Reducing cost and overheads

Thought id start a thread on this as its not something i see discussed in the Adult biz that often.

Any other business is cost conscious and will try to keep costs at a minimum, but our business is based on quality alot more than some other industries. I was wondering how to decide on cost over quality.

I think alot of noobs dont make much because their costs are too high while sales are building. But can you increase sales without spending a fair amount on marketing, content, hosting and so on?

I dont see alot of evidence of people cost cutting. The fact that people use higher % processors suggests to me that maybe cost isnt a big enough issue. Also i have never once had an email from a company offering to reduce my overheads, but in a mainstream business i used to run, i got them all the time. I would have expected the major processors to compete on cost for my business, but they simply dont bother, because it seems that they know that they dont have to.

Ive spent alot of time reducing costs and the net result is that im keeping more of my sales revenue than i was before, which is vital if im going to one day quit the day job!

Any thoughts?

Well the processors do not compete because they do not have to. It's an interesting situation. The entire business of adult is much more restricted, so prices for everything are higher.... but so are the profit margins.

I made one significant cost cutting decision in my business plan right from the start - don't handle money. Once you start handling money, you have a major new cost to your enterprise.

That's why I'm exclusively an affiliate.

When I started, to cut costs, I ran a T1 into my apartment and put on them my MS server for my web server, and my linux box for my email server. That way I didn't pay anyone for hosting.

One thing I have noticed from meeting people at the shows who are looking to start a site - take it upon yourself to learn html and dreamweaver. Don't pay someone to do things you yourself can do for free.

Make friends who know graphics, php, etc. For me, Austin is full of guys who know website work, networking, etc. I'm not saying be predatory or manipulative about it, but if you have friends who can do things for you when you are getting started...... you can get help on configuring a once-installed script, or other things you need.

Now, for me I never learned graphic design. So I made it a point to keep my sites mostly text, html and style sheets.... as opposed to being rich in custom graphics.

If you want to start low to the ground, pick what you can do and work it. Plus, if you work this way, if you don't get the sales you want, you are not out a big expense, so you can afford to keep plugging away at new things which may be more successful.

Steve

Im always looking at methods to cut costs, turning my laptop off when im not actually sat at it, trading ad space for design, content or programmig work, reducing image sizes, monitoring bandwidth usage/overages, asking for discounts on content, hosting, even if there doesnt seem to be a need for a discount anyway.

You can pretty much save money anywhere when you run your own business, for example, next year, i saved us over $10,000 by making the concious decision not to attend Vegas or the Florida show, instead, we'll possibly attend the Gay Phoenix Forum and see the people we want to do business with.

Instead of wasting hours building new sites i have a script that does it for me, instead of wasting hours updating members areas, i have another script that does that for me.

It isnt just about monetary savings but time management also.

Regards,

Lee

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Originally Posted by Lee

... reducing image sizes...

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There you go being silly again! Lol. Imo, you don't want to be so cheap that you lose sales. And being stingy on images size/quality is not a good practice.

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Originally Posted by Lee

It isnt just about monetary savings but time management also.

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I agree absolutely! Time is money in every business. And when you are a small operation, every second is especially important.

My problem is that I have so many things on my plate that I can't afford to take a couple days off to learn a new script (content management, banner rotation, etc) that could save me many many hours of labor and possibly increase my income. I always wish I was more efficient!

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Originally Posted by Xstr8guy

And being stingy on images size/quality is not a good practice.

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Of course it is, you dont give away 1200x1600 images on free sites or TGP galleries, you reduce the size and quality of them so that when the surfer hits the paysite tour, they can see that the site is going to contain much higher quality images than they got for free.

Regards,

Lee

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Originally Posted by Xstr8guy

My problem is that I have so many things on my plate that I can't afford to take a couple days off to learn a new script (content management, banner rotation, etc) that could save me many many hours of labor and possibly increase my income. I always wish I was more efficient!

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Well you have to spend money to make money, or in this case save some. I agree with Lee. I have a script that builds and installs my feeders based on templates. Ive taken time of work as holiday to write it and its saved me alot of time. If you can you do alot more as a result then its time well spent.

I've seen some pretty dodgy methods used by some companies to cut costs.. simply not paying your bills does not constitute cost cutting...

As Lee said, finding scripts to assist in your business is a cost saving when it comes to site building - a $30 script to make sites is like having your 1st employee.

In the days back when.... I still liked to create my site fronts for feeders, but the back ends were so boring to do - so I got a script originally intended for main stream folk to create little web galleries and turned in into a site builder) - it 'increased' my workflow by about 80% - I had set out to make life easier, but in this game a cost saving script wise can create more work - because it gives you more time to do the other things you haven't been able to do - not a bad thing at all, cos the money can flow too.

As for companies contacting you, it's really the nature of the adult business - not many webmasters are out front with a contact number on their site - companies would have to search the whois for who owns what, and then chances are their emails would end up in a spam folder..... companies do try to approach you, but not in the traditional way - they come to places like these boards and announce this and that - then its your option to follow it through

I would say outside my immediate business that this board, and a few others, form an important part of my business working day and I know without them I wouldn't have been able to progress as fast with less screw ups (mainly due to the main guys who speak on here and advise / comment) - so this board itself is classed as a cost saving to me and an invaluable networking and 'time out' tool rolled into one.

socks

what makes you think people cut costs in other businesses? arie works in a company where they must spend a third of their money doing things they messed up over. i've parked at printers and seen them throwing away tons of paper, including misprinted items. all grocery stores throw away food regularly and i'm sure with some planning, they could throw away less.

lessee... we were at a resturant the other day that had more people working there than customers, and they always seem to have that going on. when we were doing print ads, i spoke to a woman whose company just bought all the reps mega computers and most of the reps couldn't use them - and didn't need them. that's a common one i see at places now - they could easily make do with regular pentium 4 3gig units with half a mg of ram and instead they pay top dollar for computers that won't help them any more because they feel they must be better.

the list goes on and on but every industry i've worked with or have known people well who woeked in has tons of waste. extra employees because of bad planning or fear of firing or nepotism, costly computers when $700 a piece computers would do the job well, supplies and inventory thrown away due to errors or just idiocy, too much of things that aren't needed and so on.

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Originally Posted by marcjacob

Thought id start a thread on this as its not something i see discussed in the Adult biz that often.

Any other business is cost conscious and will try to keep costs at a minimum, but our business is based on quality alot more than some other industries. I was wondering how to decide on cost over quality.

I think alot of noobs dont make much because their costs are too high while sales are building. But can you increase sales without spending a fair amount on marketing, content, hosting and so on?

I dont see alot of evidence of people cost cutting. The fact that people use higher % processors suggests to me that maybe cost isnt a big enough issue. Also i have never once had an email from a company offering to reduce my overheads, but in a mainstream business i used to run, i got them all the time. I would have expected the major processors to compete on cost for my business, but they simply dont bother, because it seems that they know that they dont have to.

Ive spent alot of time reducing costs and the net result is that im keeping more of my sales revenue than i was before, which is vital if im going to one day quit the day job!

Any thoughts?

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Well those are all great examples of miss-management. Just because they dont think about cost doesnt mean that all business's dont. I think a business run correctly would be cost aware and make an effort to cut waste and make a higher roi.

i guess my point is that some businesses in every industry are wasteful and don't cut costs.

one of our costs that was cut in half is what we pay per update. we were shooting one update per shoot till this one guy. we got three updates from him in 2 hours of shooting time so now we get 2 updates from each and every shoot - totally different scenery, different clothes, different vibe and our updates cost half as much :)

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Originally Posted by marcjacob

Well those are all great examples of miss-management. Just because they dont think about cost doesnt mean that all business's dont. I think a business run correctly would be cost aware and make an effort to cut waste and make a higher roi.

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one good thing to do is every 6 months or so look though all your recuring bills and see if you can get them cheaper elsewhere. for example your internet connection, oftern your own provider may have come out with a cheaper option but they usually dont tell existing customers, check and keep an eye on Verizon , they have FIOS they are rolling out , in Tampa we have 30 MB down and 8 MB up for $1229 a month. check car insurance rates see if you can switch and get it cheaper, dont just accept the auto renewals. power? if you are using a lot, ( Our power bill is around $1,300 a month ) the power company can put in a dual meter cause the first 100 KW is cheaper so it splits the bill in 2. AC costs, knock it up 2 degrees and see if you even notice, you can save upto 20% on your bill. hosting costs, often bandwidth fees go down, even if you don't want to switch you may be able to use the lower fees advertised by other companies to get a reduction on your hosting bill.. talking about hosting, 2 ways to pay, by the MB and flat bandwidth rate. take a look and see which will be cheaper, look at your peak bandwidth usage over a month, add 20% to it and look for a fixed pipe at that speed, see if the costs will be cheaper than you currently pay by the MB. or visa versa.

