039: How Much Is Your Time Really Worth?

54 minutes
When it comes to making more time for the things we love, it often comes down to how much our time is worth. If we're able to make more money in a given amount of time, we can spend less time working to cover our bills, be more selective about the things we choose to do with our time, and, essentially, have more freedom. But how do we measure the value of our time? How do you determine how much your time is really worth?

Today we are going to dive into this question and talk about it from several different angles. Is the value of your time simply monetary? Is it intangible? Is it found in the things you don't have time for? Is it immeasurable?

Our goal with this episode is to get people thinking differently about their time and to help them understand how truly valuable it is.

http://traffic.libsyn.com/intheboat/intheboat39.mp3Download: MP3 (51.7 MB)

When it comes to making more time for the things we love, it often comes down to how much our time is worth. If we’re able to make more money in a given amount of time, we can spend less time working to cover our bills, be more selective about the things we choose to do with our time, and, essentially, have more freedom. But how do we measure the value of our time? How do you determine how much your time is really worth?

Today we are going to dive into this question and talk about it from several different angles. Is the value of your time simply monetary? Is it intangible? Is it found in the things you don’t have time for? Is it immeasurable?

Our goal with this episode is to get people thinking differently about their time and to help them understand how truly valuable it is.

Highlights, Takeaways, & Quick Wins

Your time is worth a lot more than you think.
Charge more money and you can provide more value to your client by opening up time.
Your thoughts on the value of your time are more important than an arbitrary number you come up with to define it.
If you don’t have a plan to cash in on time investments, you won’t be able to sustain it.
Pay attention to the way you feel and the focus you have to prevent hidden physical costs.
Take care of yourself so you’re more emotionally healthy, which helps you be a more efficient worker.
There’s a difference between time and quality time.
Having a tense family life can cause your business to feel disjointed.
Focus on the value you’re providing for the client, not what you think you can get away with charging.
Build credibility and trust before the client comes to you.
Say no to the things that don’t matter so you can say yes to the things that do.

Show Notes

04:17 Ben: I thought this would be a good topic because a lot of parents who are also entrepreneurs already feel the squeeze on their time from the responsibilities they have in the home, raising their kids, and taking care of various activities. They’re also trying to focus on their business, their own health, and that kind of thing. This question really gets to the root of something I think about a lot. I want to make my time as valuable as I possibly can.
04:56 When I spend time working, I want that time to be worth a lot, so I don’t have to spend as much time working and I can spend time with my family and time taking care of myself. That’s a good way to think about it. It’s good to try to make your time more valuable. There’s a mindset that a lot of people have where they’re not valuing their time as much as it’s worth. Today, I want to talk about different ways that we try to determine the value of our time.

Your time is worth a lot more than you give it credit for.

06:04 If you start thinking that way and treating your time that way, it has many benefits in your life.

Think Outside the Box

06:19 We’ve talked a little bit about this on the seanwes podcast, but one of the first questions is this: how much can you make right now? This is interesting. The idea is that if I gave you the next hour to go make some money, how much could you make in that hour? How would you answer that, Rachel? This question gives me a lot of anxiety and stress, because the pressure is on.
06:52 Rachel: I don’t really know. I know that I could go write a news article and get paid $100 for it, but that’s not very much. I know that, in an hour, I can write close to 6,000 words, but I’m not getting paid for that. I don’t really know how to answer that question.
07:23 Ben: Those are more indirect than this question is asking for here. The purpose of this question is literally that you have an hour, starting now, to go make some money. When you come back at the end of that hour, however much you made is how much that hour is worth. That’s where it stresses me out. I know that I’m in the middle of some projects right now, so I could sit down and work on one of those projects for an hour. That’s just an hour in a whole string of hours I need to spend on this project before I get paid again.
08:01 I can’t necessarily come back from that. I could take some of the music equipment we have in our garage and try to sell it. Maybe I could make some money that way. I dislike this exercise because it’s a little bit unrealistic, but it also doesn’t really point to the actual value of your time. It’s a useless exercise in that sense. What I do like about it is that it puts you in a place where you have to be a little bit more creative about how you make money.

