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When I was making my first virtual hires, I saw it as a cost.

Since I was doing everything myself up to that point, it was just an additional expense.

Well it didn’t take long to realize that hiring a VA shouldn’t be a cost at all, but rather an investment. 

And like any investment, you’d expect to earn a positive return — otherwise you wouldn’t make it!

Calculating ROI

For my latest hire, a dedicated social media specialist, I had to sit down and calculate the projected return on investment (ROI) of bringing her on board.

Did it make sense? What kind of results would she have to drive in order to turn a profit on her fee?

To do this, I found the baseline numbers of what we were generating in terms of traffic, email sign-ups, and revenue. Some business owners know exactly how much a new email subscriber is worth — but I’m not one of them.

It was an interesting exercise to try and find out though, and the number I ended up with was around $0.25 per subscriber per month.

So if I were to hire a $500 a month VA, I’d need their efforts to generate at least 2000 incremental email subscribers just to breakeven.

Surprisingly — or perhaps not — it was the first time I ever tried to estimate such a number in advance of a VA hire.

(Historically it’s always been about how many hours it will free up.)

Have you ever done the same?

The Time Equation

Normally calculating ROO, or return on outsourcing, has been about the number of hours I can free up every week or every month. If you value your time at $50 an hour and can free up 5 hours a week, it makes sense to pay up to $250 a week for that help, right?

That’s how I’ve typically looked at the “returns” on my virtual assistants, and even how I present the savings opportunity in my book. And that’s because the alternative was doing the work myself.

Measuring Performance

In this case, it was work I didn’t particularly know how to do. What it forced me to do was come up with concrete deliverables (ie. double traffic from this social platform).

It also forced me for the first time to ask what that traffic was worth.

And at first glance, the numbers didn’t look good. It was going to be hard to justify this hire at her proposed rate because the necessary results for a positive return seemed pretty unrealistic.

So instead we set up a short-term compromise. Instead of agreeing to a flat monthly fee on an ongoing basis, we agreed to do a 2-month trial — calling it a Pinterest account “makeover” — at a slightly lower rate.

So far she’s driving strong results​​​​​​​, though we’re not quite to the “breakeven” point yet. After the trial is over, we’ll re-evaluate and see if it makes sense to continue down this path.​​​​​​​

Your Turn

What do you think? Do you have a number in your head for what would constitute an outsourcing “win” in terms of ROI (or ROO)?

Do your team members have a concrete metric they’re responsible for?

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