By % profit, I mean after all your staff/server/internet/whatever costs are made. What is the % that you or your company has left?

[edit] - This poll is intended more for the providers doing more than $250k/yr in volume etc. Not really for resellers...

Profit: Total Revenue-Total Costs (to clear up any questions)

ahh i was gonna say on a per server basis.
never mind

can you not add polls any higher than 50% ? :)

Originally posted by UH-Matt
can you not add polls any higher than 50% ? :)
I was just adding realistic figures. I was mainly thinking about larger hosting providers with 2 or more staff and turnovers of $250k/yr etc. Not looking at the resellers etc. Should have made that more clear in the original question. Oh well...:o

i could still do with a larger than 50% vote.

(p.s. we have more than 2 staff and are not resellers)

Originally posted by UH-Matt
i could still do with a larger than 50% vote.

(p.s. we have more than 2 staff and are not resellers)
Good for you then. :):agree:

We run at 31.67%, according to the spreadsheet. Just curious as to what other hosts operate on etc. There are many variables here - server population techniques, plan prices, staff prices, server prices etc. Just curious...:)

On a serious note I think our final margin is probably a little lower than yours ... but i was trying to create some jelously in the eyes of lurkers.. just for a few minutes.

I think i might actually try and work a figure out tonight - good thread subject!

*awaits UH-Matt's profit figure(s)*

:rolleyes:

top 10 ways to increase your margin:

1. overbill and double-bill your clients
2. cut down on staff salaries by firing your mom - you can do without a server administrator
3. move all your servers to fdc

anyone got anything else to add? [tongue firmly in cheek]

anyone got anything else to add? [tongue firmly in cheek]

Chargeback on your server bills...or charge your customers cards for it.

Bob,
I doubt that you would find many providers here doing 20K/month in volume. I can only think of a 10-15 of them on here. So I think that your poll would not be accurate, because you will have people answer it who don't qualify under your terms.

-Steven

I can only think of a 10-15 of them on here.

... And they would be? :stickout:

Originally posted by progex


... And they would be? :stickout:
It's not hard to do 250k in monthly business, especially if you offer multiple solutions.

Bob, is this just for shared hosting or the whole enchilada? Our consumer hosting is only a couple years old and doesn't bring in the earnings like managed solutions do.

-Matt

Not hard to 250k a mnth???!!!
Bob said a yr. But even at a year.. WOW.


I don't think there's really anymore than 2-4 hosts here that can pull that cash bob.

Originally posted by UH-Matt
can you not add polls any higher than 50% ? :)

I was going to call bulls**t on this, but then I read your post further down.

Also, I think you beat SWR to 1500 post. You did it in less then three months!

Originally posted by RackNine

It's not hard to do 250k in monthly business, especially if you offer multiple solutions.

Bob, is this just for shared hosting or the whole enchilada? Our consumer hosting is only a couple years old and doesn't bring in the earnings like managed solutions do.

-Matt

Are you saying Racknine does $250,000/mo ??? I hope not. ;)

Originally posted by Aussie Bob
By % profit, I mean after all your staff/server/internet/whatever costs are made. What is the % that you or your company has left?

[edit] - This poll is intended more for the providers doing more than $250k/yr in volume etc. Not really for resellers...

Net? Gross? profit margin? :)

If you are saying 'Profit' = Total Revenue-Total Costs as in what you turn over on a tax return, then if you get someone doing over $250,000/yr making that 40 - 50%, they are full of crap. Either that or they need their books re-evaluated.

You will find that most the time, no one nows what any accounting terms mean. So the make up stuff. Second, as companies grow, their margins all seem to equal out. Another words, they tend to get close together if they are in the same industry. Could you imagine a host making 1 Million/yr with 30% profit and another doing the same business at 5%? How could one be so far from the other when they basically do the same thing?

Originally posted by UmBillyCord
Net? Gross? profit margin? :)

If you are saying 'Profit' = Total Revenue-Total Costs as in what you turn over on a tax return, then if you get someone doing over $250,000/yr making that 40 - 50%, they are full of crap. Either that or they need their books re-evaluated.

