Time Management – How to Estimate the Value of Your Time

Time Management WatchWhether you’re working for yourself or someone else, it’s often difficult to know how well you’re doing financially without an in-depth look at how much you earn vs. how many hours it takes you to earn it – effective time management. It’s especially tough to know if you are getting the hourly rate that you’re expecting. Project time management shows you how much you actually earn each hour, then you’ll know if it’s a job you should do, or if is something you would be right to pass on to your virtual assistants or freelancers.

Conscientiously  Log Your Hours

To quickly find out how much you really make each hour, you must carefully log your time on each project. You can do this on a simple spreadsheet… or a piece of paper… but you will be better served by using a software time management program. For every project, use a timer (or the time management software program) and carefully record the time you actually work on it… for your own convenience, use hours and tenths (every six minutes = .1 hour) – it will make your calculations easier later. Another way to keep track is from the opposite direction, time budgeting. For instance, budget two hours per day for a particular project – but you must be careful to only work the budgeted hours… otherwise you will not get an accurate picture of how much your time is worth.

Do the Math

When the job is completely wrapped up, add up the total time you worked (the time management software makes this simple). Divide the project income (minus expenses) by the number of hours you worked. This shows you what your real hourly earnings were for this project. Many times, this will be a complete surprise – for good of for bad. You may think you were earning a great hourly rate only to find that you might have collected cans for recycling and earned a better hourly wage! Or you may find that you’re doing all right – but now, you know!

Now You Know… Now What?

Once you know the real value of your time, you have hard data on which estimate the value of future projects. And you can set your rates more accurately. If you’ve been in business for a while, you know that it is pretty much impossible to accurately predict how long a job will take. But when you log your time and make real cost calculations, you’ll quickly get much more accurate at project estimating. And you’ll get a real “sense” of what your income will actually be for different types of projects.

Your new knowledge of your actual cost – and value – will help you decide whether you should take on future projects yourself, or take the project in with a plan to use your freelance or virtual assistant crew. You may also find out that some clients are just not worth your time, and, if you can’t raise your rate with this client, it is time for both of you to move on. Also, these time management techniques may show you ways to work more efficiently so you may be able to actually increase the number of projects you can support – for more income without extra time.

Tips on Estimating Your Time Value

Honesty is critical as you evaluate the time you spend on a project. Do not short yourself here. If you spend the hours, account for them – it’s the only way to know your real value to your company.

You also have the opportunity to slightly overestimate time needed for a project, for instance by rounding up projected fractions of an hour. This gives you a slight pad to allow for production snags that you really couldn’t foresee (for instance, recently a lot of independent work came to a complete halt during Hurricane Sandy and the subsequent power outages). Extra time budgeted in you proposal may offset some of this type of lost time… just be careful not to set those extra hours so high you lose the bid.

Once you establish your hourly cost, set a chargeable rate, and stick to it. Reducing your rate only devalues your time to yourself, and to your clients, and you don’t want to do that. However, you may occasionally decide to charge slightly less to get other benefits, like additional exposure or a shining item for your portfolio.

To correctly value yourself for your business and your marketplace, you must track and value your time. And once you’ve established your rate, based on real analysis of your time, you must monitor your figures to make sure they keep current with the times.

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