Costs of doing Business

[Maest]

Your own costs...

What are your expenses of doing your part of show biz?

I am asking mostly the ones among you who are working as a self sustained player who is working with the equipment they own. Weather you are a full time AC or DIT who “rents” his/her own kit to “himself” for the job you are hired (how much it costs to maintained that kit annually…?) or if you are wedding/event/commercial videographer who does job with his/her own everything (bodies, lenses, lights, backdrops..).

If you are uncomfortable to speak the concrete numbers, you can talk percentage of your personal (household) income, or similar (how many beer cans or loafs of bread you could buy with it?).

You can or don’t have to include the IRS style (literature, gas, vehicle maintenance) but I would like if we could stay mostly in the realm of tools!
You could include medical expenses and treatments (shrink or other) but that could've been a bit off topic...

If you are high profile DP (Hollywood movies, Cable shows, Prime Time Advertising) who gets all his tools and supplies provided by production, it would be also interesting to hear what your expenses of “doing business” are?


Thanks!

(I hope this is a right place to post a topic…if not, admins could fix that, yes? Thanks!)

 

[Bassman2003]

Probably in the wrong forum, but that will sort itself out. I think costs in this day and age are directly related to Gear Acquisition Syndrome. I say this because we are at a point that many do not need to upgrade cameras/gear to make a living. Back in the SD days, the dawn of higher definition and 16/9 really put the pressure on spending each year. I know I went through a lot of cameras. Now, I have owned a lot of my kit for 4+ years. I do not spend as big as yesteryear as the game has tightend up a bit.

In the past few years, I have really tried to lower my spending and keep costs down. So my expenses outside of consumables, printing etc... are limited to maybe a camera like a GH5 or a gimbal upgrade. To answer your question - a lot lower than they used to be! On purpose.

 

[Run&Gun]

Probably in the wrong forum, but that will sort itself out. I think costs in this day and age are directly related to Gear Acquisition Syndrome. I say this because we are at a point that many do not need to upgrade cameras/gear to make a living. Back in the SD days, the dawn of higher definition and 16/9 really put the pressure on spending each year. I know I went through a lot of cameras. Now, I have owned a lot of my kit for 4+ years. I do not spend as big as yesteryear as the game has tightend up a bit.

In the past few years, I have really tried to lower my spending and keep costs down. So my expenses outside of consumables, printing etc... are limited to maybe a camera like a GH5 or a gimbal upgrade. To answer your question - a lot lower than they used to be! On purpose.

I actually find it the opposite. I did spend a lot going from SD to HD, but that's just because the gear was expensive then, and I was adding a lot of items on top of that, but tech wasn't advancing quickly, I was just adding more "stuff". Now technology changes and advances almost weekly and even things that used to be bedrock items like lights and audio, improve and change yearly. Now if you buy lights, they may be "dinosaurs" in a year. I've probably bought at least the same amount of cameras, lenses and lights in the last three years than I did in the previous 10. And a decent amount of audio, too.

 

[Guest]

It is crazy to see lenses changing.

Nothing is really static anymore.

Exciting, but also challenging.

 

[indiawilds]

I produce as well as freelance. Own cameras, audio and support equipment etc for our low budget productions. The lenses bit came easy as I have been photographing stills for couple of decades. Still looking at the way cinema lenses (formats) are changing, I prefer not to invest in those unless I can recoup the money immediately. Filming is my primary source of earning a living so I have to be careful about gear acquisition syndrome. Proud to say after being singed several times I have got this GAS (Gear Acquisition Syndrome) under control for the last 3 years.

The cost of doing business has increased due to higher taxes and higher fuel prices here in India. My SUV is now 13 yrs old. Need to buy one next year. So that is one pain I need to bear. Rest all under control.

I have a NO DEBT policy. Credit cards are only used as convenience and always paid for within the billing date. If my savings from my business can't afford a piece of gear than I don't buy. If I am asked to shoot with some equipment which I don't have and there is adequate budget given by the client then I hire and shoot. Else, I refuse.

My business has to pay for any investments in equipment, food on the table and other costs of living as well as for investing in own longterm documentaries that I am working on. And once in a while couple of days in a highend 5 star wildlife resort to relax.

Scaling up a business comes with costs. It is important to know when and how to scale up. Easy to blow up. In my corporate life I have been part of failed startups as well as worked in many MNCs in senior positions. So am a bit careful about my own venture. Have many people offering to invest in my company and help me scale up but I have refused. Prefer to go slow and steady. Hmmm... I digress...I am not sure if my answer is of any help.

 

[lightstand]

Obviously there are costs besides the day to day costs such as business liability insurance but the one cost I feel that always gets neglected is retirement. Most any full time position you'll get a 401k but as an independent contractor its up to us to place that in our CODB in figuring out our rate. A long time ago when I figured out my CODB I believe the number was above $900 of course I'm single without kids and live rather frugal

 

[Josh Bass]

Not much. I dont have an office, am a rather low level freelancer who teleprompts, grips, edits, occasionally shoots. Have a website that costs money, everything else is as needed upgrades.

