Think I might be helpful on your next project? Think I could be helpful? We’ll I agree. I’m always willing to give, trade, or sell a hand. After all, Cheetos and Mountain Dew don’t pay for themselves.

What can I do?

Here’s some starter ideas. These are things I’ve been paid for in the past, but don’t let that limit you. I’m a talented guy.

• Search Marketing
• Web Site Building
• Build Fixed Gear Bikes
• Reupholster Furniture
• Eat bugs (in small quantity, for large quantity bug annihilation try Orkin)

What does it cost?

My typical hourly wage is $50 per hour. Of course, this can depend on the job and the circumstances, but that’s the number I start with.

So How do I come up with this number?
Everyone calculates their hourly wage differently. I’m a big fan of knowing the value of your time, so I’m happy to share my method here.

1. I take my taxable income from last year and subtract my taxes (these are lines 43 and 61 on form 1040). This gives me my take home pay for the entire previous year. This is the money I can actually spend after Uncle Sam gets his cut.
2. I divide my take home pay by 2000 Dividing by 2000 is a common rule of thumb for reducing a salary to your hourly wage. It assumes a 40 hour work week and 2 weeks of paid vacation. I don’t like to work more than 40 hours a week and I’m a big fan of vacations, so this rule works for me. I am left with my after tax hourly wage.
3. I divide my after tax hourly wage by 0.7 Since I’m a contractor, I get hit with self employment tax in addition to the regular tax most people pay, meaning I have to pay my taxes plus the other half an employer would otherwise contribute. The general rule of thumb is that self employed folks pay 30% of their income in taxes. Thus, by dividing by 0.7, I increase the amount by 30%. If it’s a W2 job, I’ll divide by 0.85 to account for the employer’s contribution.
4. Then I double this number and round up to the nearest $10. This part may seem ridiculous to some people, particularly those who are keen on earning tons of money and see unused time as worthless. I do this for two reasons. First, I’m of the belief that time is a valuable commodity, so in order to sell an hour of my time, I must “earn” an hour of free time. Thus, I double the price. Second, I’ve learned that no project comes in with the allotted number of hours and I’m not one to split hairs or keep a stop watch. So I round up in order to ensure that when I’m passionate about something, I have the room to give more than what was paid for without becoming demoralized or feeling used. This also covers my overhead for finding and securing the gig.

So, if we were to put this calculation into action for me in 2009, it would look like this:

1. $37,000 – $6,000 = $31,000
2. $31,000/2000 = $15.50
3. $15.50/0.7 = $22.14
4. 22.14*2 = $44.28, rounded up to $50

Of course, the math could be simplified, but this method reminds me of the reason for each step. It also has a flaw in that, for the average person, this would only reset once a year and that could be problematic if you are extremely busy and need to up your rates. However, it can be recalculated at any time using the fundamental ideas and different time spans. In fact, I think that’s the best part. This formula is self correcting. For you math savvy people, you’ll notice if I were really paid this every time, I’d only have to work 740 hours a year, or a little less than half time, to stay at my current income. This leaves plenty of time to fill up with extra work and increase my income, should I want to, and will by nature also raise my rate if I feel like I’m working too much. Likewise, if I’m pricing myself out of the market and not working at all, a simple recalculation and I can lower it.

I feel this is the fairest way to to valuable work, as well as maintain time for myself and my loved ones. I realize this is a hefty price to pay and in some cases it kicks me out of the running for a gig. That’s okay. I don’t mind not working, but I do mind working feeling underpaid. It doesn’t breed good relationships and if I think a project is worth the time but can’t afford me, I’ll do it for less or free. However, this is a good starting place and often weeds out folks who are simply looking for untrained labor. Do I make a lot of money at this rate? Judging by that equation, I think you can see the answer is no. I’m not getting rich. But I also don’t work a whole lot either and I’ve instead become skilled at spending less and doing more, a trait worth developing.

I recommend you coming up with a way to value your time as well. After all, they make more money every day, but time is finite. Make the most of it.

You can reach me by email at drew [at] indeliblemind.com