Valuing your own time is a practical tool for entrepreneurs, digital nomads, and anyone who wants to make better decisions about work, outsourcing, and travel. By assigning a clear hourly rate to your earnings, you can quickly see whether a task, service, or travel option is worth the cost.
A simple baseline
- Assume a full‑time schedule of 40 hours per week with two weeks of vacation, which equals 2,000 work hours per year.
- Divide your annual net income (salary + dividends + any other cash you take from the business) by 2,000.
- Example: $1,000,000 ÷ 2,000 = $500 per hour.
This $500/hr figure becomes a reference point for evaluating every activity that consumes your time.
Alternative productivity models
Some experts argue that most people are only truly productive for about 3 hours a day. If you adopt that view, the annual productive hours drop to roughly 700, which would inflate the hourly rate (e.g., $1 M ÷ 700 ≈ $1,430/hr). The author cautions that such calculations can become subjective, because:
- Long focused sessions can produce results that would otherwise take days for others.
- Business owners also spend time thinking, strategizing, and planning, which, while not “hands‑on,” still adds value.
For a balanced approach, the 2,000‑hour baseline is recommended.
Using the hourly rate to decide what to outsource
- Identify the cost of a service.
- If a task (e.g., copywriting, customer service, funnel building) costs less than your hourly rate, outsourcing is financially sensible.
- Scale with income.
- $500/hr → outsource anything under $500/hr.
- $250/hr (half‑million income) → still outsource most tasks under $250/hr.
- $50/hr (≈ $100,000 annual) → consider hiring an in‑house employee for higher‑value work while outsourcing lower‑cost tasks.
Adding a premium for disliked tasks
When a task is particularly unpleasant or drains you, apply a premium to its cost:
- Disliked tasks (e.g., detailed accounting, dealing with banks) → add 50 % to the hourly rate.
- $500/hr becomes $750/hr for those activities.
- Neutral tasks (e.g., routine admin that you can do while thinking) → reduce the rate by 50 %.
- $500/hr becomes $250/hr for work you can perform without full focus.
This adjustment helps you prioritize the work you enjoy and delegate the rest.
Valuing travel time
Travel decisions can be evaluated with the same principle:
- Estimate effective work time on a flight or layover. If you expect to be productive for only half the nominal time, treat the remaining half as “lost” and apply a reduced hourly value.
- Compare options:
- A 16‑hour flight versus a 24‑hour flight saves 8 hours. At $500/hr, that’s a $4,000 time saving, but only if you can actually work those hours.
- If the longer flight includes a costly layover with limited ability to work, the real saving may be far less.
Consider additional benefits such as elite status (e.g., lounge access, priority boarding). If a loyalty program provides a tangible monetary advantage (e.g., $3,000 in upgrades and lounge use), factor that into the decision.
Practical steps to implement the method
- Calculate your baseline hourly rate using the 2,000‑hour model.
- List recurring tasks and their current costs.
- Apply premiums or discounts based on how much you enjoy or tolerate each task.
- Re‑evaluate travel plans by estimating realistic productive time and any ancillary benefits.
- Review regularly as income changes; a higher income raises the hourly rate, shifting the threshold for outsourcing.
By treating time as a quantifiable asset, you can make clearer choices about what to do yourself, what to delegate, and how to allocate travel resources—ultimately freeing up more of your valuable hours for high‑impact activities.