 

[filmguy123]

Business Insurance / Liability (Gear, Physical Damages)
PLI / Medial Insurance (Legal Fees, Getting Sued, Copyright Issues, Privacy Issues)
Health Insurance + Health Bills (since private non group health insurance sucks)
Extra % of tax that employer doesn't cover (~7% self employment) - or costs for S-Corp Accounting and complexity there
Tax Accountant / Bookkeepers, or the time to do yourself
Lawyer (contracts, general questions, etc.) - should probably set aside a little stash for this annual and just count on line iteming it
LLC Annual Renewal Fee
Web Hosting (whatever your choice for this)
Digital Storage (DropBox, Google Drive, iCloud, what have you)
Vimeo Pro or Plus (depending on your needs)
Appropriate Office Space set aside - even just if at home - factor in a healthy work environment in terms of lighting, posture, space, electricity, internet, and seperation from personal
Vehicle Use - not just miles, but lugging gear in/out of a vehicle and the other tolls this may take
Business Cards, Logo Design, Advertising, etc.
Paying any sub contractors

Depending on your scenario, this could easily be north of $10,000/year - but it depends on a lot... a *Lot* of variables there...

Then, GEAR. New gear purchases, old gear repairs and fixes, hard drives, plug-ins, rentals, whatever + the extra you spend due to a shoot such as gas/food/whatever which you aren't billing for.

Finally, perhaps the largest cost: TIME and STRESS. You aren't just clocking out at 5. You are always on the hunt for the next gig, the unknown future, and maintaining more responsibilities on the business front than those who have an employer package with it all laid out.

 

[morgan_moore]

Hard Drives

It is IMO important to split between 'fixed costs' (insurance, gear renew and repair) and 'variable' costs

Hard drives, fuel etc - stuff you only burn when actually shooting should be making a profit!

You might put $100 data storage on every job yey only use $50 of space, $200 of miles when you used $70 of fuel (and some tyre rubber!)

Of course dont imply that you are liable for data security!

 

[groveChuck]

the one cost I feel that always gets neglected is retirement. Most any full time position you'll get a 401k but as an independent contractor its up to us to place that in our CODB in figuring out our rate.

Agreed, and not discussed, (and for some, I fear, taken care of) nearly enough.

As a small business, it's a cost, but also a benefit, same as if an employer was offering a 401k
(I still haven't figured out how to give myself paid vacation).

I max out my IRA every year (for our English and Northern Irish friends, that's Individual Retirement Account), also invest in a taxable account, with recent market gyrations being quite stressful, as I hope to retire within 5 years. But as they say, we shall see.

And if I were young, I'd put my money in an IRA, not unnecessary gear. Invest early and often- time is your best asset.

As far as GA Syndrome, i'm still rockin' the C100.

(this post dedicated to retired user Nedcam, who rarely visits now that he's retired. Hey Ned- wake up!!!)

 

[David W. Jones]

Having a retirement account setup is a must have.

Put the max into it every year.

It lowers your year end taxable income, and the money will be needed when you reach retirement age.

I have financial planners, and can tell you it's honestly an insane amount you need to have put back for retirement.

Unless you don't mind eating dog food when you are 70.

 

[puredrifting]

Having a retirement account setup is a must have.

Put the max into it every year.

It lowers your year end taxable income, and the money will be needed when you reach retirement age.

I have financial planners, and can tell you it's honestly an insane amount you need to have put back for retirement.

Unless you don't mind eating dog food when you are 70.

I'm 55 and like many of us, I neglected to invest enough in my retirement fund., I have some but not nearly what I should have. In my mind, I see myself working until I die in one form or another and am working on some streams of passive income, I also own some real estate but my SEP and Roth IRAs and 401ks are woefully underfunded so probably the majority of my income for the next decade will go to doing just what David suggests. I wish that I would have been doing this when I was younger but GAS, vacations and fun was where I spent a lot of money. Dumb move. It's that old, "If I had it to do over thing".

Someone my age right now, realistically, living in California, should have at least a million to million and a half dollars in their retirement fun, plus their mortages should be paid off. I have neither. I will have a small stipend from Social Security but now that the government has termed SS as "Old-Age, Survivors, and Disability Insurance (OASDI)", I am fairly sure that this money will be taken away by the Feds in one way (taxes, new tax rules) or another so counting on that as anything is not wise. As many other wise voices have discussed here, pay yourself first. Always. Period. Seeing people 70+ year old working at McDonalds and WalMart is just sad. Don't let yourself be one of them.

