This method has its advantages, particularly for anyone in a consultancy or advisory role whose business model is to sell their hours for pounds.  It takes as its starting point the comparable earnings for an employed individual in a similar role.  The recruitment advertisements should provide a reasonably accurate figure.  Then simply multiply this figure by 0.003.

This factor turns an annual salary into an hourly rate for doing the work (x0.00), which is then uplifted once to cover overheads and once again to provide a profit margin (x3).  This is a simple but effective way of putting a value on your time and setting a rate at which to charge out your time.

However, for entrepreneurs intent on using their business to support their own desired life-style this system has a serious flaw, namely, that the market rate bears no relation to their own earnings requirements.

For that, a goals-based method of valuing time is much more relevant and personal. The goals based method is more complex to calculate and will be addressed in a future article.

Whichever method you choose, the figure will help you decide how much you should be charging for your time. More importantly, from a business and personal management point of view it provides the key figure that will clarify what you should be doing and, just as importantly, what you should not be doing.