Placing a Value on Your Time: T-Rates, Milenomics Redux Edition
Today we’re starting down a new road with Milenomics. You’ll probably notice the title image has changed–not to worry, tomorrow it will be back to normal. I’m introducing Milenomics: Redux as a way to revisit posts that I think need to be revisited, and update posts that need to be updated. From time to time you’ll see these Redux posts here. We’ll take what we’ve learned, and expand on them, and in doing so we’ll increase the wealth of information here on Milenomics.
What is a T-Rate
For our previous discussion about T-Rates please read, “What is a T-Rate and why you need one.” To re-introduce the idea:
A T-rate places a value on your time. Simply put, your T-Rate is the value you give 1 hour of your time. This is your personal assessment of what your time is worth.
A T-rate should be expressed in $/hr, an example would be my T-rate, of $25/hr. Placing a value on your time is important with respect to Milenomics. We use this T-rate in our cost tracking, and even in booking flights.
T-Rates as a Factor in Cost Tracking
Using our T-rate when we travel on MMRs is imporant. The reason is it gives us a Total cost for our miles. Simplified cost analysis, where we include just the cost of the purchase itself (say $3.95) does not get at the total Cost incurred when we buy our miles.
In the short run this isn’t a huge issue–and for some of you you won’t care. Certainly, if your T-rate is low enough (or $0 because you enjoy the thrill of the hunt), then you probably don’t care to track your costs. But for someone like me, who’s time is precious, and limited, it is important for me to know I’ve put a certain amount of that time into my Miles.
If you haven’t read it yet, “Removing Inefficiencies in your Churn and MMR” covers why in the long term this thinking breaks down. Your Fixed costs are, just that, fixed–but as you continue to look for ways to earn more miles, your Variable costs continue to go up. The easiest, and cheapest miles are earned with little above the fixed costs. Long term, knowing your T-rate and keeping track of it will help you decide when to stop, or when to go after more miles.
When it comes time to redeem our hard bought miles we’re realizing the investment of time, travel and money we put into those miles. Because of this we can book at our exact cost, and still come out ahead.
For an example of this see my bookings here, and here. My long terms costs, due to my T-Rate, hover around 1.3 CPM. When I book at 1.3 CPM I’m not “breaking even,” but rather, I’m pulling out my $25/hr investment of my time. My T-Rate has helped me put a floor on my redemptions, and also allows me to not fall prey to the range-anxeity some of us feel.
And, when I can redeem above my T-Rate, at say 1.8 or so, I’m actually pulling more value out of my time. My investment at 1.3 cents has paid off with an additional .5cent dividend per mile.
Using our T-Rate in Booking Flights
Another area where a T-rate is helpful is in decided which flights to book. I outline an example of this in the post, “Trading time for Miles, When Does it Make Sense?” Often times we’re conflicted on what is the “best” flight option for us. Instead of having to rely on our gut, a T-rate lets us crunch hard numbers, and come up with the best balance of points, time, and money.
Even for paid flights a T-rate can be helpful. In the case of decided between two flights, one with a 4 hour layover, and the other with a 1 hour layover, a T-Rate helps us put a value on the 3 hour difference.
The Variable T-Rate
This is actually a term which Becky from www.thegirlandglobe.com came up with in the comments of the above post on trading time for miles. The idea of a Variable T-Rate is a great example of why Milenomics: Redux needed to happen.
While I use a fixed $25 T-rate, some of you may use a Variable t-rate. For example, you might love plane-spotting, or visiting airports, as I know some of you do. If you love airports you’ll probably have a much lower T-Rate there, than you would say, waiting on line at Wal-Mart, or on hold with InComm.
The Danger of a Variable T-Rate is that you “cherry pick” the times you include a realistic rate, and the times you discredit your rate down to near $0. If you don’t hold a steady rate for each circumstance you’re really unable to gain anything from your T-rate. So if you do decide to have a variable T-Rate, ensure that you outline that rate for different instances and hold to that level.
The Boss Coefficient
My absolute favorite Milenomics term is the Boss Coefficient. To describe it I’ll ask you to imagine going to lunch with your boss. While you might not mind waiting 15 minutes for a table to be ready, your boss might. In fact your boss might even ask why you didn’t make a reservation to avoid this 15 minute wait. You’ve just experienced the Boss Coefficient.
Now we’re not going to be tasked with taking our Boss to lunch very often. But sometimes we will travel with an older person. Or we’ll fly with someone who’s terrified of air travel. Whoever has the more restrictive T-Rate–that rate should be used for all calculations whenever you include that person in your travel. The boss coefficient brings your T-Rate up to the value of the highest T-Rate in your travel group.
Why we need a T-Rate
Einstein is quoted as saying:
“The Only Reason for Time is so that everything doesn’t happen all at once.”
A T-rate is important because it helps us find balance in our lives, and in our mile collecting and spending. Without a T-rate we run the very real risk of trying to make too much happen, all at once. We also run the risk of putting too much into our miles, and not getting that value back when we redeem.
If you’ve been on the fence about coming up with a T-rate, today I’ll challenge you again to start thinking of your time as having a value. And, if you took up the idea when I first posted about it, today is a good time to reevaluate your T-rate. Times change, and our rate should as well.
I’m even taking today to consider and reevaluate my own T-rate. With the addition of the blog my time is even more limited than it was before–and as such I’m debating bumping up my T-rate to $35.
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