As an entrepreneur selling your services and trying to build a client base, you can benefit a lot from thinking outside of the box when it comes to a business model and making money from clients.

09:00 Don’t necessarily use that question to determine the actual value of your time, but it could be a useful exercise for building some creativity.

What Is the Market Value of My Skill/Service?

09:21 When I first started as a graphic designer, I felt a little bit insecure about my skills because I didn’t have a lot of experience. I was self conscious, because I didn’t want to put a quote out there and have the client come back and say, “That’s ridiculous. I would never pay that.” I’ve had that experience a few times, where the potential client comes back and balks at the price. That feels uncomfortable. There is so much that goes into that conversation that we’re not going to get into, but for those reasons, a lot of people do what I did—they go out and do research.
10:10 I even put in some fake requests for work from other companies, my competitors, so I could get some quotes back and see what they were charging, because some of them didn’t publish it on their website. Based on what I was able to gather and judging my own personal skill from what I saw in the marketplace, I gave myself what I thought was a competitive but still affordable figure that would allow me to pay my bills. This is a really tough position to be in. If you’re focused on yourself, your skills, the amount of experience you have, and that kind of thing, it can be difficult to feel like you can justify charging a fair amount for your work.
11:20 Some people go in the opposite direction and they say, “Whatever my skill level and my experience is, how much can I get away with charging? My skills are worth however much people are willing to pay for them.” That’s a direction you can go as well. We’ve talked about this on the seanwes podcast, where you’re offering something and you have a client base that’s coming back to you for work consistently, you ask yourself—if you doubled your rates, would you lose more than half of your clients? If the answer is no, it’s worth it to do that (Related: e251 The Importance of Cash Flow).
12:06 If you doubled your rates, let’s say you did lose 50% of your clients. You would still be making the same amount of money, but you would be spending less time. Hopefully, now you’ve opened up some time and you’re able to produce more quality.

Provide more value to your client by opening up time when you charge more money.

12:40 That’s kind of a fun exercise to do. It might be worth asking the question. You might be in a place where you can afford to double your rates, and your clients and you benefit from that. This is based on the idea that the actual value is not some objective number based on the amount of experience you have, what job it is, or how much time you’re going to spend on it. The actual value of the service you provide is the results it produces for your client. What is that solution worth to them? Let’s make this really tangible.
13:30 Let’s say that your client wants you to do some copywriting for them for a sales page. This sales page promotes some product that they have. They’ve already put together a good design and a good layout so it funnels people well, but what’s going to get people from the top of the page to that Pay or Subscribe button is good sales copy. Maybe you’re working with a relatively small company, and they’re going to blast this out to as many people as they can. They expect to reach 500 people who actually come to the page. The better the sales copy, the higher the percentage of that 500 people who actually make a purchase.
14:38 Part of the discovery process is learning a little bit more about what kind of people you’re writing to, what their purchasing habits are, where they are in their buyer’s journey, and whether these are people coming in from the first mention or people who already have an established relationship with this company. Those are all things you would want to learn. Assuming they’re all really warm leads, the percentage could be relatively high, as long as you knock that sales copy out of the park.
15:12 Let’s say that they could potentially earn $50,000 from launching that product. A $50,000 profit from a good sales copy is worth charging something like $5,000, maybe even more. It’s a small percentage. For that company, it’s not an expense. They’re not paying an expense to a writer so they can get their sales copy—they’re investing in good sales copy so they can make their investment back many times. You can apply that to many other things. This is based on the idea of Value-Based Pricing, which is something we’re really excited about on the seanwes platform.
16:05 If you go to ValueBasedPricing.com, you can learn more about that. Sean and one of our other team members, Justin, are putting together some tools and some amazing frameworks for discovering the real value of your services or your products to your clients. It’s not just so you can charge more, but really, so you can charge appropriately. In this example, we talked about a relatively small company. What if you did the same thing for a really large company? They’re going to earn $5 million. The stakes are a lot higher there. You really have to knock out that sales copy. Because the upside is so high, you can charge more, and they’re willing to make that investment, because they want to make that $5 million. They’re willing to invest in someone they can trust.

