Understanding Profit and Expenses

Understanding Profit and Expenses

From Burnout to Business Money

One of the biggest arguments that you'll ever see take place between sellers is the pricing of items. You'll see newbies asking, "How much should I price this?" or some experienced sellers saying, "Why do so many people sell so low?" It's an ongoing debate that really comes down to dissecting the types of sales and understanding profit margins. 
 
Before I dive deeper into this, it’s important to understand that anything you sell, whether it’s premade videos, photos, panties, shoes, etc, has a market range. Ideally, the market range is the price that buyers are most willing to purchase at. Why is that important? An environment with a healthy market range means buyers and sellers will appeal to each other. There’s no trophy for being the cheapest or most expensive seller. In that same thought, being one of those doesn’t guarantee more sales. So take the time to see what items are generally priced at when deciding your own prices.
 
The next important aspect is understanding what a sale is. Before you say, “Wow, I know what that is, it’s so basic…” Slow down a second. A sale is the total amount received from a buyer; a sale is NOT profit. Faking yourself out that you earned $50 when you never accounted for the expenses that went into this sale is the quickest way to get frustrated, burnt out, or even debate quitting. Making lots and lots of sales is great, but the entire goal is to make profitable sales.
 
This leads me into my next breakdown of a sale. There’s two words you’ll always hear in business that you need to have ingrained into your mind: Gross sales and net sales.

Gross sales is your total income you’ve earned BEFORE expenses. 
Net sales is your total income you’ve earned AFTER expenses.

(For the sake of keeping this as a simple example, always take in account paying taxes. Taxes vary from state to state and country to country. Educate yourself on deductions, keep receipts, and always save a minimum 25% of your income to pay them. I am NOT giving tax advice, just a heads up.)

Now for the nitty-gritty part of expenses. What are those? Here’s a list to help you out:

-Shipping costs
-Shipping materials
-Clothing/items cost
-Gas
-Whatever you physically purchased to make the order

Once you know what your expenses are, here’s how you determine your profit. I’ll be using my personal numbers for this example. Here’s how mine breaks down for a pair of panties:

Total sale price for 1 day panties: $35

Expenses-
Postage (varies where I send): $4
Panties cost: $1.10
Envelope: $0.23
White privacy bag: $0.08

(Personally, I don’t include gas into my price because I take multiple orders in one trip and claim mileage on my taxes. Also, I don’t have the time to break down the vacuum seal bags cost per use since I cut them so weird.)

Total expenses: $5.41

$35 (total sale) - $5.41 (expenses) = $29.59

Gross sales: $35

Net Sales: $29.59 <-Here is your profit

So if I sell 10 pairs of panties this month, here’s how that’d look:

Gross: $350
Net: $295.90

►Don’t fake yourself out because you didn’t account for $54.10 in expenses. So that profit you’ve received is how you pay yourself. The idea of “high pricing = high personal value” that gets thrown around isn’t at all true when you understand profit. You can change your profit margins by keeping expenses low, even if your sale pricing isn’t high.

And another big question that always comes up is, “How do I decide pricing for videos, pics, and other digital media?”

My personal way of breaking it down is by the amount of time and effort that goes into it. For premades, I did the time and effort ONCE, so my pricing will be lower than custom content. For anything custom, I consider filming time along with uploading and editing time. I know a very simple 5 minute custom video is going to take maybe 10 minutes max to record, 2-3 minutes to edit, and around 10 minutes to upload. That’s 25 minutes of time and effort put into the video so I already know what I’m going to charge.

Also when considering custom media pricing, I also base the price off of these:
-number of tasks in the video
-if it’s able to be resold
-fetish level
-personal comfort level (this varies from person to person)
-if it’s being purchased with another item (custom media in their purchased panties, socks, etc)
-if I like the idea and it’s fun

My personal opinion on good business practices:
-Do NOT spend money from a sale that hasn’t been completed. Buyers may ask for a refund under special circumstances and it’s not their fault you don’t have it.
-Custom content should be completed within 48 hours of purchase UNLESS a specific time for completion has been communicated.
-Shop around for lower cost items, buy in bulk, and look for coupons. Buying panties at $5-10 adds up crazy fast when you could buy them at $1 a piece in bulk.
-Keep pricing simple. I see new sellers with complicated listings that don’t make it clear what the cost is or I see “nickel and diming” with add-ons.
-Guilt trip sales are gross, desperate, and quite annoying. Bad things have happened to every single one of us sellers, that doesn’t mean it’s a crutch to make sales each week.
-A seller making more sales than you is not your enemy. Stop being a bitch about others’ success.
-You don’t have to offer everything; stay with what you’re comfortable selling until you’re ready to branch out.
-Be careful where you take advice from. Sellers who make $500 a month can only give you $500 a month advice. 
-Consistency in advertising is so important. 
-Always communicate with a buyer who has sent you money. Even a small update goes a long way in building rapport. Also, don’t be afraid to follow up.

 

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