Maximizing That Hourly Rate

Figuring Out How to Best Utilize My Working Time

Recently, I spent some time figuring out my true hourly wage for my real job and both of my side businesses. For those unfamiliar, one’s true hourly wage is the amount of income they make per hour when including all time spent because of that job (work time, commute, business functions, etc.) and subtracting out all of the expenses related to the job (transportation, nice clothing, gifts, etc.).

In the end, any effort that one can make to increase their true hourly wage is going to improve their life dramatically. Thus, it’s worth my time to take a look and see how I can best raise that hourly rate for my real job and for each of my businesses. Let’s take a look.

The Simple Dollar

Per hour invested, The Simple Dollar pays me the highest wages of anything that I do. For some of you, that might be surprising, but let me add a few caveats. The first several months of this blog, I earned almost nothing for the effort and, also, on an average day I have three hours total invested in the site, which is far less than the total time I have invested in my “real” job.

This calculation was pretty interesting, and it begs an obvious question: should I immediately drop everything and spend my time working on The Simple Dollar, since I earn the most per hour by working on it? The honest answer is that I shouldn’t, and here’s why.

Breaking Down the Calculation

1. Additional time spent working on The Simple Dollar equals diminishing returns

Recently, I reduced my rate of posting here, which has reduced the amount of time that I spend working on the site in a given day. What was interesting is that it didn’t actually reduce my traffic at all – in fact, the upward traffic trend hasn’t changed a bit since I made the move (allowing for seasonal fluctuations). It was because of that reduction in time that my “hourly rate” for working on The Simple Dollar improved.

2. The current hourly rate that I earn rests on the back of a lot of work invested in the buildup

Many of my visitors come in via Google searches. Because I’ve written so much for The Simple Dollar, there are a lot of different search terms that people can type into Google and find The Simple Dollar. So, my hourly rate is nice now in large part because of the hard, non-lucrative work that I put in before.

In a way, it’s like residual income from any form of writing, except the pay rate per writing is much lower. On any given day, a single article in the site’s archives makes a penny or two. Thus, when I write a new article and it eventually slips off the front page, it does continue to exist and is found by readers, but by itself it doesn’t earn much at all. Now, The Simple Dollar has somewhere around 2,000 articles in it, so each of those articles earning, say, a penny every day adds up to $20 a day. Thus, in a way, any income I make from The Simple Dollar now is much more akin to passive income than active income.

So, given all that…

How I Maximize My Hourly Rate for The Simple Dollar

1. I continue to write good posts that are compelling to read

This blog is successful because of the readers, and the readers only come because I have something theoretically interesting to say. Without that, the readers go away, the links go away, and eventually this all dries up.

2. I continue to write them at a regular rate to build up the archives

The more posts that wind up in the archives, the more likely a person searching Google is to discover The Simple Dollar. That’s one of the reasons I was conflicted about reducing my posting rate recently – one big reason I am able to attract new readers is because of the size of the archive, and by slowing down the writing, I slow down the growth. In the end, I went in the direction that my readers wanted, for better or worse – it does free me up a bit to seek other opportunities.

3. I look for new ways to share my writing with others

Does this come in the form of a magazine or newspaper column, or a book, or something else? If I can find ways to share the stuff I write for The Simple Dollar easily with other places, that brings in more readers and perhaps more income.

Surprisingly, more advertising doesn’t do the trick. All more advertising does is annoy people, driving them away and leaving a bitter taste in their mouth. We’ve all searched on Google and found some very annoying ad-laden sites – I have no interest in that. It’s bad for me as a reader and anything I don’t like as a reader is something the people who read my stuff likely will hate, too.

Computer Consulting

My hourly rate for this is surprisingly bad, because I spend perhaps 75% of the time invested in this side business trying to find new clients. When I’m actually working, my rate is quite good – but that work is relatively rare.

Thankfully, since my focus is so local, I can usually combine advertising efforts for this endeavor with participation in community events. I meet people, hand out my card (with rate info right on the back), and enjoy myself in other ways.

How I Maximize My Hourly Rate for My Side Business

1. I take a serious look at how I’m promoting it

Given that I spend most of the time for this project on promotion, maybe it’s time to look at what I’m doing wrong. Clearly, something isn’t clicking – perhaps I need to seek out other methods of spreading the word.

