15 = £416.67 Hourly Value Rate
Making better business choices when you know (and respect) your Hourly Value Rate
Sticking with the example, every hour you “give away” is stealing £416.67 from your ability to earn your ideal income this year.
We all have a finite amount of hours available each day, and you can’t recover hours that you allow others to take from you. Once you’ve let that hour go, the only options you have are to give up an hour of your time off – effectively taking that hour away from yourself, or your kids if the reason you want to work less hours is to spend more time with them.
From here on in, use your Hourly Value Rate to determine whether to accept or decline any requests on your time. Ask yourself “am I happy to spend £416.67 on doing that thing for an hour?”
Would you spend £416.67 on;
- Meeting someone for coffee who wants to discuss potentially working together some day?
- Letting a client take unpaid time with you?
- Doing tasks that you could outsource cheaper; such as answering your own phone, or allocating payments that have already been received. Both could be outsourced for c£10 an hour, ‘saving’ you £406.67 for each hour!
- Messing around on Facebook; just idly procrastinating and ‘losing’ a few hours to watching funny cat videos, when you could be using Facebook so much more effectively with a strategy?
- Spending an hour researching a supplier to save £20?
No. No. No.
Let’s find your Hourly Value Rate right now. Grab your calculator and work out your own rate, then starting from today, make a list of absolutely every task you do each hour, for the next 7 days.
Then work down the list, evaluating every one of those hours against your HVR. Could you have made better decisions with how you spend your time? How many of those hours did you ‘give away’?