 

[filmguy123]

I really appreciate reading the wisdom here. I have NOT been saving for retirement as I should. It's been a balancing act with the hustle, the GAS - even when justified to "build a small agency / platform", and my own desires for a comfortable space to live, hobbies, fun, etc.

As I near my mid 30s, I know a mindset shift is in order. I am hoping the gear investments made will build a platform to allow me to simply work and save but I know that's as much of an active choice (there is ALWAYS something more) as it is just suddenly "arriving" at a place of "enough".

I've lost a good deal of the time value of money over the last 10 years, and I am hoping that I can reclaim that with better choices going forward and leverage the money and experiences gained thus far to do so well.

 

[filmguy123]

And just a little side note, one thing that is difficult when pulling numbers through as a small business is understanding the insane value of write-offs (although I do understand that this applies to retirement savings as well!!). ~40% ballpark discount on all gear makes everything feel cheaper. And that's 40% of the invoiced price - with a prime store card or BH rewards or another credit card, you can often get 4%-5% back as a statement credit AFTER you write-off the full invoiced amount. So why not snag the new XYZ, it's *almost* half-off.

Again, I know this applies to retirement too so let me reverse that mental paradigm:

Everything that you don't put into retirement, or a business write-off, is actually MUCH more expensive than you realize. If you keep $10,000 cash for yourself (say for a vacation, or to redo your home theater setup), that's actually costing you about 40% more than it would to save it for retirement or invest in your business. It makes it a $14,000 expenditure instead of $10k, from that lens. That $100 dinner and drinks? It was actually $140 gross... $140 that could have gone into gear or retirement.

Obviously you need to be at a certain healthy salary baseline to think of money in terms of longer term management VS allocated monthly spending, but once at a reasonable baseline, that 40% figure really brings on the shame for not investing and preserving as much of it as possible. A 40% tax on anything you do in excess of your reasonable salary and living expenses (vacations, toys, hobbies, etc.) is a powerful incentive to think twice before not using the money for investment purposes. ESPECIALLY when you then factor in the additional ROI over time.

 

[High1ander]

And just a little side note, one thing that is difficult when pulling numbers through as a small business is understanding the insane value of write-offs (although I do understand that this applies to retirement savings as well!!). ~40% ballpark discount on all gear makes everything feel cheaper. And that's 40% of the invoiced price - with a prime store card or BH rewards or another credit card, you can often get 4%-5% back as a statement credit AFTER you write-off the full invoiced amount. So why not snag the new XYZ, it's *almost* half-off.

Again, I know this applies to retirement too so let me reverse that mental paradigm:

Everything that you don't put into retirement, or a business write-off, is actually MUCH more expensive than you realize. If you keep $10,000 cash for yourself (say for a vacation, or to redo your home theater setup), that's actually costing you about 40% more than it would to save it for retirement or invest in your business. It makes it a $14,000 expenditure instead of $10k, from that lens. That $100 dinner and drinks? It was actually $140 gross... $140 that could have gone into gear or retirement.

Obviously you need to be at a certain healthy salary baseline to think of money in terms of longer term management VS allocated monthly spending, but once at a reasonable baseline, that 40% figure really brings on the shame for not investing and preserving as much of it as possible. A 40% tax on anything you do in excess of your reasonable salary and living expenses (vacations, toys, hobbies, etc.) is a powerful incentive to think twice before not using the money for investment purposes. ESPECIALLY when you then factor in the additional ROI over time.

That might be the case in the US, but for example here in Sweden, I can either get a laptop for my company worth 2200$ or if I were to give myself salary and buy one it would only be worth 1000$. We have 25% sales tax on gear and most services (our jobs are 25%, taxis and hotels about 6-12%, food 3%), we have about 30% "employment fee" (basically a "hidden tax" that includes retirement, and other welfare-stuff which the employer pays before you see your salary) and then the regular tax of about 30%. I.e. that drink and food that cost 100$, it depleted 220$ from your company. Good thing is that my work and my hobby converge so I put most of my money back into my company in form of gear...

 

[puredrifting]

...so I put most of my money back into my company in form of gear...

That's what I did for years and now regret, although I am in the U.S. with a different social and tax system. If I would have put those millions of dollars over the course of my career into retirement investments, I would be in SUCH a better financial position, even with paying taxes on a lot of it. At least I bought real estate, I own three houses so that's worth something.

 

[groveChuck]

If you keep $10,000 cash for yourself (say for a vacation, or to redo your home theater setup)

Just remember, half of that $10,000 (plus $500 more) is a 1 year contribution to an IRA.
I know you know, but positive reinforcement and all that.

Another blog area I spend a little time in (though I'm learning too late to retire early, I can retire at 65, hopefully) is Early Retirement.
The math goes this way- if you can live on half of whatever you earn (whether $50,000 of $100,000, or $10,000 of $20,000) and invest the rest in low fee index funds or ETFs, you can... retire at 30.
It's called FIRE- Financial Independence, Retire Early.