2. I adjust my rates

I actually think my real work rates need to go higher, not lower. I’ve been told recently by two people that they were surprised that I fixed things so quick and so well, because they figured based on the prices that the work would be shoddy. It’s probably time to seriously rethink my rate card.

3. I look at altering or expanding my services

At this point, many of the people I know locally are aware that I have turned The Simple Dollar into some form of success – in fact, there are probably a few people on my block who lurk here (or maybe not… who knows). One possibility might be to expand into developing web sites for local businesses at a reasonable rate and hosting them on the server I use for The Simple Dollar – since they would be low traffic and static, this would be pretty simple. It’s an avenue to consider, at least.

Really, what I need to do is reduce the percentage of my time spent on promotion, but without just abandoning all sense of promotion. It’s a balance that I’ve not quite found yet, and I am probably promoting too hard.

My “Real” Job

What about my real job? There, I’m salaried. I focus on doing a quality job on the work assigned to me and turn in great reports. The hours vary somewhat, but for the most part they’re pretty stable and I don’t gain much benefit out of working excessive extra hours – and I wouldn’t get paid for them, anyway. Plus, there is a proscribed pay scale, publicly posted and used, for all people in my department. Thus, it’s fairly difficult to maximize my hourly rate there.

That doesn’t mean I can’t try some things, though.

How I Maximize My Earnings and Opportunities at My “Real” Job

1. I practice frugality in terms of my work expenses

Maximizing my gas mileage during the commute is one big step, as is reducing the size of my work clothes budget.

2. I keep my social network alive to keep an ear out for great opportunities

There are a number of startups in the area that match my skill set. If the right opportunity came along, I might be interested in joining one.

3. I take advantage of the educational opportunities afforded by my job

My job pays for some limited further education and we’re permitted to spend a small percentage of our time furthering our education. To this point, I haven’t properly utilized this opportunity, and doing so could increase my value in the marketplace.

Looks like I have a nice checklist of things to work on!

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  1. Do you have any idea how much the cooking blog would be bringing in compared to The Simple Dollar? Obviously, it would start out a lot higher than the Dollar did because you already have such a huge following.

  2. Thank you for sharing this. You are absolutely correct about the very front heavy business nature of blogging. The vast bulk of the work is in the front with little to show for it initially. It’s quite commendable that you place a great premium on ensuring the readability of your posts rather than on advertising per se.

    I am glad you are trying to diversify your income stream as well. Keep up the good work!
    -Raymond

  3. dave says:

    Reduce the number of hours you work at your salaried job. That will increase your hourly rate because your pay is constant. =]

  4. Michael says:

    Does your three-hour-per-day figure include reading personal finance material? Does it include any of your “unexpected” material you posted about recently?

  5. An interesting question would be to see how the hours you put in at the beginning translate into the current traffic and thus financial gains you are experiencing now. It would make a good tutorial for learning how to make a blog popular and profitable.

  6. John Jenkins says:

    You are the victim of some pretty clear signaling regarding your computer consulting. You are violating people’s expectations with low prices, so they assume that is sending a signal about quality. You should raise the listed rates, just for the signaling effects. Then, if you choose, you can offer a reduced rate and make the customer even happier because everyone likes a bargain.

  7. silver says:

    You say that “something isn’t clicking” regarding your promotion of your computer consulting service. But I think your expectations are too high. That’s the just nature of the thing. When I was in graduate school, I was part of a student group that had frequent campus events. We would hand 2-5,000 flyers and would be lucky if we got 20-50 people show up.

  8. Harris says:

    I think your site actually already has a lot of advertising, the kind that most intelligent people would never click on. You can probably remove that and get some good affiliate like msn money or something and keep a clean look on your site.

  9. Very interesting article! I’m doing just about all of the things you are so it’s really interesting to see it from someone who has been at it for a while.

    Regarding your consulting biz- I’ve found over 90% of my freelance work simply by word of mouth and I never lost business by lowering my rates. You need to start low, but once you have 1 or 2 pleased clients, start boosting the price. If you do a great job, people will happily pay a higher price.

