Just trying to get a rough handle on what to expect - and then there's always the things you don't expect!

I'm going to be opening for business soon (I hope!!) - part-time, trying to replace my full-day overtime with magic shows (more fun and less hours!).

I can figure what percentage of my gross OT goes into my pocket as "profit" (about 60%).

Does anyone have a general ball-park percentage of gross-to-profit?
Or maybe I should ask: what percentage do you shoot for when figuring your pricing schedule?

Ed

Not sure I understand the question. Profit isn't a specific percentage of gross.

Profit is simply Total Revenue minus Total Expenses.

If the result is positive, that is your profit. If the difference is negative, the firm is operating at a loss.

Your Total Revenue is the total of all money that comes into your firm. Your Total Expenses are ALL the expenses associated with running your firm.

What I do is determine my salary as part of my Total Expenses and my Total Price is a result of that. But you also have to take into account what the market will bear at any given price and how many shows you are willing to perform as a result of the above equation.

Could you explain a bit more about what you mean? Sorry I don't understand.

You trying to figure out what your take home over time pay is from work? Ask your employer payroll department or your accountant.

Ed, as ScottR said, profit is simply total Revenue minus total Expenses.
And that's what you owe taxes on.

Many brick and mortar businesses would love to pocket ten percent of the take in.
But I'm sure an entertainer working from home doesn't have nearly as many expenses as most businesses,
so the profit margin should be pretty high.
But until you've done it for a year, it's going to be very hard to tell. Everybodys expeneses will be different.

Get you a Schedule C tax form to study. That will give you a good idea of what you can deduct.
A business must fill one of those out at the end of the year to show how much profit or loss you have.
I'm sure you can download a form,
and if you need help in understanding the different lines, let me know.
Try different numbers on a sample to sort of see how it works.

But to answer your question, and this is certainly a wild guess, 50 percent.
(If you talking about part time.)

Tom

Ed
It is simple, you buy 2,000 worth of props, $200 worth of gas, $300 worth of costumes, and you do $10,000 worth of shows. In that case your profit will be $7,500, which is 75% profit. When you are selling a service the profit margin is always high. Next year you will need less costumes, less props, and hopefully do more shows, so next year your profit percentage will be even higher.

There you go Ed high profit margin is the reason why there are so many hack childrens magicians out there.

Al,
You forgot advertising and promotion, phone, electric, office supplies, auto repairs and a few other things...

I've discovered that it depends upon what level you are in the business. At the lower income levels, I think that you will find that about 30-35% of your gross goes towards expenses and you will have about 65-70% for salary. At higher levels, you will have more expenses and probably have to invest more in marketing (I've heard as much as 35%) so your expenses may run 50-70% (possibly more). Yes, your gross is higher, but you may keep the same amount as you did when you were a smaller operation.

Jim

Tacrowl
Of course there are other expenses, I was only giving Ed a ball park figure. I buy very few props, or costumes anymore, and after 22 years of performing I also do very little marketing, but if you don't put quality in every show it will not run smoothly at all.

Ed the numbers only mean something after the fact. Ignore the numbers and concentrate on doing a good job with your marketing and customer service and the numbers will take care of themselves.

Gil Scott

Which is why I added the line:


Great shows can demand a higher price.

But in my experience, you CAN'T ignore the numbers. You MUST know if you are operating at a profit or loss. The only way to do this is to keep accurate records, forcasting, and analysis.

Too many people see the trees and not the forest. For example, "Wow, I just made $575 or I just made $1275."

As Tom, Jim, and others have accurately pointed out: you must take into account all the numbers, like the $0.50 mileage deduction (yes, 2010 is lower than last year, sigh). This is a great way of calculating vehicle expenses.

If you just drove 50 miles round trip, that just cost you $25. Liability insurance? $250/year divided by x shows per year. Subtract that from your show price. Website hosting, giveaways. It goes on.

Sorry to be so confusing, guys. I'm just trying to get a handle on my vision of replacing my overtime with magic shows, and how much I might need to gross with shows to match the take-home of overtime. My OT varies, but I can get a general ballpark feel for it, and so I can also gauge the approximate percent of that actually sees the insides of my pocket.

I'm expecting to be at this desk for at least 8, likely 10 more years, so unless something gravely unexpected happens, it'll be solely a part-time business. That really limits my availability for shows. (And that's my choice, because I am not going to let a side business take over the rest of my life. It's to replace the OT right now, and be my retirement plan later, and that's all.)

So then it becomes a matter of seriously looking at what I might expect to put into my pocket from magic. Get a ballpark feel for that, and see if the number of shows I can see myself able to do times the anticipated profit per show really does equal what I'm hoping to do.

Yah - there's a lot of up-and-down room in there. This year, I'm dropping a bit of money on props and such that I hopefully won't need to replace next year. But if I expand my service area, then travel expenses will go up. So I know all I could hope to come up with is a very general, very iffy, SWAG percentage.

But it would be something to begin looking at. For example:
If it goes as Jim Snack says and I can expect about 65%, and I can do 100 shows at 100 bucks each, then I'll gross 10k and pocket 6500. Now I can see how close I am to my target, and what I need to look at to adjust that: more shows, edge up the market price, BOR, sidelines, add-ons, etc.

I know actual tax calculations are hairy, and my tax man is a good friend and a level above CPA (I forget exactly what it is), so we do talk a lot! But I just wanted to get some kind of "about that far" direction.

Ed

PS

Been there and done that one, Al! Which is why I'm tryin' to do it right this time!! 8>)

Ed
A good marketer can get a lot of work, but a good performer will get repeat work.

Good Luck

It's hard to say honestly there is no straight answer all depends on what type of magic you do - that's why I love doing close up magic (I counted that my entire show aka props is $35 in hard costs) and I made me well over 100K in the last 7 or 8 years... 75-80%. if you do close up in a restaurant it could be 90-95% i.e. no marketing costs, just travel, possible replacement of a new deck - I can handle that...

Get into big illusions and you can be sure your profits will go down (most likely) - bigger gross but percentage wise you will go down. in the end it's all about the bottom line... risks/benefits play ratio play role here too. just my 2 cents...

I am always thinking about the points made by individuals made in this discusion. I am heading into my 14th year as an entertainer. 68% of my entertainment work is as a a stand-up magician and close-up artist. I am at the point where I think, "you know, I really don't have to spend much. My over head costs are low, and they can continue like this for years to come. I have a lot of control over my profit margins."

I wish I knew this info when I first started. I guess we call this experience. Something that we can not replace.