A little twist on last week’s newsletter, (my thanks to all of you that responded) where I wrote that ‘value’ is a function of more than fiscal measures. This week, let’s talk about ‘fiscal’ because even when it is so easy, few of us apply it to ourselves. Let me explain.
“Golconde is a synonym for 'mine of wealth'. (OED). The use of normalcy against the bizarre makes the latter stand out more. It is entirely likely that Magritte intended to comment on the wealth of the suburban lifestyle and how bland it has become. (How bizarre the bland lifestyle some choose can be.)”
Rene Magritte DOT Com
A long time friend, mentor, author and consultant told me many years ago that to establish your day rate in consulting, decide what you want your annual income to be, knock off two zeros and ‘voila’ - you have your day rate.
Example - want to earn $100,000? Then your day rate is $1,000.
If you assume that a ‘working year’ comprises 5 days a week for 50 weeks (keeping the numbers simple) then $1,000 a day means that your annual income should be $250,000. Why the difference?
Of course, what my friend’s simple formula accounts for is downtime, underutilization, vacation and non-fee earning work. His experience told him that some 60% of his time in any given year is not going to be charged for, so he adjusted his day rate so so as to not fall short of his goals.
He’s not alone. All consultants and service companies manage two key metrics;
Utilization: how much of the team’s total availability has been billable.
Billing Ratio: the ratio of fees charged to ‘salaries paid’.
Here’s the question. Why don’t we all think this way? If we truly understood our fiscal worth to others, how likely are we to just accept what they say they are prepared to pay?
Just one side effect. Do this exercise and then look at the projects you take on. How many of them deliver less ‘units of currency’ for your time, per day than the number you just calculated. Next question. Then why are you doing them? (That is key - I’m not advocating stopping doing them, simply providing one way for you to understand the impact that choice has on your overall goals.)
As always my thanks and appreciation for your continued support, comments and attention. Please like the post, share through your social channels of choice and forward the email to colleagues, friends and family that want to join us on this journey and don’t forget to send me your thoughts. Even comment on the post itself (like here).