We're constantly looking for ways to manage costs effectively, but particularly in this business, balancing costs and quality is really crucial because, as Patti said, you want to get it right the first time to avoid doing it over a bunch of times.

Also, in things like hosting, I've never seen a deal where having dedicated bandwidth is less expensive than having a good deal at a data center. But then you have to really look at whose bandwidth is being offered, whether the data center is overselling capacity at peak periods, etc.

I actually think that in many ways, the adult industry is already controlling costs... design for adult is generally a LOT less expensive than design for corporate sites, and I'm sure that's driven by competition. The adult industry has pioneered a lot of tech innovations that have cut costs as well (content management software for sites, etc). It just takes a mindset that is constantly thinking about the bottom line and ways to enhance it while still providing a quality product.

reliable asians can save you a small fortune.

We constantly look at cost cutting measures.

Ganging DVD covers to print several at a time. Changing various vendors from time to time who provide the same services at reduced rates. Booking studio time to shoot large blocks of footage rather than spreading the shoots out over time, etc. etc. - Cam is a master at savings and cost cutting without decreasing the value of the end product.

We pay cash rather than use credit. This too helps.

But I'm not the one to respond on this issue, Cam is. After all, I did graduate from the Zsa Zsa Gabor School of Economics! (as my accountant likes to say)

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Originally Posted by gaybucks_chip

I actually think that in many ways, the adult industry is already controlling costs... design for adult is generally a LOT less expensive

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I have a friend that is doing mainstream sites and he charges several thousand dollars to produce what we would typically only spend $500 on. Same is true with hosting, I have had clients with mainstream sites come to me and ask for a quote and then tell me that there is no way I can offer them service for that price as they are currently paying 3x to 4x the amount for shit service.

I think its smart to cut costs, but not at the expense of quality and/or reliability. For example, going with a dirt cheap host may save you a few bucks every month but that is irrelevant when your sites are down for days on end, or sooo slow that you lost new customers.

cheers,
Luke

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Originally Posted by Chilihost

I think its smart to cut costs, but not at the expense of quality and/or reliability. For example, going with a dirt cheap host may save you a few bucks every month but that is irrelevant when your sites are down for days on end, or sooo slow that you lost new customers.

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I second that! You can probably find cheaper hosting but I prefer great service and reliability and I'm willing to pay a little more if necessary. Btw, Luke actually saved me money. I had several virtual accounts and it was actually a lot cheaper for me to consolidate them all on a Chili dedicated server. Thanks Luke!

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Originally Posted by Chilihost

I think its smart to cut costs, but not at the expense of quality and/or reliability. For example, going with a dirt cheap host may save you a few bucks every month but that is irrelevant when your sites are down for days on end, or sooo slow that you lost new customers.
cheers,
Luke

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Yes, there is no question that cheap doesn't always translate into better.
And conversely, spending more doesn't always translate into better either.

The balance is in keeping all things equal and if one part of the assembly line can't keep up with the rest of the operation, then its time to fix it or replace it.

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Originally Posted by Chilihost

I think its smart to cut costs, but not at the expense of quality and/or reliability. For example, going with a dirt cheap host may save you a few bucks every month but that is irrelevant when your sites are down for days on end, or sooo slow that you lost new customers.

Luke

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I will third this :) I don't get how people will use some eighth-tier provider to save a few bucks, when an hour's downtime could mean hundreds or thousands of dollars in lost sales, and repeated downtime will equal lost affiliates and rebills.

luke's personal service and hosting is really good stuff, but just because a host costs less doesn't mean they're inferior. my host is reachable by phone, has his own NOC with 2 guys in it at all times, and i've been happy there for 17 months now.

on the other hand, those who can't differentiate between good and bad hosting should probably play it very safe. there are some VERY cheap hosts out there who will give you real problems and maybe even kill off all your traffic or get your domains blacklisted!!!

I think i can tell how much downtime my host has fairly easily by looking at my stat counter. I agree cheaper isnt better but if the product or service is upto standard then it is.

Totally. Cost does NOT equal quality. I'm constantly amazed how many people host with Cave Creek, because to me it seems really high priced (competitive for 1997, maybe, but not for today) and as far as I know, they only have two primary bandwidth providers.

On the other hand, my own experience is that Planet, EV1, Softlayer have been rock solid, have 4 or 5 different major providers, and are VERY competitive. Jury is still out on OrangeFiber/AlphaRed, we've only had one server with them for about 3 months now, but so far, they also seem very reliable, have outstanding support, and are dirt cheap.