Trying to figure prices and wondering if I am even close on some budgeting areas.

10% of expenses towards advertising
2% for a chamber of commerce membership (will be later on)
3% for business domain names
1% for modernbill support/a po box
70% for server expenses
1-2% for fraud prevention (fraudguardian/varilogix)

10% increase for any expenses I may have missed, and future increases

I know those percentages don't match out exactly but it will be changing anyway I am sure.


In addition I am figuring about $2 for support per client, without phone support. Also, 2.9%/$0.30 credit card/paypal fees, plus a $0.50 bank account fee per account right now.


**Do the numbers above look about right for budgeting expenses?

**In some industries it seems like there are fairly normal profit levels stores aim for, is there a certain profit % most decent hosts aim for that don't mass oversell their servers?

**Also, I know this can vary from 1 to 1,000,000; but on average about how many clients would you expect to get on the following systems?


Dual Xeon 2.8 GHZ
2GB Ram

Dual Xeon 3.2 GHZ
2GB Ram or 4GB Ram

Dual Opteron Dual Core 265
4GB Ram or 8GB Ram

You should consider paying yourself at least something if you're doing all this.

I believe your server expenses are too much, and consider putting more in advertsing.

k. server expenses is for 10 virtual private servers with 200-600 clients and backup space (or one or two dedicated servers). The percentage will be MUCH lower initially.

I was thinking of paying myself out of the extra/support employee categories especially in the beginning, that was another thing I wasn't sure on but I forgot to add into the original post.

Hard to say how many clients per server with those specs. For me it relies probably 65% on disk and partiiton setup. On some single P4 2.8 - 3.0 servers with 1G RAM I have ~520 clients on one. But another seems to be at it's peak before suffereing performance with just ~250. This is from personal experience.

You've forgotten some of the biggest expenses that can be incurred:

- Tax
- Staff costs (including yourself)
- Office

While you may not necessarily need #3 straight away, you should still put it into your business plan (you do have one right?) or you'll get a rude shock once you reach the limitations of your garage/bedroom/basement.

70% for server expenses seems too high. :erm: btw what percentage of profit you are expecting for yourself.

Yes the server expenses are rather high.

Just a little note for you, when companies "ration" expenses out, support decreases and the company burns to the ground.

I am taking $ figures and converting them to categories/% cause I thought it would be easier to show that way. My main staff category was the $2 for support/client but I realize it will probably be more than that.

70% is because I have a lot of fixed monthly expenses that stay the same no matter how many customers you have in the calculations and then figuring for longer term, but I know it is still high.

Also that 70% does NOT include the $2 per client for support, which I don't know if it is high, low, or what if you don't offer phone support.


What is an average 'target' profit percentage over all expenses?

Your server expenses are ridiculously high. Also, you want to figure around 10 - 20% of your income going for taxes.

--Tina

When I actually threw in support/staffing, etc. instead of figuring so much per client the percentages dropped to be more like this, again, estimate:
And it would be 10-20% of income after expenses correct (for taxes)?

3% merchant fees
2% fraud protection
10% advertising
45% support
5% bank account fees (worst case)
3% for business domain names
25% server expenses


The percentages are not fixed (and probably add up to more like 90%). Thinking about paying myself especially initially as a support employee unless that is the wrong way to figure it in.

And it would be 10-20% of income after expenses correct (for taxes)?




Only your tax accountant can tell you for sure. However, not ALL of your expenses are going to be deductable. So, figure 10 - 20% after ALLOWABLE expenses. Again, this is for initial rough estimate budgeting purposes only...talk to an accountant for true information.

--Tina

Yeah, I am going to be confirming everything with an accountant, it is also why I am adding the 10% increase over ALL expenses into the budget sheet to allow for things like taxes and things I miss.