What’s Your Time Worth?
Do you know what an hour of your time is worth? Most people don’t, and if they did, they be shocked at the value of the time they waste.
There are only two days in our lives, the day were born and the day we die, that we all don’t have exactly the same amount of time to do things. The interesting thing about time is that we can’t “use” it, “lose” it, or “waste” it. Time just keeps on keeping on regardless. It’s what we do within the confines of time that makes the difference.
Because we don’t see the actual amount of the time we spend doing things, there is a tendency to not put a value on our time, and therefore not put a value on what we do.
The Personal Perspective
What is the dollar value of your time? Let’s keep this simple and assume you make (or would like to make) $100,000 a year. Of the 52 weeks in a year, we generally have two of them off for vacations leaving 50 weeks to do what we want or need to do. On average, we spend about 40 hours a week at work (although most salespeople will spend well over the 40 hours).
So that means that we have 40 hours a week times 50 weeks or about 2000 hours a year to get our job done.
Dividing our desired income ($100,000) by the number of hours (2000) give is a value of $50/hour.
Essentially, this is what one hour of your time is worth, give or take a bit depending upon whether you work more or less hours in a week.
Spending your $50.
So, when someone spends 4 hours searching the Internet for information on a $50 dollar item, they’ve just spent $200 worth of time checking out a $50 item!
Or we take an hour ($50) to drive across town to deliver a proposal when a courier could have done it for $20.
Doesn’t make sense does it? But we still do it (at least I still do!).
The Company’s Perspective
Let’s look at how much your company must make (I.e., how much you must sell) in order to give you your $50/hour?
If your company is in a high margin business and has 50% gross profit, which means they make 50 cents for every dollar they sell, it costs them $200,000 in sales to give you your $100,000 a year. Be aware that the $200,000 in sales doesn’t provide anything for the other costs the company incurs like support staff, keeping the lights on, etc. The $200,000 just cover your income and nothing else.
Let’s look at the other end of the gross profit scale and assume that your company is in a highly competitive market where the profit is slim. What are the numbers then?
At a 10% gross profit, they must sell $1,000,000 to pay you your $100,000. That’s a million dollars in sales to just covers your cost, not the cost of keeping the lights on, heating the place, etc.
The Bottom Line
What’s the value of your working hour? Are you spending that money as wisely as you could? Think about it.