Buyback rate
The buyback rate: one number that tells you what to stop doing yourself
What the buyback rate is, how a founder calculates theirs and why it ends the argument about whether to hire. The formula, an example and the most common mistakes.
6 min readAIKAA editorial
What is the buyback rate?
The buyback rate is a founder's single most important number, because it turns «should I hire someone for this» from a question of nerve into a comparison. Without the number every handover is a feeling: does it feel expensive, does it feel risky. With the number you compare two figures.
How is the buyback rate calculated?
- Take your annual pay – what the company pays you a year, before tax.
- Divide it by your yearly working hours. The default is 2,000.
- Divide the result by four.
Example: annual pay 240,000, hours 2,000. Your hour is worth 120 and your buyback rate is 30. Any work someone else can do for under 30 an hour should move.
Withheld – opens to membersWhy divide by four instead of using the full hourly value?
Because handing over is not free. In the first weeks a new person works slower, asks more and needs a playbook. A quarter is deliberately conservative: it starts the handovers with the tasks where the gap is so wide that no early friction can eat it.
What do you do with the buyback rate in practice?
The buyback rate only works once you know where your hours go. That is why the order is always the same:
- Audit two weeks in half-hour blocks.
- Mark money and energy on every block.
- Everything below the buyback rate that drains you goes on the offload list.
In the demo workspace the owner spent 25.5 hours over two weeks on work below their own buyback rate. That is more than three working days a week, costing more than anyone would have charged for it.
What are the most common mistakes?
- Pay is set too low. Many count only the salary they draw. Count what your work is worth to the company.
- Hours are not logged. A number without an audit is a guess.
- Everything moves at once. Handover is done one task at a time, cheapest first.
The buyback rate does not tell you who to hire. It tells you what to stop doing yourself.
AIKAA calculates the buyback rate automatically from the audit and shows for every task whether it sits above or below the rate.
Frequently asked
How is the buyback rate calculated?
Annual pay is divided by yearly working hours (default 2,000), and the result is divided by four. With annual pay of 240,000, for example, your hour is worth 120 and your buyback rate is 30.
Why is the buyback rate divided by four?
Handing over is not free: the first weeks go into teaching and checking. A quarter makes sure handovers start with tasks where the benefit is clear from the beginning.
What do I do with tasks above the buyback rate?
They stay with you, or become a playbook if they drain you. Expensive, energising tasks are exactly the work you are freeing time for.
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