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  • #992920
    Maria Grant
    Member
    • Total posts: 24

    Hello soloists,

    I have a questions, what does your time cost? How do you usually decide if there something is worth your time?
    I am writing a post on building a website and got stuck on calculating the value of your time if you choose to do it yourself.

    I understand that say if I am sitting at home doing nothing instead of earning say $25 and hour at a part time job, my time costs $25. And so if instead of meeting clients for $100 (profit) an hour I spend an hour doing a website it costs me $100.

    As a business owner the cost of your time varies, I doubt that anyone has a marginal cost function worked out for their work. I am just curious how people actually do it and how acurate it is?

    #1188804
    bb1
    Participant
    • Total posts: 4,485
    Maria Grant, post: 221468, member: 70764 wrote:
    I understand that say if I am sitting at home doing nothing instead of earning say $25 and hour at a part time job, my time costs $25. And so if instead of meeting clients for $100 (profit) an hour I spend an hour doing a website it costs me $100.

    That’s a very simplistic way of looking at it.

    True if you just look at the time that you are away from selling to your clients.
    But in your first example if you are sitting at home anyhow, and the web developer is going to charge you $200.00 per hour, your time is actually worth $200.00 per hour.

    The same in the second example, although you could be charging a client $100, you are ahead by $100, that being the difference between what you can earn, and what you would be charged.

    Now again mine is a very simplistic way of viewing it as well. As it will depend on how competent you are at building a website. Some people may be able to do a good job in a similar timeframe to a developer. Others may take 10 times as long, and still do an ordinary job.

    #1188805
    Maria Grant
    Member
    • Total posts: 24
    bb1, post: 221485, member: 53375 wrote:
    That’s a very simplistic way of looking at it.
    True if you just look at the time that you are away from selling to your clients.
    But in your first example if you are sitting at home anyhow, and the web developer is going to charge you $200.00 per hour, your time is actually worth $200.00 per hour.

    I don’t think it matter how much a web developer takes per hour. The idea I was thinking is this,
    for example: to make a website it will take you 10 hours of your labor or it will cost $1000 to have it made by a web-developer. Assuming you get two identical websites in each case.

    If you value your hour at $99 then you should do the website yourself, if you value your hour at lets say $100.50 you should outsource.

    So question how do we determine the cost of your time?

    If I’m just sitting doing nothing at home the most I could realistically be making at a part-time is $25 per hour, this makes my website cost me $250. That’s easy enough to calculate, for every hour I spend I incur cost of $25.

    For a business owner to embark on any project I would assume that such analysis must be preformed.

    #1188806
    bb1
    Participant
    • Total posts: 4,485
    Maria Grant, post: 221488, member: 70764 wrote:
    If you value your hour at $99 then you should do the website yourself, if you value your hour at lets say $100.50 you should outsource.

    .

    I think you are missing one very important factor, sure it would appear that if I am charging the client 100.50 I should outsource as I am making a 50 cent profit.

    But factors that will impact on this simplistic way of looing at it are your overheads. As an example say you overheads to earn that 100.50 is say $20.00 than, the actual money you are making is only 80.50, so you are actually still better of doing the job yourself.

    There are so many factors that go into working this out it is not just one straight calculation. You need to work out what your on costs for each individual job is.

    #1188807
    bb1
    Participant
    • Total posts: 4,485

    Thanks Millie.

    The other thing that needs to be considered are the non tangible (is that the right term), items. I actually do a contra deal with a cleaning business, where they clean and I garden, and at the end of the period, the main thing to consider are our hourly rates actual hours spent. Plus I have tip fee’s as additional on costs, that is different to the cleaning business, as we include all other overheads in our hourly rate.

    But with web development, it is not just a simple case of throw dollars at the developer, they disappear for a couple of days or weeks, and back they come with a fully functional web page, although if you see some of their advertising and talk to some that’s how easy it is.

    But in reality, you need to first provide them with a detail specification, than sit with them to just sort out any uncertain items in the spec. Than throughout the build process hopefully the developer is giving you review points so that you can provide input, put in tweaks, etc. There are other bits and pieces along the way.

    So what am I saying, if you are doing the build yourself, some of these steps aren’t required, as you can see the little tweaks as you go, rather than waiting for the developer, and saying oh but I would really like this. So in the hypothetical situation put above of say a 10 hour build, it is not as if you don’t need to put in any effort during that build process, you are putting in considerable time (well I would hope you would, if not sack your developer).