  10. Marjorie says:

    Dear Trent,

    I too would be curious about how you spend those 3 hours on average per day on the blog. Does that include research and reading two books a week? Lately I’ve found that I’ve been spending about that much on my own blog, but I don’t really include other “auxiliary” but equally important tasks like visiting related blogs and commenting on them, not just to meet other bloggers but also to promote my own. That can take at least an hour or so a day alone.

    Thank you!

    Salut,
    Marjorie

  11. TheFruagalPlace says:

    Why don’t you consider your blog and consulting to be “real work.” Actually, if you think about it they are more “work” than the day job can tend to be… :)

  12. Peter says:

    Trent,

    I’m wondering if you included benefits in your hourly rate at work (e.g. 401K, health insurance, etc.)?

  13. Trent Hamm Trent says:

    I spend about half of those three hours purely writing and editing. The rest are spent on email, brainstorming, and reading.

    Yes, I include my extra benefits from work.

  14. Hi Trent. Its nice to know that you can make a decent return without being obnoxious about advertising. Simple is sophisticated. I really enjoy the content of your current blog and look forward to checking out the cooking blog! Good luck with that :)

  15. Mitchell Up In Canada says:

    Hi Trent,

    I’d be curious to know for each of your jobs how much lower your true hourly wage is compared to your nominal wage?

    In my case (I work as a computer consultant with one full time client) I find that my true hourly wage is about half (53%) my billabe rate. Commute time, admin time and such add almost 30% to my hours and expenses/taxes take away about 33% of my income.

    I enjoy your posts.
    Mitchell

  16. Jason says:

    Trent, I’ve been a fan of yours for the last year or so (when I first discovered your blog). I was home recovering from shoulder surgery and surfing around. I think I spent the first day or two at home reading through all your articles…just incredible!

    Keep up the great work, and continue to inspire the rest of out here to find some active/passive income ideas for becoming debt free and building wealth!

  17. Deborah says:

    I can’t wait for you to start your cooking blog (one look at my blog should tell you 60% or why). This post has a lot of great info for people who are looking to create a web presence with the idea of making money.

  18. TheFrugalPlace says:

    I was thinking more about thos post last night – why not write an eBook on how to write and monitize a blog for newbies. That would generate a good income stream for you that is very passive and you could market it through both your own blog and Clickbank.

  19. Marjorie says:

    Dear Trent,

    I second TheFrugalPlace’s recommendation for an eBook. I would certainly buy it.

    I’m impressed that you’re able to limit your work on this blog to 3 hours on average each day. I hope that I can do the same in a few months, but for now I’m in the same position that you were in at the beginning, i.e., spending lots of time just writing and marketing yourself.

    I do love what I write about, though, which makes the “work” doesn’t seem like so.

    Salut,
    Marjorie

  20. sandspiral says:

    Hi, Trent–I “third” TheFrugalPlace’s recommendation! Being a newbie about to embark on a blogging adventure, I could definitely use such advice.

    And thanks for the post–very interesting!

  21. sara says:

    yes! i was going to email you with some questions about making a profitable blog, i’d be very interested in an ebook with your thoughts

  22. Chris Conley says:

    I’m sure a lot of people of would be interested in a book; especially me(although this blog might be too good of a free source to spring for a book!)

    Calculating your true hourly can be really eye opening. It can be highly motivating, but as you alluded to, can be deceiving in making the jump to something else. Even though you could make a higher wage elsewhere, you still to make sure you’re working enough hours.

    I’d love to make the jump into full time web development and design, where I could make a significant increase in my hourly wage. But for now, there’s no way I could bring in enough work to support it full time.

    One thing you’ve taught me though is to have a little more patience. If you’re doing good things; better things will naturally come your way if you keep at it.

  23. Sarah says:

    On maximizing gas mileage: My husband has a long commute to his job – using about a gallon of gas each way. He started following the strategies at hypermiling.com to improve his gas mileage… it has helped quite a bit, although even better is carpooling where he pays our neighbor 1/2 of what the gas would have cost him (everyone wins there). Hypermiling is great, but driving less is the way to go. :)

  24. Jason says:

    I have to size a project I’m doing on the side to setup a database for a local college’s office. It will be a relatively simple MS Access application with some VBA scripting. Should I consider the difficulty of the project in determining my rate, or simply increase/decrease my hours estimate? I tend to hate to overpromise in terms of delivery because things always tend to crop up and slide that end date out.

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