How Much is Your Time Worth?
A guide to quantifying time and cost-receptive decision-making
As a real estate agent, how much is your time worth?
This whitepaper will guide real estate professionals in quantifying the value of time to make better business decisions and suggest tools that help maximize returns.
Introduction
Do we live in the information age or the age of information overload?
Information Age
Age of Information Overload
Information Overload (noun) - the excess of information available to a person aiming to complete a task or make a decision
As defined by the Interactive Design Foundation, the concept of information overload refers to “the excess of information available to a person aiming to complete a task or make a decision”. Browsing your weather app in the morning, searching online job listings on your way into the office, or reading reviews for that new pair of shoes you’ve been eyeing. From the moment we wake up until the moment we lay down to sleep again at night, our brains are constantly bombarded by information meant to inform our decisions, both big and small.
When writing this article, 38,863 women’s shoes were available to shop on Zappos, and 4,599 Analyst job roles were listed on LinkedIn in Hong Kong alone. The overwhelming number of available options for every decision subconsciously pushes us all towards a state of materialistic and mental excess. Given this context, it is unsurprising that concepts such as minimalism have recently seen a resurgence in popularity to combat the additional strain that the age of information overload has put on our brains.
The rising trend of minimalism
Minimalism is the concept of returning back to basics - using only what you need and avoiding clutter at all costs. The visual approach can be seen across various disciplines, including interior design, art, company logos, and even product design.
In 2019 Mastercard dropped the company name from their previous logo (below), opting for the minimalist design seen today.
Art - Concept of Ma
Shōrin-zu byōbu - Hasegawa Tohaku
Technology
The Light Phone
Interior Design
In practice, this design method gives the eyes and mind less to process and thereby allows more mental space to be allocated to focus on what matters most.
Some prominent examples include the elimination of text in the Mastercard logo, the Light Phone, which provides users with only the bare necessity functions of a mobile, and the Japanese artistic concept of Ma, which stresses the importance of negative or empty space in framing viewer attention. Beyond the visual realm, minimalism also has a distinct utilitarian aspect: by removing unnecessary options and items, it is easier to focus on what is important.
Improving time management with minimalism
Given the success of minimalism and its increasing relevance in modern times, it would only seem logical to apply the practice to our most valuable resource: time. In fast-paced industries such as real estate, understanding the value of time is essential to success. But how do we determine which activities are “worth it” and which should be “decluttered”?
“spending less time on cleaning or shopping means I have more time to spend with friends, go out, or travel” - Fumio Sasaki
Click to quickly navigate to one of the methods
Below, we discuss two methods you can use to calculate your time's monetary value and how to use this value to assist in decision-making. Such information can help you understand how to assign a value to each of your tasks and decide where you need to “declutter” through the utilization of external tools, outsourcing, or other methods. As a famous Japanese minimalist Fumio Sasaki said, “spending less time on cleaning or shopping [in our case, non-core tasks such as manually updating databases] means I have more time to spend with friends, go out, or travel [or in our case, be with clients and close more deals]...”.
The first and most straightforward method for calculating the value of your time is to establish two main factors:
1. How much time you spend to earn your income
2. How much money you earn
With this method, the devil is in the details. The natural tendency for a salaried worker would be to take your monthly salary and divide it by your number of working hours; say 9am to 6pm, 5 days a week, 4 weeks a month, to reach your time-rate per hour. However, this method does not consider the actual time-cost incurred and vastly overstates your hourly rate. In addition to your 9am to 6pm hours, you should also include the time spent doing tasks directly related to your ability to work. These include items such as the time it takes you to commute to work, catch up with clients outside of working hours, or attend networking events.
Another way to identify these activities is as tasks that you would not have done if you did not have this job or had a job in a completely different industry. It is important to note that if you receive income from multiple sources, the time spent on tasks related to all your income sources should also be included. The idea of this exercise is to put a value on your time overall, not just your time as it relates to one of your jobs.
Real Income Calculator
Note: please first fill out the above Time Calculator
Monthly base salary
Average monthly commission income
Monthly business expenses
Tax rate - %
Now that we have covered the time aspect, let’s look at money. We want to examine your effective income, meaning income that you take home after taxes and other business expenses. As a real estate agent, if you use taxis or rent cars to transport clients around town for property viewings, then these costs should be deducted from your income.
One more point worth paying attention to is your commission payment schedule. If your commissions are paid out quarterly or yearly, then it may be worth looking at your time across a more extended period, perhaps on an annual basis or longer. It can be helpful to take yearly commissions and convert them into a monthly average rate for this item.
For real estate agents, calculating your total time spent and income earned can be difficult. You may find yourself overloaded with leads during the good months of a hot-market year. During these periods, you might close a lot of deals while working a comparatively smaller number of hours, making your hourly rate look quite expensive. On the contrary, during a dip in the market, you could be working long hours trying to find new leads while at the same time closing fewer deals. As you clock longer hours, your hourly rate can start to look relatively low. These fluctuations are widespread within the industry, and we have to be hyper-aware of them when calculating our time value.
After gathering the inputs, it is time to calculate. Don't worry, we know your time is valuable, so we have done the number crunching for you below each formula with our easy-to-use time-value calculators.
