A simple rule for deciding when to outsource a task:
Take your annual income and divide it by 8,000. If you can pay someone less than that per hour to take the task off your plate, outsourcing is sensible.
Discussion
Number don't lie
So if you make 100k a year you can’t hire anyone? Do everything yourself?
I guess it depends on where you live. Where I am, it’s fairly easy to find help at $12.50/hr
How’d you come up with this? Or is this some generally accepted rule I’ve just never heard about.
Straight into the kindle. 🙌
If I wasn’t on Damus right now I’d zap you.⚡️
I’ll be back.
Wouldn’t that imply that you could work 21 hours a day?
🤔🤘
The tradeoff is that oftentimes what you outsource atrophies in yourself.
Why 8000? What went into that number?
Basically if you can pay someone for an hour of work with what would normally cost you 15 minutes to earn, it's a candidate for outsourcing.
Yeah, I guess the practical question is whether to include taxes and your expenses in that calculation?
Let's say your income is 100k, you take home free floating at most 25k... so outsourcing is worth to somewhere around $3/hr.
And that’s how price impacts the division of labour to bring more interest to under-resourced areas of the economy. Part of the invisible hand.
But certification, licensing and apprenticeships can distort this - resulting in a situation where even if something is not a candidate for outsourcing based on cost, even if you can invest the time to develop the skill to do it, you may be prohibited by actual law implemented by the State.
Love this discussion! My view:
The rate you should be willing to pay (in the West) is likely way higher than income/8k. The rate is your opportunity cost. I.e., how much value you trust yourself to create during that hour. That includes reading a book/learning. All you need to be confident is that what you learn is going to be worth more over the course of your lifetime than what you pay for an hour of somebody else‘s time.
There are trade-offs and subtleties to consider. For example, you need to buy food and shelter today, so these thoughts only work once you are covering your baseline costs.
I used to outsource little, but since I started thinking this way I’ve massively increased. Having said that, I believe that the rates paid in most of the West for manual labor are a form of modern slavery, but that’s an entirely different discussion.
Not the annual income - disposable annual income. Can’t pay someone with your medical expenses or grocery money etc.
8,760 hours in a year. But for most people, ~2,640 hours of work. Not understanding your dilution of work hours.
It's a great idea.. but who is the inventor?