In the Internet Marketing industry, new tools come along all the time. Many of them have great sales letters full of all kinds of compelling reasons why you need to buy them. I personally have created numerous tools designed to save time by helping you perform routine tasks faster (from link building to content writing to content spinning).
But these products aren't free, and sometimes they are far from cheap. So how do you know if a products is worth the investment? The only way to know is to figure out how much your time is worth.
Calculating What Your Time Is Worth
If you're already earning an income online, then calculating how much your time is worth is pretty easy. If you're a freelancer that charges by the hour, then your time is worth whatever your hourly rate is.
If you don't charge by the hour, but make a pretty steady monthly income, simply divide your monthly income by the number of hours you work each month. So if you're currently earning $4,000 a month from your online business, and if you're working 120 hours a month to earn that, then your time is worth about $33 an hour.
If your work is more long term (that is, you invest a lot of time now for a big payoff later), then using an annual calculation is probably better.
If you're not already earning a living online, or if your earnings goal is much greater than what you're currently making, then you need to decide what you want to be earning and use that as your hourly figure. Be reasonable here. Everybody wants to earn $1,000 an hour, but if you're currently closer to the $10 an hour mark, using a goal rate of $25 an hour is far more realistic!
So you've done the math, and you now know how much your time is worth. Great! That gives you a way of determining if any tool is worth its sticker price, and can help you get past the hype and salesmanship of the product vendor.
Is The Product Worth The Investment? An Example.
For example, I've got a tool that I'm currently letting people use for free while it's in beta testing, JiffyArticles.com. The tool is designed to help you write articles much faster by having you work with templates that give you a starting point for your content.
The feedback so far has been incredibly positive, with people saying they are writing much faster and giving me the numbers to back that up (e.g. 1,000 words in an hour, 600+ words in 18 minutes, 300 words in 10 minutes, etc.).
But Jiffy Articles won't always be free. My goal is to release it on Monday, November 21st, at which point people will have to pay for the tool to keep using it. For the first five days I will be letting people buy access to the tool for $77 a year (that will go up to $127 a year after the launch promotion is over).
So at that point you will have to make a decision: is Jiffy Articles worth $77 a year to me?
If you don't know what your time is worth, you have no good way of determining whether or not that's a price worth paying. But now that you do have your hourly value calculated, it's a snap.
Let's say that you can normally write one article in an hour, and you've determined that your time is worth $25 an hour. If Jiffy Articles helps you write an article in 45 minutes, saving you 15 minutes per article, then for every four articles you write it's "earned" you $25. That means that the tool will pay for itself after you write 12 articles.
In this situation, if you write at least 12 articles a year (who doesn't?), Jiffy Articles is worth the money for you. You can use that same kind of reasoning with most tools that promise to save time or earn you money.
Of course, not all products will give you a chance to use them for free in advance so you can determine just how effective they are for you. But they pretty much all have a money-back guarantee of at least 30 days. So just use the product for a couple of weeks to determine what its actual time savings (or dollar earnings) is for you. If it doesn't stack up to your hourly value, ask for a refund.
Think About The COST, Not the PRICE
What's the difference between the "cost" of a product and the "price" of a product? A lot, and it's important that you change your mindset from thinking about price to thinking about cost.
If a product will take $77 a year out of your bank account, that's its price. But if that same product also earns you $77 a year, it doesn't actually cost anything. If it earns you $1,000 a year, then it's actually an investment, not a cost.
Any product worth purchasing should be an investment that actually earns you money. It's easy to get sticker-shock because a product appears expensive at face value. If you know what your time is worth, though, and if you use the product long enough to know how much time it saves you, then you can calculate the actual cost of the product and determine whether or not its an investment worth making.
The distinction between "price" and "cost" is an important one, because you may pass on a product that appears expensive at face value that would actually be a great investment. Knowing what your time is worth can make that decision a much easier one.
Please post your thoughts, ideas and questions in a comment after this post.
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