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How Much is Your Creative Time Worth?
One of the biggest lessons I learned from reading a bunch of stuff on entrepreneurialism was not how to make money - it was how to put a price tag to my time. Honestly, the first book I read that made me think about that was The Four Hour Workweek, but for one reason or the other, it didn't click.
Where it did click, though, was from reading Part III of Todoodlist. Nick asked the question this way:
"If you had to put a monetary value on one hour of your life, what would it be?"
Something in his discussion made me realize how much of my time I was spending trying to save money - but had I reallocated that time to making money instead, I would have been better off.
Case in point: I bought and setup a home server last summer to cover a lot of the routine tasks that I had been doing to keep things backed up and synced up. All told, I probably spent 30 hours on this project, starting from the research portion of it. I still have to fiddle with it.
Of course, there were easier options available, but it would have cost me money to use those options. Between Backpack, Mozy, and MobileMe, I could have gotten the same functionality for what I actually use, but I'd be "stuck" with the monthly bills.
The problem is that the math doesn't add up. Let's assume for the sake of discussion that my time is worth $60 an hour. The server ended up costing me around $1500, and the time (if I took it seriously) ended up being worth $1800. So the total cost of me monkeying around with the server was $3,300. This does not include routine maintenance of the server.
However, had I just used Backpack, Mozy, and MobileMe, then, at most, I would have been looking at $40 a month. Setting up those systems would have taken at most 2 hours. So the total cost of going with the software-as-service model over three years would have been $1560. (I'm not willing to go much further than three years - there are too many variables at play.)
This is not so much about the technological suite I use to keep my stuff going as it is about the thought processes I used to make my decisions, and those processes didn't really look at the value of my time.
What changed? I started using my creative time to make money and learned that it's more effective to use your time to make money rather than trying to save money. (This presumes that you don't have a spending problem.)
Creative Time is Different Than Other Types of Time
The life rate model Nick proposed in Todoodlist worked up to a certain point. But it broke down at the point in which it assumed time has a standard amount of value to it. The truth is different: some types of your time are more valuable than others.
What I'm focused on here is creative time, mostly because it's the easiest to track. In any given week, there's a certain amount of time in which you're in your creative zone. If you're honest with yourself, what you'll probably find is that in that small amount of your time, you do the majority of the things that directly make you money.
For instance, if you're a writer, I'll bet that if you looked at the amount of words written in a week, the majority of those words are written during your flow states. The idea or outline for a painting may occur in an hour, and that hour can't be replaced by any number of hours outside of the zone. Whatever your craft is, there are certain creative peaks in your time. And they tend to come pretty regularly.
Let's take a step back for a second. If the meat of what you get paid to do happens in, say, 10 creative hours a week, shouldn't that time be more valuable than other parts of your week - for example, those times in which you're vegging on your couch not because you want to, but because you can't do your other stuff? If you removed those hours on the couch, you would be okay. If you removed those creative hours, you'd be unable to do whatever it is that makes you money.
So, on the one hand, we know that our creative time is really valuable. On the other hand, we don't act as if our creative time is that valuable. A lot of it has to do with us not seeing what we get out of that time.
Figuring Out How Much Your Creative Time is Worth
This will be the hardest part to explain because it depends on how you're currently leveraging your creativity. I also don't have this part worked out nearly as much as I'd like.
Let's assume you spend 40 hours working on a project that yields you $1600. You'd think that your creative time is worth $40 per hour, but when you look at things, you notice that 10 hours of that time was spent in your creative zone - and in those periods, you actually did 80% of the creative work. The rest of the time was spent transitioning to or from one zone to the next or handling administrative overhead. Here's how the math would work out:
The total yield for the project is $1600. The creative peak time spent on the project was 10 hours, and that accounted for 80% of the value of the project. So, 1600 X .8 = $1280; this is the amount of value you got out of your creative time. When you divide that by 10, you get $128.
If this is close to how you work, then your creative time is normally worth 3x your hourly rate. It's hard for most of us to grasp it that way. A better way may be to consider how much longer it would take you to work on a creative project off-peak than on-peak.
(Oddly, Nick mentions in Todoodlist that his life rate is three times the amount he charges per hour for his business. It's odd because my calculations are independent of his reasoning - I think - yet we converged on the same number.)
Regardless of whether you leverage your creativity for money directly as a freelancer, the reasoning stands. Every hour you dip into your creative time costs you three hours somewhere else.
Really Getting How Much Your Time is Worth
Let's imagine that you have the option of going to a doctor at 10am - right during your creative peak - or 4pm - when you're off-peak. Let's also say it'll cost $60 to visit the doctor and your creative time is worth $128. If you choose to go at 4pm, then the net value of the visit is $100. If you go in the morning, it'll be $188.
If the doctor's receptionist said that it'd cost you $88 extra to visit in the morning, I'm sure you'd choose to go in the afternoon. Left to our own devices, though, we'll give up that $88 without thinking about it.
The point of all this is for you to value your creative time for the rare asset that it is. If at all possible, keep non-creative work out of your peak times.
If you can't get non-creative work out of those peak times, is there a way you can outsource some of the work to other people to free up that time? If you can pay someone $6o an hour to free you up to make $128 an hour, you come out $68 ahead by doing so (assuming the same calculations as above).
You may also notice that I'm not talking about ways to increase your creative time - it can be done, but it's more effective to use what you already have wisely before you try to create more to misuse. You're also less likely to keep ratcheting up what you're trying to do if you limit yourself to the time you already have.
So take the time to figure out when your creative peaks are, or, when they come unintentionally, to shift tasks to best harness your energy. Then protect those periods by keeping other things out of them if at all possible.
Reflect on when your creative peaks are. Chart them on whatever planner you use.
Where possible, reorganize your schedule to put the creative tasks in the creative periods and the non-creative tasks in other time blocks.
In the future, make it a point to not commit yourself during creative times for tasks that don't require the creative heavy lifting.
Bonus points: Can you hire someone to do the things you're spending your creative energy on for less the cost of your creative time? This is a win-win for you and the person being hired.