A lot of people who charge hourly are missing out on charging a fair price for the actual value they’re providing.

17:35 We’re going to talk a little bit more about the trust thing. Do you have the trust? Do you have the proven track record? Those kinds of things.

What Is Your Value Potential?

17:55 Let’s go back to the original question. How much money can you make right now? This is one of the reasons I don’t like that question. Sometimes, what you’re spending your time on is adding value in other ways. You’re investing in yourself, so your time will be more valuable in the future. For us, we’re doing a lot of that right now. A lot of the time we’re spending is invested in things. Rachel, can you speak to this with your writing?
18:34 Rachel: I don’t get paid anything right now. I probably write close to 50,000 words a week, and I don’t receive any compensation for that. It’s a lot to invest, a lot of hours every week. It’s hard to put a value on all of that. It’s building. I’ll be producing books that will be passive income. It’s hard sometimes. I get carried away sometimes by thinking that I’m not contributing anything right now. As a writer, I share blogs every week, but most of the words that I write are going into a file right now that is becoming a book. You can’t even see the value of it yet.
19:51 Ben: I can tear that apart. I mean that I disagree with that assessment of the value of the time Rachel is spending on her writing. There are other ways that you invest your time. If you’re working out and taking care of your health or you’re spending time on your relationships, there’s value to those things that aren’t monetary.

Some of the value you get out of the time you spend doesn’t have anything to do with money.

20:37 Rachel: A couple of weekends ago, I spent some time revamping our menu. We have a month of menu, four weeks, and it probably took me three or four hours to do it. We’re super grouchy right now because we’re doing it.
20:59 Ben: It’s hard. We’re cleaning up our diet, and it’s been this gradual thing we’ve been doing for the past several years.
21:11 Rachel: Our diet was already pretty clean, but now we’re cutting out some of those little things that have stuck around.
21:21 Ben: It’s difficult. We would really like to just go get a pizza tonight.
21:27 Rachel: My point with that is that Ben and I both invested that time, and it’s for the sake of our health and for our children. I don’t think a dollar amount could be put on that.
21:43 Ben: No, you can’t. If you were to try to, you could think about things like the cost of health care over several years. What if you had a condition and you had to get pills for it or you had to go in for checkups all the time? Maybe you get hospitalized. Those things are real expenses, but there is also the opportunity cost, like not being able to do certain things because you don’t have the energy or the focus because you’re not putting the right kind of foods in your body.
22:17 Rachel: It’s hard to see that when you’re faced with wondering whether you should give three hours to menu planning or whether you should spend that time actually working and providing money for your family. It’s hard when you’re balancing that.
22:40 Ben: We talked about doing things for your health, but spending time learning new skills could be another way that you invest your time.

If you only ever invest your time but you don’t have a plan to cash in on that investment, you won’t be able to sustain that.

23:08 You have to be able to afford to invest. This is true with money and with time. In our situation, I am taking care of the bills right now with my work while Rachel is building her writing business. This is something we talked about for a long time, and it’s something we’re very much on the same page about. That’s just the financial piece. I’m working, making money, and paying our bills, and Rachel is able to invest her time in that, but she’s also able to invest her time in learning things so she can be more efficient with her writing, so she can experience more success.
24:03 Then there are all these other pieces of value that come out of that. There’s some relational value there, because I’m supporting her and her dream. There’s also a lot of value in Rachel being able to pursue her dream, work toward her goals, and share that work with the world. There is value to our kids being able to see us working and building things, even though it’s difficult at times and maybe a little bit scary. It’s infused with value, and there’s something about looking at it that way as opposed to just thinking about it in terms of dollars and cents.
24:59 That’s why I said I was going to tear it apart. Even the stuff that Rachel is writing that she’s not sharing yet is making her a better writer, so the things she does share are even more impactful and make even more of a difference. Think about the people who’s lives are better because they had a chance to read one of Rachel’s articles. She has comments and messages from people to prove that that’s happening, but it’s an investment we can afford to make. It’s also one that we have plans to cash in on at some point. Don’t just invest indefinitely—have a plan and a direction of where you’re going.

