Time Management – How to Estimate the Value of Your Time

Time_Management_RecordsGood time management practice says that whether you’re working for yourself, working in a small business for someone else, or freelancing, it’s hard to tell exactly how well you’re doing money-wise without taking a careful look at the money you’re earning vs. the number of hours you’re working. It’s particularly tough to determine how much to charge so that you get the hourly rate you want – or need. When you have a good idea of how much you’re actually getting paid per hour, you can then decide if it’s worth taking on a particular project or whether it’s something you may want to skip.

Log Your Hours

The first and best step is to actually log the hours you spend actually working on each project. You can use a simple word processing document table, a spreadsheet, or a more formal time logging program like. However you chose to log your time, Whenever you’re working on a specific job, use a timer and keep track of the number of hours and minutes you spend. This can also work in reverse if you budget your time to each project and only work the budgeted time.

Do the Math

When a job or project is finished and there’s nothing left to do, add up all of the time you worked. Divide the total money earned by the number of hours worked to find out how much you earned on that project.

By doing this type of calculation you’ll find out your real hourly wage on the project. For many, this can be a complete surprise. You may think you were making a great hourly rate only to discover that you could’ve taken cans to the recycling center for a better hourly wage!

Run the Numbers

When you calculate the value of your time, you give yourself hard data that you can use to estimate the value of future projects. You can then adjust your pricing more realistically. While it’s generally almost impossible to accurately predict how long a job is going to take, when you log your time and make these calculations, you’ll get better at estimating. You’ll then develop a sense of how much you can make on different types of projects.

Use this data to decide whether to pass on future projects that offer you too low an hourly rate, or to seek higher paying work with the same client. You can also use this information to streamline your work to make it more worthwhile.

Tips

When you’re calculating the time a project takes, you need to be honest and take everything into account. Don’t tally up the hours when you still have a few remaining small tasks to do. Wait until everything is completely finished.

You can also make your estimations more realistic by padding the hours a little. For example, round up your partial hours. This lowers your perceived hourly wage but guarantees that you’ll always make more than expected! It also allows for times when there’s a snag or roadblock in a project that eats up time.

When you choose the hourly rate to charge people, pick an absolute minimum and stick to it. Never go below it even by a little. You owe it to yourself to make what you’re worth. That being said, you may decide to lower it slightly when there are other benefits involved in the project, such as exposure or a good portfolio item.

Finally, once you arrive at a realistic estimate of the value of your time, keep monitoring as much as possible. Things will change and you need to keep your estimation up to date. Monitoring is the only way to know exactly how much you’re making per hour.

DanSig-02




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