Determine what your time is worth.
The world of being a freelance professional or consultant can be fraught with danger since so much of it seems uncharted to a first-time freelancer. The normal institutions one adheres to while working in an organization are no longer readily available. So we must ourselves create some guidelines and self-imposed institutions to ensure that we work as efficiently and productively as our corporate brethren.
Fortunately, in this article, we’re here to help by providing you with some shortcuts that we’ve learned that have greatly contributed to the success of our freelance careers as we were in the progressing of creating the company that would eventually become LavaLink.
So, here’s a couple of unorthodox tips to help you get the most out of your billable hours (and protect yourself amidst the never-ending and sometimes fraught with danger dance between client and freelancer):
1) The best thing you can do for yourself is to determine exactly what your desired hourly rate is. There’s some math behind this, and here it is:
– Determine what your base earnings target is annually (ex. $100,000)
– Divide that number by 220 working days, and multiply by 8-hours
– You’ll arrive at a base hourly number. Let’s assume that you really work about 4 good productive hours within a standard 8-hour workday.
– Multiply your base hourly number times the ratio of nonproductive hours vs. productive (billable) hours. In this example, 8 / 4 = 2.
– Now you’ve determined what hour desired hourly rate is.
Once you’ve determined that number, write it down a big piece of paper and hang it on your wall. It should say “My time is worth $125 an hour.” Then, whenever you deal with clients, stay firm. People will respect you if you stick to your guns and you’ll have the added bonus getting rid of no-good time waster clients.
2) Go to Radio Shack and get a digital timer. You can get one for about 15 bucks. Then, once you sit down at your computer, set it for 60 minutes. Once the timer goes off, you’ve logged one billable hour at your desired hourly rate. Then take a 10 minute break from your computer, stretch out (if you’re like most people who work at a computer, you’re at risk to develop back problems), relax etc. then set it for 60 minutes again a log another billable hour, and repeat the process.
Whenever you find yourself doing a task that doesn’t align with your target hourly rate, you should either eliminate doing it altogether or outsource it.
For example, let’s say that you were tasked to write content for a client’s website which you also designed. If your time is $90 an hour and you can have an article writer create 5 articles for you at a price of $37, then it makes sense to outsource the activity so that you can spend more time on higher revenue generating activities.
The math behind this is so simple yet so often ignored. Let’s say it would take you 5 hours to research, write, and submit those 5 articles. If we adhere to your target hourly rate, that time would be worth $90 x 5 = $450. So, in essence, those five hours that you spent writing articles took you away from your highest revenue generating task and if you had outsourced the work you would’ve profited $413 in the worth of your time!
This may seem simple and stupidly obvious, but it is a very fundamental principle that you should adhere to if you plan to grow a business. If your time is worth $100 an hour and you spend most of your time doing tasks that someone else could do for $15 an hour, then chances are that you aren’t really making meaningful progress towards scaling up your company.