Hidden Costs

25:55 Rachel got into this a little bit when she was talking about not taking care of yourself. We talked about some of the potential financial costs of that. When we think about the value of our time, sometimes we don’t consider this. If we think of the value of our time in dollars and cents and we’re thinking about building our business, maybe Rachel is thinking about how many words she’s missing out on writing by spending this hour doing something else, we can neglect the other areas of our lives that need our time. That ends up costing us in other ways.
26:50 When you’re not getting enough rest, exercising, or eating right, and there are things you can do for your emotional health, like meditating—when you’re not doing those things, you can still get work done and you can still make progress, but you’re missing out on a level of deep focus that you could achieve if you were taking care of those things. You’re losing productivity and missing out on energy. When you exercise and eat right, you’re more emotionally healthy, and that helps you to be a more efficient worker.
27:36 It helps you think about things better, to tell yourself better stories about the interactions you’re having with clients and other people. There could be a real dollars and cents cost to putting your head down to work instead of going for a run today, although it would be difficult to determine what that is. Or, “I don’t have time to cook myself a healthy meal from scratch, so I’m going to go get myself fast food.”
28:13 Rachel: I can definitely tell when my focus is not as good as it should be because of something else, like food that I’ve eaten or not having gotten enough sleep. I can tell today that I didn’t get enough sleep last night. My brain doesn’t work as fast. When we’re paying attention to those kinds of things, we can see that we need to invest a little bit more in sleep or in working out to balance out our emotions.

Pay attention to the way you feel and the focus you have to prevent hidden physical costs.

28:54 Ben: Like I said, if you’re not taking care of yourself, you can still get stuff done and be productive.
29:02 Rachel: It’s just not nearly as effective.
29:06 Ben: I encourage you to actually test it out. Figure out what your baseline productivity is, however you measure that, and then spend a week or two doing things differently. Keep a journal, and see how things are different.
29:27 Rachel: I actually keep a writer’s journal just for that purpose. I keep track of my words, and after every writing day, I keep track of how my focus was and why I think it might be not as great as it was last week. When you do that, you can go back and see what the circumstances were around that and what you can do to change it. If you’re not paying attention to those things, you’re never going to know what might be factored into that and what you could do to make it better.
30:05 Ben: Another area where there are hidden costs is in our relationships, if we’re not spending time on the significant relationships in our lives.

There’s a difference between time and quality time, and you need to spend purposeful, quality time with people to prevent hidden relational costs.

30:29 Quality time is where you’re purposefully trying to deepen the connection you have with that person or people. You have to spend that time. As a father of boys, I’ve seen how when I’m not spending time with them, showing interest in the things that they do, teaching them, and guiding them consistently, they don’t listen as well because they don’t feel as connected. That ends up costing me time, in some cases. They have a tendency to act out more in school or in church, and that ends up being a headache. Then, there’s just the mental drag of feeling guilty that I’m not spending enough time with them.
31:33 The same thing goes for Rachel, for your spouse. It becomes this mental drag, where you know that you need to spend some time with them. You’re trying to focus on your work, but you’re also thinking about the people who you’re not spending time with. Don’t underestimate how important spending that time is, not just for your family and for you, but also for your business. Having a tense family life can cause your business to feel disjointed, frustrating, and tense as well.
32:14 Rachel: Any kind of personal issues can affect work. I remember when I would go into the office, when I was still working at the newspaper, and one of the kids would have been sick that day and all day long I would think, “Is he okay? Is something worse wrong?” That’s just the person I am, but it affects your work.