Predicted Income Formula
({[(Average leads X average deal size X deal close rate X company commission X your cut of company commission) + Base Salary] - Business Expenses} X (1 – Tax Rate) ) / Hours Worked (incld. overtime, commute time, & other hours contributing to income)
Predicted Income Calculator
What type of agency work do you do?
Monthly base salary
Monthly business expenses
Effective tax rate - %
Monthly hours contributing to income (same as above)
The second method for calculating time-value is a bit more complex but helps straighten out some of the common fluctuations in the real estate industry. We still investigate time and money for this method, but instead of looking at historical income, we look forward and estimate our future income. To estimate future income, we start with a few key inputs;
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base salary deal-close rate (number of deals closed out of total leads received)
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your company’s total commission
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your cut of the company’s commission
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the average number of leads
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average deal size
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business expenses
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tax rate
As discussed previously, the key is to make sure all our estimates are realistic when estimating time. If not, our hourly rate will not serve as a useful tool for decision-making. It may help to frame crucial inputs such as the average number of leads and average deal size into three separate categories:
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One low estimate – a bad month or a cut-off deal size which you wouldn't bother to pursue)
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One estimated average
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One high estimate (a good month or a deal size that would get you excited but isn't unreasonable for you to come across).
This categorization process can help you establish a more realistic value that fits within your range of actual possibilities. Of course, the best way to gather this information is through real data. If you have a powerful CRM, you can access data from the past to obtain accurate figures. After finding this value, divide it by the number of hours worked to earn this income (as calculated in Method 1) to find your hourly rate.
Now that we have our average rate per hour, how do we use it?
Now that you have your average rate per hour, how do we put it to use?
Let’s say you've done your calculations and feel confident that your hourly rate sits at US$35 per hour.
First, let’s take a look at decisions.
Suppose you have a client meeting across town this afternoon. You can take the metro, which will take 30 minutes, or take a taxi for 10 minutes. The metro will cost you US$4, while a taxi will cost US$19. Does it make sense to spend the extra $15 to take the taxi? If you take the taxi, you save 20 minutes. You know that you have an hourly rate of $35, or ~$0.58 per minute. 0.58 X 20 = 11.60, so that 20 minutes is worth ~$11.60. In this case, no, taking the taxi is not worth spending the additional $15.
Once you start breaking down your decisions this way, it is easier to understand what activities and expenditures are worth your time and money. Not only does this help you decide in a clear, rational way, but it also helps you feel confident in the decisions you’ve made, freeing your mental capacity to think about the important things instead of wasting time laboring over future and past decisions.
Now that we know how to use our rate to make decisons, we can start looking at how we use our time.
That two hours you just spent putting data into the company database? $80. What about the 4-hour afternoon you spent taking clients to view properties? $160. Were they both worth the money? Could you streamline one of these activities?
Let’s take a closer look at the data input activity.
That two hours you spent maybe doesn't happen every day, but let’s say it happens twice a week. That’s two hours, twice a week, for four weeks each month, a total of 16 hours a month. At an hourly rate of US$40, that’s US$320 a month on data input alone.
Given that data inputting doesn't directly contribute to closing more deals, it probably makes sense to streamline and automate this activity. Using what we know about your hourly rate, if you were to implement a CRM system that helps you automate 50% of your data input with no other functionality at all, you would actually be saving money by paying anything less than US$160 a month for this service (the US$320 in time-cost X 50% reduction in time needed).
Propertybase and Liondesk, two prominent real estate CRMs with a minimum monthly cost of US$99, would save you US$61 a month. However, Property Raptor, at a minimum price of US$49, would save you US$111 a month. This opportunity is without even considering all the other timesaving and productivity-boosting features that a robust CRM can provide. When you take this theory and apply it across all features of a CRM tool and all agents within a real estate agency, the savings can reach significant heights.
6 top CRM features that save time:
AI-led property matching: Reads through endless listings in your database to find the perfect match for your client
Automatic document generation: Fills and formats documents for you so that you don’t have to waste time creating materials for clients
Data tracking: Organizes and ranks sales leads and processes to reduce wasted efforts
Data centralization: Consolidates your data into one single location so that you can manage and access important information at speed
Lead assignment: Automatically delegate tasks to your team once a lead is ready to move along the sales cycle
Marketing templates: Enables the creation of hyper-personalized emails at scale using data directly from the CRM system
Although the commercial benefits of looking at your time through the lens of your hourly rate are clear, there is one downside: the tendency to start putting a monetary value on all time.
At the end of the day, time is the only thing in life that we can’t get back. Outside of the working environment, activities such as attending a child’s school ceremony, working on a creative art project, or simply spending quality time with friends and family contribute greatly to our quality of life and overall happiness.
Understanding the time-value you are dedicating for your everyday tasks and getting tools that can help you streamline business functions will help you re-evaluate how you allocate your resources - not only in work but in your personal life too.
Property Raptor is the world’s best real estate CRM software designed to help industry professionals automate time-consuming tasks so you can focus on the things that truly matter. Time for family, personal growth, and downtime is essential to remaining productive, competitive, and content. Not everything can have a dollar value, and if you choose to give your emotions and relationships a monetary value, be ready to pay out.
Take back your time with Property Raptor. Schedule a demo with us today to check out our game-changing software in action!
CONTACT PROPERTY RAPTOR
+852 3611-0130
info@propertyraptor.com
36/F, 41 Heung Yip Road, Wong Chuk Hang, Hong Kong