Time is money
How much money?
By now you already have some idea.
You’ve thought about your goals. How much are you wanting to earn in how much time?
What do you want to earn for each hour you put into your delivery business?
You’re measuring your business performance now. You’re looking at your profit per hour. You have an idea of what you’re getting. Is that enough?
So now you can make a measurement.
My time is worth…. Break it down to the minute
What’s your time worth per hour?
What does that come to for a minute?
Create your own rule now.
My time is worth 50 cents a minute.
That’s the rule I go by.
For my delivery business, it’s worth $30 per hour.
That’s how I measure a lot of my business decisions. I compare it to the 50 cents a minute that my time is worth.
What’s your rule?
50 cents a minutes?
30 cents a minute?
Making decisions using your __ cent rule
When you start making decisions related to things that take time, you can measure your price against that decision.
This is how I measure whether or not I’m taking a delivery:
Did you know you can set your price as a delivery contractor? You can’t set the rate in most instances. You cannot establish the pay model. However, you can set your price through accepting or rejecting delivery offers.
50 cents a minute is my price.
If it pays 50 cents a minute or better, I’ll take it. If it doesn’t, I’ll usually pass.
Measuring opportunity cost.
A common term in business is “opportunity cost.’ It’s all about what does a lost opportunity cost you?
A sales trainer once asked a class I was in how much we enjoyed doing paperwork. He then asked “how much more commission would you earn if you spent that time selling instead of doing paperwork?” That was the opportunity cost. When the cost of delegating (hiring an assistant) was less than the opportunity cost, he said that spending the money actually made sense. It allowed us to make more than we spent.
Should I call into support to argue for money I should have been paid for a canceled delivery? How much is that call going to cost you? If you’re not delivering, you’re not making your 50 cents a minute or whatever. Ten minutes on the phone is ten minutes you’re not able to be on that next delivery. It’s costing you five dollars. What’s that call going to get you, $1.50?
Do I take the shorter route instead of the freeway? Do you pay the extra $1 in vehicle costs by taking the extra miles, or the $2.50 in opportunity cost from the five extra minutes it takes to take the straight route?
I sold phone systems that could take caller ID information and look up a customer’s file automatically before a phone call came in. The systems cost several thousand dollars. That feature alone more than paid for itself. It could shorten a phone call by 30 seconds to a minute. That’s not much, but over thousands of calls taken by dozens of agents, that added up to thousands of dollars in labor savings.
When you have to make decisions related to time, measure that time against your rule. That will be huge for you.
And oh, by the way, set your price high enough.
There’s a temptation to say I can’t make $24 per hour, I can’t make $30 per hour. So I’m going to go for $18 per hour – 30 cents a minute.
I know the temptation. When I first talked about this on the podcast, this was my 40 cent rule. I said then that I was toying with 50 cents but wasn’t sure it was attainable. It took awahile, but I went ahead and took the dive.
I talk a lot more about using the 50 cent rule in this week’s episode of the podcast, especially in using it to evaluate if a delivery offer makes sense.
My gut feeling is, you are selling yourself short. When you aim higher you usually hit higher. In fact, listen to the later part of the podcast (or scroll down on the page) where I talk about a method you can do to help you determine what kind of price you can go for.
Don’t undervalue yourself.