Keeping Your Work Efficient

32:40 Ben: In your business, in your actual work, what are some things you’ve been putting off that could help you be more efficient? It could be automating something, making something work more automatically so you’re not having to repeat the same thing over and over again. Maybe it’s taking care of some administrative stuff that you’ve been putting off, because that’s not your strong suit. For a lot of creative entrepreneurs, we really love doing the work, the art, the creative part. The administrative stuff becomes this thing we have to take care of.
33:24 What about when you’re running into the deadline for taxes and you haven’t gotten started on it yet? You don’t know whether or not you’re going to get some money back or you’re going to have to pay money, and that anxiety, that feeling of having left something undone, really wears on your ability to get meaningful work done and your ability to be focused.
33:55 Rachel: We took a whole Saturday where I did our taxes, because it was too heavy for me. I couldn’t get it out of my mind. I definitely can attest to that.
34:10 Ben: Those are some of the other places where the value of our time lies. It’s important for us to be mindful of that, especially when somebody is asking for our time, whether it’s a client, a friend, or a family member. We need to consider all of those things as well. We need to value our time the way we should.

Question Industry Standards

34:43 Aaron asked, “What do you do if you feel like your time is worth more, but people doing similar work as you are charging less than you want to charge?” We talked about this a little bit earlier in this podcast. I tend to agree that your time is worth whatever people are willing to pay you for it, but I want to back that up by asking, what value are you actually producing for them? There may be some industry standard. One of the biggest places you see this is in the music industry. Artists feel like they have to put their music on iTunes, and iTunes sells it for this much. Most artists sell each track for 99 cents. I don’t know if you have control over how much you sell it for on iTunes.
35:53 Some places do give you some control, but there are some guidelines. They say, “We recommend, because of the numbers, statistics, and because this is what people are used to paying, that you charge this much.” That’s unfortunate in some ways. It works well for the general population. It’s nice to jump into a framework that’s already been established. It’s really good to ask yourself, “What is the actual value of what I’m providing? Is it valuable enough to me to say that I don’t want to be part of that system, to find some other way to share this with people and allow them to purchase it from me where I can charge what it’s actually worth?”
36:50 They’ll value it more because they paid more for it. It will mean more to them. Those are good questions to ask. I’m a big fan of challenging the status quo, not just for the sake of being that way, but questioning it. Why do they charge that much? Is it really because that’s what it’s actually worth?
37:23 Nathan asks, “How long did it take you to realize what your time is worth?” I replied to him right away in the chat, and I said, “I’m still figuring it out.” This is something we constantly have to be thinking about. We can tend to focus our idea of the value of our time on a specific thing, like the amount of money we can make or the amount of time we can spend with our family, but it really encompasses all of those things.
38:00 Charlene asks, “How do you figure out what your time is worth? What process do you use?” Asking these questions is a great place to start. When you’re talking specifically about the value of your time in a client relationship, as much as you can, you should go the Value-Based Price route. Determine what the value is to the client, what a successful implementation of your solution looks like for them, and then price yourself based on that value.
38:41 Cory Miller asks, “How do you measure the value of your time aside from monetary value?” We talked about that, the value of taking care of yourself, spending time on your relationships with the people closest to you, and also the value of managing your business and taking care of things. Automation in the home is another way. If I can automate certain processes and we can come up with a way to do things more efficiently, like putting together the food schedule, even if it takes time to do that, it’s a worthwhile investment.

The Value of Your Time Might Mean Saying No

39:32 Daniela asks, “What did you begin to do differently once you started to think about the value of your time?” This is an interesting question. Rachel, what has thinking about the actual value of your time done for you?
39:50 Rachel: When I first lost my job and we were just getting started on all of this writing stuff, whenever they boys’ teachers asked me to do something, I would do it. I was spending a lot of time at their schools, and that’s not necessarily a bad thing, but I don’t think it was the right thing for me. I value my time in words rather than dollars, but once I started having a numerical value for my time, I started thinking, “What is this going to cost me? Is it really going to be better for my kid to see me at the school for the third time this week, or would it be better for me to stay home and write?”

Thinking about the value of my time allowed me to say no to things.

40:44 Ben: That’s really powerful. When we truly come to understand the value of our time, it empowers our ability to say no, and that’s something we’ve talked about both on this podcast and on the seanwes podcast (Related: seanwes podcast e140 Supercharge Your No With a Reason for Saying Yes). Having the ability to say no is a great asset.
41:12 Rachel: Right after I lost my job, we were thinking, “Oh my gosh, what do we do now?” It kept both of us from going out and seeking traditional employment. The value of our time, especially the value of our time with our kids, was huge to us. There were jobs that Ben got offers for where he would be gone from 7am to 7pm, and that just wasn’t worth it to us. It wasn’t just about the money or what Ben could make in an hour, but it was about what that would cost our family.
41:51 Ben: Katie asks, “I have less experience than most—recent grad. Is my time worth less?” I answered this one right away also, and I said, “The answer is ‘not necessarily.'” This goes back to the Value-Based Pricing thing. It’s a little bit complicated. When you don’t have a lot of experience, you don’t have a bunch of work to show. You can’t show examples of the kind of work you’ve done, and that affects the kind of clients you’re able to attract. That doesn’t mean that if a client came to you and you established a relationship with them and built trust, that you wouldn’t be able to charge as much as or more than people who have more experience.
42:48 It just means that when you don’t have a track record, you have to work that much harder at establishing trust in the beginning in order for them to justify making that investment. It’s a different way of thinking about it. Don’t try to compare yourself. Some people graduating college or even high school, with no experience with clients whatsoever and who may not even have work to show in a portfolio, are coming out very talented and very capable of being able to produce a great solution for any paying client.
43:44 What a lot of college graduates do is they come into the marketplace and they do what I did—they say, “How much are these other people charging? I don’t have the same amount of experience…” Focus on the value you’re providing for the client, not what you think you can get away with charging. Also, this is time well spent. Build a portfolio and do some pro-bono work to create some examples, some case studies of the kind of work you do and the process you take.

Build credibility and trust before the client comes to you through pro-bono work and a growing portfolio.

44:37 By the time the client comes to you, you want to already have some established trust. That’s where you want to get. It would be better if you can afford to spend six months to a year doing free work to build a strong portfolio and build trust. You build relationships that way and you can get referrals. A lot of great things can come from that. At the end of that year, you’re already in the position where you have the kind of trust to attract the kind of clients that would pay you what you’re really worth.
45:23 “How do you communicate the value of your time to your clients? I think of the story of Charles Steinmetz.” Charles Steinmetz is said to have charged a company $10,000 for making a chalk mark on a generator and saying, “This is where the problem is. This is what you need to fix.” The guy looked at the invoice and said, “$10,000 for making a chalk mark on a generator?” He said, “No. $1 for making a chalk mark on the generator. $9,999 for knowing where to make the mark.” That’s a fun story, but I really encourage you to check out ValueBasedPricing.com.
46:27 They will do a great job of taking you through this process. Part of your process for getting a client on board has to be coming to an agreement on what the value is. They’re the ones who determine that. The client determines what the value of your solution is to them, not the other way around. The client is the one who says, “If this solution works for us, it’s going to allow us to earn this much money. This is what we expect to make.” Discover that first.
47:25 I need to make at least $6,000 a month just to pay our bills. For the amount of time that I have available, I can’t remember what the exact dollar amount is, but I need to make at least this much per hour, per week, and per month. I can’t take on any projects that will pay me less than I need to make in the amount of time it would take to create it. That addresses whether or not the project is viable. As long as it’s viable, you can charge them a percentage of what they’re going to make from implementing your solution, which is an investment.
48:13 That’s how you position your service or your product. That’s how you talk about it to your client. That keeps their focus not on how much money they’re spending, but on the value they’re going to be receiving from it. The bottom line is that your time is probably worth more than you think it is. I say “probably” not because your time may or may not be worth much, but it really has more to do with the way you think about it. The practices we talk about in this episode are a great way to get away from thinking too little of your time.

Your thoughts on the value of your time are more important than an arbitrary number you come up with to define it.

49:12 Your time is priceless. The value of your time is immeasurable. The more you move toward that understanding, the easier it’s going to be to say no to the things that don’t matter so you can say yes to the things that do. The easier it will be to take time to take care of yourself and focus on your relationships and the things in your work that will really move you toward your dreams and your goals.