It takes discipline and frugality, but many people do it. It seems engineers make up a large portion of early retirees, possibly because they love crunching numbers. A flight attendant blogs about retiring at 35. Teachers do it. Oh, and no Starbucks.

One powerful piece of math is the Power of Compounding (the most powerful force in the universe, Einstein supposedly said).

Take a weekly (discretionary expense) vs investing it with an average 7% yearly rate of return.
Weekly expense x 752 = 10 yr expense
For a monthly expense (multiple streaming services or whatever), multiply by 173

Starbucks $5/day x 5 days= $25/wk x 752= $18,800
In 10 years, your Starbucks habit could have earned you $18,800. Seriously.
This is real- Google Rule of 752

One of my faves is MrMoneyMustache.com His on-screen alter ego is in your face, profane, says "people need a punch in the face", talks about "complainy pants" who whine that it's not possible, etc. He says "Don't buy that shiny new iPad you want when you've got a perfectly good laptop", "Ride a bike", "When you drive, drive used", and "Cook and eat at home".

It takes serious frugality, but MMM, as he's known, did it. It certainly helps that he was a software engineer (and married one, too), makes money writing his blog, and came out of retirement to practice his hobby, carpentry.

Even if not retiring, there's wisdom in the live lean, invest early life (he eats well and travels, just for the record).

But he definitely practices a Stoic philosophy, which is the antithesis of GAS.

Just as you can talk yourself into "needing" to buy something, you can talk yourself out of buying it.

Rant/Sermon over...

 

[Paul F]

I will have a small stipend from Social Security but now that the government has termed SS as "Old-Age, Survivors, and Disability Insurance (OASDI)", I am fairly sure that this money will be taken away by the Feds in one way (taxes, new tax rules) or another so counting on that as anything is not wise.

Nerd notes: The Social Security Act formed Old Age & Survivors Insurance (OASI) and an OASI fund was set up in 1939. The D for disability was added in 1959, but it's easier to say Social Security. When it was passed in 1935, it really was for old age. Back then, the average lifespan of a man was 59. Well over half the men died before entitlement. Had Congress corrected for lifespan over the years, benefits would now be paid at about age 84. Regarding it going bankrupt, indeed, the charts on the SS website show that the funds dry up in a rapid decline in the late 2020's. The fixes are simple and reasonably painless, but no legislator dare be the one to put a bill forward to fix it. SS had a fiscal crisis in the 70's that was resolved through legislation.

Saving - I started saving from day one. I always put 10% away and took 401k benefits. One key thing my wife and I had in common was to save first and pay cash for everything including our cars. I've only owned 3 cars in 40 years; all new. As soon as we bought one, we started saving for the next. Not being in debt (except the mortgage) let us sleep better when jobs were on the line. We lived a full life, but never spent extravagantly. I recently retired. The one message I got from others that were already retired was that it was costing them a lot less than they anticipated. That has been my experience. We are living large on about 60% of what I expected to need. It really has surprised me. It makes my wife and I wonder where all the money went when I was working.

How to invest - Don't listen to anyone for investment advice. Example - During the 2008 crash when the DOW went down from 12,000 to 9,000, a noted TV investment personality on the Today show advised investors to hold their positions. It was clear that the market would go lower. Later, when the DOW was at about 6,000, he was asked again what joe investor should do and he said to sell. Well, of course, the market recovered and went up from their. His advice was exactly the opposite of what people should have done. As some of you older folks realize, youth is wasted on the young. If only you knew what you know today or if only you listened to old people. How ignorant I was when young. It took me until now to realize how simple investing is. It's just so irritating to obtain wisdom when you need it least. Or perhaps you become delusional that you have wisdom when you are older.

Don't Trust Anyone - If you watch American Greed you know that any investment or investment advisor may be a con. Even the trusted family investment advisor could be running a ponzi scheme. The best advice is diversify, diversify, diversify (remember, don't listen to anyone, including me).

 

[Bassman2003]

This is why I took a good look at expenses about three years ago. I noticed that tech advances in our space are outpacing the consumer. 4k? Many would be happy with a 4k TV hooked up over coaxial... It does not pay to keep throwing money at gear when rates are decreasing. I left the thinking as posted above of throwing everything back in the business. Sad to say but the value is not there like it once was.

Save - yes. Frugal - Good. Invest - yes. Expenses are best kept to revenue generating circumstances. "Build it and they will come" is much more difficult to justify for me anymore.

 

[combatentropy]

I started saving from day one.
I always put 10% away
and took 401k benefits.
pay cash for everything
only owned 3 cars in 40 years
all new

One of these is not like the other

You sound disciplined, but throughout my life it has been drilled into me that you should buy cars used. A 5-year-old car has lost half its price.