What Is Your Highest Business Expense?

Ive started to do our year-end tax reports (blah) and was actually quite surprised to see how much we have spent over the past 12 months on various products and services relating to just our adult business.

$8k in hosting costs
$55k in content purchases
$12k in design work
$9k in traffic buys
$3k in software programs
$5k in programming services

Obviously this doesnt include things like electricty, phones, web connection, etc.

For us it looks like content is our primary business expense for the past 12 months, is this true for everyone else or do you have a different primary expense during the course of a year?

Regards,

Lee

Lee,

Seems you left out the most important, and for us, the largest expense, is payroll. I would think that is true whether you are a one man show or are a company with salaried and hourly employees. Even the one man show has to pay himself. Of course he/she could be taking a very minimal expense in order to get his/her business up and running in which case payroll would probably not be the largest expense.

Most certainly our highest cost is our payroll expense.

Bill

Can't say that I have a structured payroll ... I just get to use whatever is left after expenses LOL

For me, I'd say the bulk of my expenses would be hosting and domain name purchases/renewals, followed by some scripts I can't get for free, MAYBE a software upgrade or two, and then there's equipment repairs and upgrades. I do buy content and stash it away for future use when I see a good deal, but it isn't a primary expense right now.

Bill,

Right now we dont run any payroll through our adult business, we're being paid by our mainstream business activities ;)

Regards,

Lee

I would say for us it's the following order

1. server expenses
2. many script licenses
3. traffic purchases
4. employee
5. design work

That's it pretty much :cash:

1. exec compensation
2. model fees
2. studio mortgage
3. equipment
4. hosting/cdn
5. travel
6. sub-contract work (design/writing/security)

Since we design and shoot everything ourselves featuring ourselves, our biggest expense is affiliate payouts.

Since we don't pay our affiliates (well I didn't mean that the way it sounded) but rather they are paid by ccbill, we don't figure them into the expenses since our income comes after they are paid.

PAYROLL by far, followed closely by production costs.

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Originally Posted by Alex_Manifest_M

Since we don't pay our affiliates (well I didn't mean that the way it sounded) but rather they are paid by ccbill, we don't figure them into the expenses since our income comes after they are paid.

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I used to do it that way, too but a) there's a spot on the tax forms for commissions paid, and b) I wanted to focus on our gross sales since that's a number other business people care about and focus on. Maybe I would feel differently about it if we were incapable of making any sales without affiliates.

Talent Fees paid to models (one-time session fees), account for 95% of my monthly costs.

Lets see 105 hrs per week at .50 per hour? I must be nut!!! As being a small guy in this business I only have myself as a large cost. My hosting is well through my hosting company www.cpwebhosting.net which I own so it is an expense there. Other than when I do my own shoots my cost are no where as much as anyone here, but I wish I had them big time!!

Exclusive content costs

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Originally Posted by MiamiB

Exclusive content costs

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That is nice your doing something good, good for you!

no one spends money on legal fees?

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Originally Posted by PornTeam

no one spends money on legal fees?

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We do!!! LOL!

But in the grand scheme of things legal expenses are not that high on the list.

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Originally Posted by PornTeam

no one spends money on legal fees?

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Absolutely, but they are not high on the list. We may all be in "Adult" but what we do varies a lot. If you buy your content, you won't have model travel expenses. If you don't own a studio and work out of your home, then you won't have substantial office expenses.

It depends so much on the individual type of operation that they can't really be compared one to the other. We produce more video content than Titan easily every year on a "minute for minute" basis. BUT since we are not sending models to the ends of the earth for hot sex on the edge of volcanos, there is no way we would have shoot costs close to theirs. We have a three man crew with one assistant. Other studios need a bus to carry their crews around. We have one model in a solo scene, they may have as many as can fit in the bottom of a canyon so no way to go apples to apples.

The long and short of it is that there is no comparison really. Asking what a home office based affiliate who solely promotes sponsors would probably get you a good base line. Especially if it is given in terms of 'percentage of sales'. If a company has $150k in model fees annually but sales of $1.3M then they are doing very well. It is all a question of percentages.

Business 101 :cash: