How Much Is Your Time Worth?
Earlier you considered production costs in producing a physical product. But production costs apply to your speeches and programs too. And knowing what your production costs are will help you enormously in setting your fees.
In determining production costs, the first thing you need to determine is, how much is your time worth? Let’s consider a hypothetical example. Let’s say you want to prepare a keynote that you’re going to market to corporations. What are your production costs in developing this keynote?
How much is your time worth? I’m not talking about some pie-in-the-sky, wishful figure like $1,000 an hour. I mean how much money your business is paying you (as its employee) to do things.
Now you may not be used to thinking of your time in this manner, but you need to start. One way to come up with a good figure is to assume that your speaking career doesn’t succeed and you need to “go get a real job” (as some speakers’ spouses have occasionally described it).
If you did get a “real” job, what annual salary could you realistically expect to be paid? If the job comes with benefits (like vacation time, sick leave, health insurance, etc.), double your annual salary. Then divide that figure by 2,000 (the approximate number of working hours in a year). That result is the approximate hourly wage that you could be earning in the corporate world.
For example, let’s say that if you weren’t speaking, you could land a job in the corporate world at $50,000 a year (just to pick a nice, round figure). Since the job comes with benefits, we double that to $100,000 and then divide it by 2,000. The result is an hourly wage (that you pay to yourself) of $50 per hour.
Even though you’re not actually paying yourself the money, this is still an important figure to understand. For one thing, suppose that you have a task to perform (constructing your web site, for example) and you’re wondering whether you should hire someone else or do it yourself. Now that you know how much your time is worth, your decision becomes much easier to make —
If you can hire someone for substantially less than your hourly wage, you should do so. You’re better off paying them to do the work for you, freeing you up to pursue other, more profitable activities.
If the person you’re considering hiring charges substantially more than your hourly wage and you can do as good a job as they'd do, you’re better off doing it yourself.
Knowing the hourly wage that you “pay” to yourself is useful in making such decisions. But we want to use your hourly wage for a different purpose — determining your development costs for a keynote or training program.