What’s your effective hourly rate?
Would you spend a lot of time trying to save a few bucks? Well…
My wife and I have a pretty different way of looking at time. And while we’re in the middle of a home remodel, it presents itself sometimes. 🙂 Case in point…
One of the things we plan to do, as non-sexy as this is, is to blow new insulation up into our attic. It really increases the efficiency of the house and has a pretty high ROI on the electric bill (especially with our Florida summers).
Now, you can hire it out. Or you can do it yourself. David says: “Let’s hire somebody to do it.” My wife says: “We can do it ourselves”.
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Why would she want to do that? To save money, of course.
So, we’d have to rent a machine. Buy bags of insulation. Load it up. Lug that thing up into our attic. Climb around in the attic like monkeys. It’ll probably be miserably hot up there, too. It would take quite a bit of our time and be quite frustrating. OR…
I can pay somebody to get it done – probably in a couple hours. Done.
We’ll be going my way on this one. 🙂 Because here’s the thing…
My time has value.
It isn’t even remotely worth it for me to do that myself. The value of my time is higher than that.
Do you place value on your time? You should. One of the biggest mindset shifts one can make in business and in life is to begin to value your own time.
I’m reading the book by James Schramko right now, Work Less, Make More. One of the concepts James is big on is the effective hourly rate (EHR, for short). Your EHR is calculated like so…
- Get how much money you make in a month.
- Subtract your expenses to get net profit.
- Get how many hours you worked that month.
- Divide profit by hours worked.
You then get your effective hourly rate.
Now, I calculated mine. It varies every month. Plus, I wasn’t really tracking my time (I will be moving forward), so I’m ballparking it. But, my rough calculation for EHR for last month (November) was about $110/hour. Honestly, it probably spends more time less than that. Looking at EHR now, I think I’m going to begin re-working some things specifically to increase it.
But, $110/hour. Does it make any sense for me to blow my own attic insulation? Remember, that includes tracking down the machine, figuring out how to use it, loading it, making trips to get insulation, lugging all this crap around, DOING it. This wouldn’t be a quickie job for me – at all.
I think it’s the same kind of thing in play when I see people trying to hack their theme when they have no idea how to do it. Or when they try to make a landing page manually just to avoid buying a tool to do it much faster and better.
If you desperately try to avoid spending money at all costs, even if that means doing a lot of legwork on your own, then you might be REALLY harming your EHR.
Time is the one asset that, once spent, you can’t get back. Money can be made. There’s a bunch of ways to do it.
Make sure you treat your time with the value it deserves.
And, even if your EHR is much lower, ASSIGN a value to it. Your time DOES have value, no matter what. If you spend that time on one thing, you can’t spend it on another. There’s always an opportunity cost.
Plus, thinking in terms of your EHR will help you make better business decisions. 🙂
What’s YOUR effective hourly rate?