Profit Margin

[SN3]

For all of you web designers, graphic designers, and the like: what is your profit margin?

[joecacia]

Nothing yet
Still a student.

[BinkyMelnik]

SN3:

You left an item off your poll: zero.

(Bink: "Profit"? What is this word, "profit"?)

[RyanJonPilling]

I'm not sure that "profit margin" is applicable to a service provider like a designer.

Technically, the profit margin is the difference between your cost, and the sale price. With design, your fixed costs are a tiny part of the equation. (software license every couple years?... plus all the nuts and bolts of running a business)

The biggest "cost" is our time. In a big firm, the profit margin would be the income over and above paying the designer's hourly rate. In the case of the average independant designer, that hourly rate is part of our profit. You could say that your profit margin goes up every time you get paid, as your income raises farther beyond your fixed annual costs.

So, that's a long way of saying... (shrug), I dunno.

-Ryan

[SN3]

If you have a profit margin of zero, than you're not making any profit. That's why i left it out. I'm looking to see what the ballpark % of revenue to net profit. Example: you make $10,000 in a year, have $500 in expenses and pay $1500 in taxes, you keep $8000. Your profit margin would then be 80%.

[BinkyMelnik]

SN3:

If you have a profit margin of zero, than you're not making any profit

(Ding, ding, ding!) There you go!

you make $10,000 in a year, have $500 in expenses and pay $1500 in taxes, you keep $8000

Good thing we don't hafta factor in those times we take a job for $500 then, in the process, hafta turn down a $2500 one because we're bogged down with the $500 one. Them's the times you wanna put a bullet in your head.

[tmeyer]

I wonder how many web designers "supplement" their income through their own ventures. I'm just starting out but I would guess that many run successful blogs, forums, directories, etc... to add to their year end total.

[SN3]

Originally Posted by BinkyMelnik

Good thing we don't hafta factor in those times we take a job for $500 then, in the process, hafta turn down a $2500 one because we're bogged down with the $500 one. Them's the times you wanna put a bullet in your head.

I know what you mean. And sometimes you can't turn down the $500 jobs because they have been from clients that gave you a lot of other work.

[BinkyMelnik]

SN3:

sometimes you can't turn down the $500 jobs because they have been from clients that gave you a lot of other work

Zactly. So you're sorta doing "charity work" insteada "profit work" because you have a relationship and you wanna keep it going.

And I didn't even mention those times when you really DO do charity work 'cause you wanna help someone out who hasn't got a farthing, either because it's someone you like, or a friend of a relative, or it's just plain a worthy cause, so you're subsumed, and then real paying work comes along, and you hafta suggest it be given to someone else. (Ouch!)

[SN3]

I was also looking at the expenside side of things. What % expenses?

[T0d]

To much goes into 'web work' and working at home to even be able to pull a profit margin.

If you want % net profit from gross income that's different and will vary TONS person to person.

Person A. doesn't write-off what person B. does, Person A. pays rent for business B does not. etc etc etc.

I think in big business .5 to .10 profit of a $1 is considered good. By the time you factor in goods cost, goods sale price, marketing, advertising, labor, etc etc etc etc etc.