“Money often costs too much.” — Ralph Waldo Emerson
Think in terms of an hourly rate.
You can make more money, flow more value, and expand yourself.
It all starts with a simple question:
… How much is an hour of your time worth?
One of the best ways to change your game is to change the value you put on an hour of your time.
Use Your Hourly Rate as a Gauge to Prioritize Your Time
Because putting a dollar value on an hour of your time helps you focus and make trade-offs in how you spend your time.
If you make $5 an hour, chances are that the activities that would make you $50 an hour are very different. In fact, it might not just be a different skill set … it’s a different mindset, and a different set of expectations. It’s also a different set of jobs and experiences, and a different life style. If you want to make $50 an hour, then you do less of the $5 an hour things, and start doing more of the $50 an hour things.
Don’t get hung up on the money part. Instead, use your hourly rate as a gauge and a yardstick to grow your capabilities and prioritize your time. Also, use it to improve your efficiency and effectiveness, while driving from your life style, and finding creative ways to spend more time doing what you love. And, always remember that you climb better ladders if you stay true to you.
How Much is Your Hour Worth?
How much are you selling your time for? If you’re paid by the hour, you already know how much you are selling your time for. But that doesn’t mean that’s how much your time is worth. My first surprise was many moons ago during my early consulting days, when I found out I was being billed out at $100 an hour. I remember I wasn’t being paid that, but I was surprised that somebody thought my time was worth $100. Then I found out others were earning more, but working less … Hmmm, I thought to myself, “I’m doing something wrong.”
A friend of mine taught me a quick trick for figuring out how much your hourly rate is. He said, if you’re on salary, simply chop off the thousands and divide it in half. For example, if you make $20,000 per year, then, take 20 and divide it in half, so you are paid $10 per hour. If you make $40,000 per year, then take $40 and divide it in half, so you are paid, $20 an hour. If you make $100,000 per year, then take $100 and divide it in half, so you are paid $50 an hour. It’s not an exact science, but it gives you a working ballpark.
Is Your Time Worth More
I remember one of my friends asking the question, should Bill Gates pick up a penny? … or a dime? The default response is, “Of course” or “Why not?” Aside from the philosophical perspective, the point behind the question was that Bill Gates’ time is worth so much, that it costs him more to pick up a penny then spend that same time thinking up the next best thing. In other words, it’s a distraction, and it undermines spending his time on more valuable things.
How many metaphorical pennies do you pick up each day?
Asking the Question, Starts the Process
Simply by asking the question, what are $50 an hour activities? What are $100 an hour activities? What are $10,000 an hour activities, you start to see patterns and opportunities. For example, some coaches like Tony Robbins have charged $10,000 an hour. You can ask yourself, what sort of problems did he help solve that were worth that much?
If you start looking around, you can find models and examples of people that make more per hour. You can look at career paths and possibilities and you can see how much different types of jobs make per hour. More importantly, you can see the limits and limitations. For example, would it be realistic to expect to make $10,000 an hour waiting tables? If so, then where? If not, then what are some other paths, if making $10,000 an hour is an important benchmark for you.
The point is to cast a wide net and explore the paths, know the baseline, and know the ceilings of what’s possible. This will help you adjust your own expectations, as well as pick better paths.
It’s a Minimum, Not a Maximum
The point is to expand yourself and put more value on your time. After all, some say, time is all we’ve got. Just because you set your eyes on $100 per hour, means you should limit yourself to $100 per hour. In fact, you may find it easier to make $100 per hour, by going for $10,000 per hour. In the words of Bruce Lee, “Aim past your target.”
To do this, it means getting clarity on a few things. What is the market value of XYZ? For example, how much are people paying to do XYZ today? It means figuring out what skills you already have are undervalued, or you are not making the most from them. It also means getting clarity on what skills or experience you need to grow to move up the stack. The beauty is that models are everywhere, once you start looking for them.
In order to play this game though, it does mean you have to experiment and it does mean you have to play in arenas where you aren’t limited in what you can make. For example, as an entrepreneur or an Infopreneur in today’s world, you can test creating amazing products that change the world, while you’re changing your game. As a consultant or freelancer, you can test upping the ante on people paying a premium for your service or time. You can test splitting your offerings, by having a lower priced offer for one market, and a premium offer for another. Regardless, the point is to make it possible to explore what’s possible.
The Difference that Makes the Difference
The difference between the $10 an hour or the $100 an hour or the $10,000 an hour, might not be what you expect. While part of it might be skills and experience, a bigger part of it may in fact be how you build perception. At the end of the day, it’s not the intrinsic value, but the “perceived value” that people will pay for. And perception is reality. That’s why brand is such an extreme way to change the game. If two things are created equal, the better brand wins.
If you keep brand simple and think in terms of the three, five, or seven attributes that you want to be about (quality, value, beauty, etc.) then you can bake those into what you do. The other key is to make sure these align with your own values so that you can be authentic and play to your natural strengths. This is a more sustainable way, and by aligning your values, you gain advantage in terms of energy, passion, and ultimately personal power.
Don’t be surprised if when you start looking through this lens that you see many people working less, but making more. All your preconceptions about how much something should be worth, may be vastly different than what the market pays, or the perceptions that people have built. Don’t be blinded by your own assumptions, and don’t be blind-sided by how the market works. Especially don’t be surprised that by simply changing your arena or your container can suddenly boost your hourly rate. For example, your skill might be worth $10 in one part of the country, but $100 in another. The reverse is also true. In fact, the Web makes this especially interesting because it’s a world wide market. What you do for $100 an hour, somebody in the world might do for $10. But remember too, it’s not just the intrinsic value, it’s the market value, the perception, and the brand.
So the keys that make the difference, aside from changing your own mindset, beliefs, and assumptions, and expanding your skills and experience, is testing arenas, and testing possibilities, and exploring the models that are already out there, while coming up with some models of your own.
Getting Started with Your New Hourly Rate
A great place to start is to start from where you already are. To do so, try this …
- Figure out your current hourly rate. If you’re already paid by the hour, then good, you already know this number. If you’re paid by salary, then chop off the thousands, and divide it in two. For example, $60,000 is $30 an hour.
- Identify what you want your hourly rate to be.
- Explore the options and possibilities of how you can pull that off. Find some examples to model from and test. When you get stuck find mentors and people in your life that can help you see what you don’t see.
Good luck and may your skills be with you.
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Photo by TheRitters.