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Are you a consultant, coach, freelance professional, independent contractor or newly started small business entrepreneur?

Are you having a difficult time determing what the value of what 1 hour of your time is worth? The first thing that you must realize is that whatever the amount of money you would like to make in one year, you need to double it. And the reason why is that you have include the cost of taxes, insurances and unforeseen costs. Indivudual taxes and health insurance usually totals somewhere about 80% on top of your regular hourly rate and then add 20%. So that essentially means your rate would be double.

Here's an example. Say that you are a consultant and at your former employer your salary was $85,000 a year and you say to yourself, if I go out on my own, I should be able to make at least $100,000 a year.

1. So let's take $100,000 as the amount of money you want to make this year.

2. Now to get your billable rate per hour we have to double that number to cover taxes, insurances and unforeseen costs. So 100,000 x 2 = $200,000.

3. Divide $200,000 by 48. There are 52 weeks in a year and as a visionary person who is now easily taking on double tasks and responsibility (at a minimum the administrative person and the boss) you need to give yourself at least 1 week vacation per quarter or 2 days of personal time per month to rest, relax, reflect, personal doctor appointments etc.

$200,000/48= 4166.67/week

4. Ok, now take $4166.67 and divide that by the number of hours you will work per week. I will say a realistic number is about 30. And the reason being is that if you are working primarily by yourself, doing the administrative work, updating the website, the marketing, the appointments, you realistically cannot work 8+ hours a day completely focused. At some point you WILL begin duplicating efforts, forgetting things, getting frustrated and easily annoyed. And besides, the reason you started your own company or decided to freelance is because you wanted to have more freedom with your schedule and personal time and you figured that you could also make more money doing what you did before. So now you'll have some time to do yoga, run personal errands, volunteer at your child's school, have lunch with your spouse. You know, all the fun stuff that you never had time to do working for someone else. So let's take $4166.67 and divide it by 30.

$4166.67/30= $138.89/hour

WOW! $139/hour is the value of one hour of your time if you want to earn $100k salary this year working just 30 hours work a week with 4 weeks vacation and benefits included. I bet you thought that the hourly number was going to be a lot higher didn't you?

The other thing about that magic number is that when you realize the TRUE value of your time...you can begin to understand the power of 'outsourcing'. If you are currently spending your time on projects and tasks that would cost you less than $139/hour to have someone else do it, then you should pay someone else to do it even if it is a break even proposition in your business. That way you can focus more of your time doing what you do best, marketing and selling yourself and your business :) resource: www.itsnowornever.net

Learn more about this author, Shonika Proctor.
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