Do you know how much your time is worth? Probably not, unless you work in an industry where you bill clients by the hour.
Even then, you may not know about the many hidden factors that contribute to your hourly rate, such as overheads, or the cost of any benefits.
In this article, we'll look at why it's valuable to "cost" your time, and we'll give you a handy calculator that helps you to do this.
The Benefits of Costing Your Time
When you know the value of your time, it's easier to stay motivated and focused on your work.
It also encourages you to address issues that harm productivity and waste time, such as procrastination, excessive interruptions, and maladaptive perfectionism, where you become obsessed with producing perfect work, even when it takes too long to deliver.
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Costing your time also enables you to identify lower-value tasks that you should delegate, outsource, or drop altogether if you can. You can then focus your time on the highest-value tasks that will make the biggest difference to your organization and to your career.
To use our calculator to estimate the value of your time, enter the appropriate figures, below. Then, click the button at the bottom of the form to see your results.
Note:
We use dollar symbols on the calculator for illustrative purposes only. Please enter figures in your local currency.
1. Enter your yearly salary:$
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2. Enter the yearly cost of your employment benefits:$
Tip:
To calculate the total yearly costs of your benefits, look at your end-of-year tax statement, your employment contract, a pay stub, or make an intelligent guess.
Benefits could include medical, dental, and vision insurance; life insurance contributions; tuition or training reimbursement; retirement contributions; or other perks such as a company car or gas allowance.
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3. Enter the employer's payroll tax: %
Tip 1:
The payroll tax that your organization pays for you is normally a percentage of your salary.
But it will likely depend on the country, state, or region that you live in. Your human resources or accounting department will have this information, or you may be able to get it online or from your tax office.
Tip 2:
If you can't get hold of this figure now, estimate 10 percent.
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4. Enter your share of rent, light, heat, equipment, and so on:$
Tip:
Your organization spends money on your workspace and on utilities like heat, water and electricity.
It may be difficult to find an exact figure for this, so, you can estimate 10 percent of your salary for this cost. (Based on the salary you entered above, this is $0.)
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5. Enter the cost of other overheads:$
Tip:
Your organization invests in an infrastructure that supports the work that you do – for example, IT and administrative support.
The costs for these support services may be difficult to find, so you can use an estimate of 40 percent of your salary for this cost. (Based on the salary you entered above, this is $0.)
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6. Enter the profit expected from your work:$
Tip:
This will vary depending on your sector or industry. Some professional services companies, for example, want to see a 50 percent profit on the work their people do.
You may be able to ask your manager for a rough estimate. (Based on the salary and costs you entered above, this is $0.)
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7. Enter the total possible working days each year: days
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Tip:
This is the number of days you work every week, multiplied by 52 (weeks). So, if you work five days a week, this figure is 260. (We'll look at vacations below.)
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8. Enter your vacation (annual leave) days each year: days
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9. Enter paid public holidays each year: days
Tip:
For information on public holidays in specific countries, visit timeanddate.com.
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10. Enter training and other days away from the workplace: days
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11. Enter your working hours each day: hours
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Click Here to Calculate the Value of Your Time
Total yearly value: $0
Total daily value: $0
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Total hourly value: $0
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Note 1:
You will likely have made a number of guesses while doing this calculation, and this is fine in many cases. However, if you need the value of your time to be precise, talk to your HR or accounting departments.
Note 2:
If you're self-employed, you can use a similar approach to work out the hourly value of your time. However, be sure to include the time that you take to sell your services and run your business, as this may take longer than you think!
Using Your Hourly Rate
Once you've worked through these calculations, you should have a pretty good estimate of how much your time is worth – this may be a surprisingly large amount!
Use this number when you're looking at your workload. Spend some time estimating the value of each of your regular tasks. Where possible, your aim should be to concentrate on tasks that have a value greater than the estimated value of your time.
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Then, eliminate, delegate, or outsource tasks that have a lower value than your time, where you can.
Tip:
Once you know the cost of your time, you can use an app to calculate how much time you spend on activities like meetings. This can "shock" you out of holding low-value or poorly focused meetings.
Key Points
Costing your time helps you to understand and prioritize the tasks that are really worth your time, and to decide which tasks you should eliminate, delegate, or outsource. Knowing your value can also help you to stay motivated, and to be more productive.
To estimate the value of your time, you need to take into consideration things such as your salary and benefits, your employer's payroll tax, and other overheads. You may be shocked by how high the value of your time is!