Outsourcing Calculator
For the “Do it Yourselfers”. What is your time worth?
What is your “REAL” time wage?
1. Your two week take home pay after taxes. $________
2. Hours you typically work in two weeks. _________
3. Divide 1by 2; this is your real time (hourly) wage. $_________
4. Cost to hire someone else to the job intended . $_________
5. Time you would save, in hours, by hiring someone. __________
6. Cost of doing this job yourself (e.g. buying supplies, fuel to get supplies try to think of everything associated with this task). $_________
7. Multiply 3 by 5. $_________
8. Add 6 and 7; this is the total cost of doing the task yourself. $_________
Outcome:
If 8 is less than 4, there is a strong financial case for doing the job yourself.
If 8 is more than 4, there is a strong financial reason for hiring someone else to do the job for you.
Psychological Cost and Benefits
1 being strongly disagrees
5 being strongly agree
1. Psychological benefits: I enjoy doing this job myself 1 2 3 4 5
2. Skill Premium: I can do this task as well as the person I’d hire. 1 2 3 4 5
3. Opportunity Costs: If I do this task myself, I will not miss out on other activities import to me. 1 2 3 4 5
4. Indirect Rewards: If I do this task myself, I’ll get other benefits like exercise or self confidence. 1 2 3 4 5
Scoring: Add up your points
4-8 points: The Psychological cost is high: outsource the task.
9-12 points: Let the financial calculations in the first part of this chart dictate
you actions.
13-20 points: The psychological benefits are great: do the job yourself even if you easily hire it our.
Bookmark the page so you can refer to this calculator often it works for anything (e.g. maid service, having your laundry done, dog walkers etc.).
Source Readers Digest 02-26-03