    And please don’t get me wrong, I am not saying build your own web site, in fact to most I would say, don’t even consider it, but what I am trying to say it is not just a case of my time is worth $100.00 and a web developer is going to cost me $XXXX, therefore that is the pure basis of my consideration. There are many and varied other consideration’s in your decision as to where the breakeven point would be, if you were to do the task yourself.

    #1188808
    Kelly Exeter FS Editor
    Member
    • Total posts: 241

    My hourly rate (depending on the service being provided) is anywhere from $120-300/hr. So I always work on at least $120/hr when weighing up whether to outsource something or not. And I work on the basic rule of … if I can pay someone $60/hr or less to take something off my hands, I will usually do so.

    I also work on the assumption that me spending 5 hours of my time (like say editing some audio/video) doing something I am not skilled to do, and doing something that someone else can do in a hour and do a much better job of it than me … then, cashflow permitting, it’s always a sound investment.

    That said, I think in many situations you need to have experienced the frustration of trying to do something yourself and spending a ridiculous amount of time on it for a poor outcome to really appreciate the value of getting someone else to do it.

    I find this with my web and graphic design clients – the ones who quibble least about costs/appreciate me the most, are the ones who have tried to do it themselves for sub-optimal results

    #1188809
    Roman K
    Member
    • Total posts: 44

    Having gone through heaps of Brian Tracy’s books and audio programs I can share his approach I found useful.

    1) Determine how much you want to earn a year. Set your goal, divide by number of months/weeks/days/hour in a day to get down to the most important value: how much your hour costs.

    2) Refuse doing anything which pays less than that. If you want to make $500 an hour stop doing laundry, buying groceries, cleaning, washing your car, etc.

    3) Start logging your time, set an alarm, every 15 minutes force yourself to write down what you are doing, then add up, the majority of people will be shocked how much time they waste. Turn your negative habits into positive ones.

    When people say, yes, but I don’t make so much money yet in terms of hourly rate this brings us to the next question: What your next activity should be to get there?

    As Brian Tracy says, if you have something to sell (product or service) your next activity should almost always be prospecting until you get to the stage when you have so many referrals you don’t have time to prospect anymore. From this perspective, prospecting is the activity which can get you to your goals.

    With this mindset, when you start thinking about how much your ideal hour costs and how you could spend it better even if you are not earning that much more, it changes everything. Some people stop doing household work and come to realisation it’s a much better idea to hire other people for this kind of work. This applies to every area including developing websites.

    Also, there is heaps of time management techniques, methodologies, and practices which when fully understood and applied save heaps of time and increase the value of your hour enormously. The best investment you can possibly make is invest in your mind by reading books in your area, taking courses, programs, attending seminars, etc.

    Hope this helps.

    Roman

    #1188810
    GuestMember
    Member
    • Total posts: 318

    Lots of good thoughts. I’ll add some variables to the mix that I don’t think business owners always see in the more standard ways of looking at valuing their time:

    Enjoyment. If you love learning a new skill, you cannot easily price this.

    Future. DIY websites give you skills for the future of the business or new businesses.

    Serendipitous learning. By building my own WordPress site, I needed to research plugins. While doing this, I discovered other, unrelated plugins. They offered functionality that completely changed the possibilities of my site.

    Rapid change. If you want to change something within your skill set, you can, at any time. No waiting while customers suffer. Rounds of development, backtracking, or new ideas, are costly. You can experiment with a DIY approach and adapt.

    Where else could you be? If you could be doing something else, earning more, is it time to let go? Few business owners would choose to do their own development if they could outsource or delegate. Given their we are solopreneurs or very limited resources on here, or at very early stages of something bigger, DIY is often appropriate.

    Time to market. If someone takes 3 months to learn to build a website and a competitor moves in, it wasn’t clever to thwart a business by doing it in-house. If I were starting a blog today, I’d self-build without a doubt (and I did). Starting a new platform with APIs for time zones, newsletter, worldwide currencies, PayPal, newsletter, meeting scheduling and functionality all over the place, and no experience of .NET, I’d get experts in (and I did)!

    #1188811
    EdwardThirlwall
    Member
    • Total posts: 8

    I’m not sure how you all will take this, but at the end of the day, it really boils down to how driven you are in the first place. For me working in self storage means that I do whatever it takes to get customers in and make sure that I am hitting a certain value per hour, because that’s what my business means to me. I wouldn’t reject work or business if I could help it!

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