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How Do You Figure How Much Are You Worth An Hour? (Answer is here!)

Almost a year ago, I wrote the blog asking, "How Much Are You Worth an Hour?". A year later, I finally figured out a mathematical formula for this and want to share with you. It is simple math and I can promise you that if I could figure mine out, I am sure you could yours.

Step 1: Determine how much you made last year (or an amount you aspire to this year). Hint: Realistic and achievable number.

Let's use $100,000 for the example.

Step 2: Divide that by 40 hours per week x 50 weeks per year or 2,000 (Let's assume you have 2 weeks of unpaid vacation/ time-off).

$100,000 / (40 hours x 50 weeks) = $50 per hour.

So, there you go, if you earn or aspire to earn $100,000 this year, your rate is $50/hour.

Let's take a step further. What would you do with this number?

Now that you know your rate, you could plug that into your buyer or listing expense sheets. You must know what is the ultimate value to the time spent on each transaction to evaluate if you have made money on the transaction or not. You could also charge a specific amount per hour for your CMAs if you work on protesting property tax appraisals as a service.

So, it's not a matter of saying you charge $100/ hour. You have a mathematical formula to figure it out.

Much to your success in the 'Rain.

*************************************************************

I proudly serve and sell real estate in the northern suburb cities of the Dallas metroplex. If you are thinking about purchasing or selling your home in neighborhoods of Frisco, Plano, Dallas, McKinney, Allen, Little Elm, Prosper, Celina, Richardson, Dallas M-Streets, Dallas White Rock Lake area and other surrounding areas and more importantly, want to work with a local area expert, contact me immediately.

It is a competitive market, hence it is important that you choose to work with the realtor who knows these communities like none other. I employ a systematic market approach in selling your home - an intentionally unique proposal that most real estate agents do not use. If you care to be on your way to a successful closing, contact me immediately to see how different my proposition will be.

Contact:
Loreena Yeo
Realtor®/ Broker of 3:16 team REALTY
(214) 783-2210
loreena@loreenayeo.com

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Posted by Loreena Yeo - Broker|Realtor(R) of www.Frisco-TX-Homes.com (214) 783-2210 on 10/08/2008 02:27 PM

Comments (19)

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19 Comments on How Do You Figure How Much Are You Worth An Hour? (Answer is here!)

OCT

2008

The number is good (for me) to keep from doing clerical work such as making copies, faxes, etc. If someone on your team is there to do that, and you utilize them, then you've just raised your hourly pay (most likely) and hopefully have created an incoming producing action.

I believe we are worth more that that because we are also arbitrators, we set the prices with the help of our customers of course. Gas prices are ridiculous when we have to show the properties. staging the properties, bringing the minds of our clients and buyers together to a common goal. Paperwork etc. I have a listing of a 3 bedroom, 2.5 bath beautiful condo in Rockville Centre that just hits snags at every end. Buyers can't find buyers for their homes so that they can't buy this condo or the person that wishes to buy the buyers home can't get a mortgage. Real estate never was this hard before.

HMMM... I've figured it on deals before... # of hours with a certain client or house. Sometimes it's more... sometimes it's 50 cents and hour.

Great formula. Good for giving the CMA rate.

Interesting formula. I know I'm worth A LOT more... but so many times, I have to hold my clients' hands so much, it's pennies...

OCT

2008

I appreciate your formula. It certainly drives home that fact that we need to manage our time to meet our goals. Sometimes this means working smarter, not necessarily working longer or harder. I have a slightly different approach. First, I periodically track my time. I then eliminate activities (such as leasing) that don't produce enough income to justify my handling of such matters on a regular basis. An example is that I don't handle listings under $100,000. I just spent more time on these listings and got paid less than other listings that I handle. Second, I review each sale to determine how much time was spent on the matter. I then look for ways to improve our systems to improve our efficiency. Third, I develop an annual sales plan. It starts with an annual commission goal. I then review my past sales to determine their sources - listing vs. selling, internal sales or sales with cooperating agents, appointments vs. open houses, single family v. condo, etc. I then set individual goals for each type of sale or each source of the sale and develop a plan for each individual goal. I then monitor my progress on the indivdiual goal as well as the annual commission goal each month.

OCT

2008

I know that I was making MUCH more per hour 3 years ago. Sticking a baby in the mix has added emotional wealth rather than fiscal!

Thanks for the post. Our time is our most valuable resource and if we don't appreciate it noone else will.

OMG, I make less than a cashier at one of THOSE stores. My math must be wrong or I need some fuzzy math maybe.

Thanks for this Loreena. I guess those that think $50/hour isn't enough for the hard work they do, need to refine their systems or sell more houses faster. LOL

Right now, as I build my business, I'm just hoping to keep making enough to pay all my dues and fees!

Good post, I havent figured how much I make an hour but it should be interesting to see how much time I really put in---Bart

OCT

2008

Interesting format.....I'm thinking of a recent listing that did not sell....and realizing that I'm certainly in the negative on all the time spent there. But looking to the postive, I learned a lot from it, so I'll just chalk it up to life learning.

OCT

2008

Great information. Many people thinks they don't get paid enough for the work they do. Thanks for sharing.

Not so sure I want to know....lol Only Kidding!

OCT

2008

It looks better if you figure it out by the hour and averaged over the year, because I think there are some high maintenance transactions that I would have been lucky to have made minimum wage!

OCT

2008

Great BLog! Ahhhh so true, do we really know what we make an hour? I would hate to figure it out.... thans for the laugh!

OCT

2008

This is a great approach. I am so new in the business that I don't have any transactions to base a number on. However, I used a similar equation to determine how many transations were needed to reach my target income. The key point here is that if you really believe that you are worth $50.00 per hour then you will pay someone to do all of the tasks that don't make you that rate. I always struggle with the concept because I always think that I can do things better that anyone else. It is very hard to give up the control of a project and let someone else do the tasks that don't earn me the rate that i need.

I like to reverse the concept and consider how much my clients are worth an hour, avoid gold digging suspicions in a volatile market, and work pro bono. It could mean saving a families home, their marriage, or salvaging equity for an elderly client. It's not always about the money. It never was for me in this business. I've worked in a forclosure and poverty ravaged district in North Memphis for 8 years and self-esteem comes before money in nearly ever case I've seen. In most cases, the challenge is to uphold and raise the spirit of a client in this type of environment rather than risk lowering their dignity on the front end with financial matters. If a satisfactory result is the end product, the rewards are more than monetary compensation. And then you may consider yourself priceless.

OCT

2008

Yes, our time is valuable and we need to make sure everyone knows that. We work a lot of hours and don't get paid until we get to the closing table. Thanks for sharing.

I have a lightbulb moment recently.... Sometimes I take time off during the day to step into stores like Linen N Things, Ross, TJ Maxx - just to unwind. I usually dont buy stuff. But what I realized that day was if I spent 1 hour there just to "window shop", it would cost me XXX and I drove back to my office right after that thought. I became more productive just by knowing how much I am worth.

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