We’ve all heard the saying time is money but what does it really mean and how can understanding it really help create a successful business. Read on to find out!
What it means… in the simple sense it means that you shouldn’t waste time because you could be using that time to earn money. For example, are you one of these people that will send email after email, backward and forwards trying to get to the bottom of something when a 5-minute phone call would do the job!?
Or maybe you’re the opposite and what would take you 2 minutes to type up in an email you decide to make a phone call about which you know full well is going to take at least 20 minutes because its rude not to have a catch up?
You wouldn’t just burn your money away so why burn your time away?
But we can go much deeper than this and learn some very good techniques which help us become profitable in business.
The deeper meaning… you could look at this simple phrase from the aspect of valuing yourself and making the most of what you are able to achieve.
How do you put a value on your time you may ask?
Well in business this can be quite simple. The key to making money is to get a product or service and sell it for more than what it cost you. If you need to recover £20 to cover your overheads, you would charge more than the £20 to make a profit. What this figure is, is the minimum your time is worth because at the end of the day you’re in business to make a profit.
Then you can work out what your most profitable elements of work are. These are usually your strengths as you can perform them quickly and to a high quality.
So, your first step before undertaking any task is to ask yourself are you the best person for the job? If there’s somebody else in your team which is going to be able to get the job done quicker to the same standard, even possibly better then what’s the point in you doing it over them? If you can work like this in every aspect of work you do, suddenly your efficiency goes up meaning your profitability goes up too!
Also, valuing your time is very important to help deliver a good quality service. If you do not value your own time, then how can you expect others to value it either?
If you want people to pay you good money, then what you are providing needs to be worth it. If you are charging a high value for your time you are more likely to be motivated to deliver a high standard as quickly as you can. Again, this goes a long way to increasing your profitability.
Moving away from time-based billing is the next step. If you only sell your time then you might as well sell your sole. Time can never be recovered and people don’t care how long it takes!
Imagine for a moment you have an issue at home that needs sorting. You have a tree that is possibly causing subsidence to your home and needs removing. If you don’t act soon it will mean serious structural work or even your house falling down! You have a few options.
1 – You could do it yourself. It’s cheap in the short term as you won’t have to pay anyone and you already have a chainsaw. How hard can it be? What’s the worst that could happen, hey?
2 – You could take on the guy you got in for a quote who has told you it will 10 hours work at £50 per hour. So, a total of £500 for the job. It’s not a fixed price but doesn’t see why it would be any different. He offers a 5 year guarantee over his work.
3 – Or you have the company who is super organised and knows what your pain is and the likelihood of this costing you thousands. They have quality systems and machinery and can sort it but their fee is £500. They have not told you how long it will take exactly but have told you it’s likely to only be half a day. He offers a 5 year guarantee over his work.
You know your pain point is the house falling down or the possibility of paying thousands to get it structurally secured. You decide against the DIY option as you don’t have the time and knowledge and its not worth the risk.
Now you need to weigh up the other two. Both options are set to cost you £500. Thr hourly rate one has a small chance of being slightly cheaper or slightly more expensive. Chances are though it doesn’t even enter your head as to how long the fixed price person is going to take. You are comparing the price. You may even think the quicker resolution is better as its less disruption to your normal life.
The customer is focused around getting their problem resolved. How long it will take you to do the work is not important and therefore neither is your hourly rate. Would the customer even bother to work out the hourly rate of the fixed price person is over twice that of the other? I very much doubt it.
If you’d like some help around pricing in your own business then we have packages that can help you get this right. Simply book a discovery call to find out more.