In case you hadn't noticed, 2016 is now in full swing so this seems an appropriate time for a little 2015 housekeeping. I recently attended a small business owner's workshop with one of my clients and read this article. Both of these got me thinking about "knowing your numbers". As a small business owner or freelancer you are often so involved in doing what you do that you don't look back and understand how you performed. If you don't know how you did, how can you know if you're improving?
The article in particular is valuable for freelancers; it helps you to work out what 1 hour of your time is really worth. Obviously this is worth knowing when bidding on client jobs but another benefit that I hadn't thought about before is using this information to make other decisions in your life. To take an example from the article:
Should you buy the nonstop flight and save two hours or get the flight with a stopover and save $90?
Being the cheap ass that I am I would usually save the $90 and spend 2 hours reading. This article made me think about things differently; if 2 hours of your time is worth more then $90 then this is not a cost effective strategy:
If you know your time is worth $80 per hour, then you should always buy the direct flight that saves you two hours even if it costs $150 more than the flight with a stopover.
There is a counter argument that you might not always have work to do, don't mind reading for 2 hours and would like to keep the $150. That is all true but it still got me thinking about how much my time is worth and how I performed in 2015.
Agi and I started freelancing in 2014 so 2015 was our first full year as freelancers. We learned a lot during the year, lost clients, found new ones and kept trying to earn higher rates.
I spent a couple of hours pulling together all of the data I had on my earnings and hours worked last year. I put all of the info into a spreadsheet (I love a good spreadsheet). The result? My average hourly rate for 2015 was $23/hour.
That was a bit lower than I expected but as I discussed in my post about How We Started Freelancing I had to start at a low rate to get my foot in the door. With that in mind I decided to look at how my hourly rate had changed throughout the year:
That's better! So, at the end of the year 1 hour of my time is worth around $32. That's good and I'm happy with that but even more important to me is that I want to keep getting better so check out the trendline:
I'm even more pleased with this trend but how am I going to continue it into 2016? I wrote a post recently about my thoughts on how to keep that improvement going through investment in yourself. I will keep this chart updated throughout the year and let you know how the trend progresses.
Have you done any self assessment like this? What did you find? Get in touch and let me know, I'd love to hear your thoughts.