You will find that most the time, no one nows what any accounting terms mean. So the make up stuff. Second, as companies grow, their margins all seem to equal out. Another words, they tend to get close together if they are in the same industry. Could you imagine a host making 1 Million/yr with 30% profit and another doing the same business at 5%? How could one be so far from the other when they basically do the same thing?
Yep, tonnes of differring variables and different accounting practices and how you're setup as a company, individual etc.

We do about $20k per month. At the end of the month - after paying all our bills and staff's paychecks and my husband and my salary....we just about break even.

...and, for tax purposes, that's EXACTLY the way I want it! :D

Seriously, anyone doing over $100,000 per year is in the 28% tax bracket and BETTER have a whole bunch of tax write-offs.

--Tina

Originally posted by AffordableHost
We do about $20k per month. At the end of the month - after paying all our bills and staff's paychecks and my husband and my salary....we just about break even.

...and, for tax purposes, that's EXACTLY the way I want it! :D
You still have the tax payable on your salary(s) though.
Seriously, anyone doing over $100,000 per year is in the 28% tax bracket and BETTER have a whole bunch of tax write-offs.
Hah! Maybe in a country that has a fair tax system. In Australia, you'd be doing well over 48% in taxes with that kind of taxable income [I think]. We're one of the most overtaxed nations on earth. :angry: :rolleyes:

Originally posted by Aussie Bob

You still have the tax payable on your salary(s) though.




Yeah, but the business doesn't. Plus, with 3 kids and creative accounting (all legal!) - its alot less taxes at the end of the year. This year, we may even get some back. :D

--Tina

Originally posted by AffordableHost
Yeah, but the business doesn't. Plus, with 3 kids and creative accounting (all legal!) - its alot less taxes at the end of the year. This year, we may even get some back. :D
:D:agree:

I started hosting about 3 months ago. So far profit is negative :D My business plan for the first year shows 54% gross profit margin and 40% pre-tax net profit margin. Well, I don't know about that, but I would like to think that's where I'll be in another 9 months. Let's see :) That's with zero staff - just one slave (me).

Approx. 50% pre-tax gross profit margin from game server hosting all going to company owners (4, not equal share) according to figures from 3 dozen steady customers over 2 months. Not quite $250k/yr but we're 1/10th there.

Originally posted by UmBillyCord


Are you saying Racknine does $250,000/mo ??? I hope not. ;)
Hah, if we were doing USD$250k per month in this field I'd hire someone to do my job, create a limited holding company, and start another business :)

-Matt

I think the majority of people on WHT are extremely small (myself included at the moment). Just read the posts carefully...

This market is too flooded... resellers reselling to resellers who resell to other resellers! Get it?

Anyone making 40% + wants to look at ways of minimising it so they don't get taxed to death on it. We break even, but we do it for a reason :) We invest about 50% of our turnover into new equipment etc. If we break even and we've all been paid then I'm happy.

i think less than %200 will make the life of company shorter .. there are more than support/server fees .. there are stress and hard work just to have good growth ratio.

I'd like to know how anybody can legally do 200% without using one of the methods mentioned above :)...

Since I assume you meant 20%... how do you figure less then 20% is going to make the life of a company shorter? Larger corporate companies work (and grow) with profit margins less then 5%.

Sure 30% profit sounds great in theory, but guess how much of that is taken away by the tax man :). If I ever had that much toward the end of the year I'd probably do the exact same thing Karl does... invest in equipment, whether I need it or not :D.

Yeah .... although my company is just officially launching January 1st, I still think about how many hosts fail ... and that's why I have spent so much time on my business plan. The profit margin is there, if you work for it.

I plan to put a lot of the money that the company makes into new servers, better UPS's, and other such hardware, therefore increasing the strength of the service I provide.

We invest about 50% of our turnover into new equipment etc.

This is a common misconception. You are getting hit by the tax man on server purchases. They are an asset. Taxable. Even after the standard deduction (probably 5 year depreciation?), you get hit on those servers. So, if you do not really need the equipement, don't buy it to think you are "balancing your books".

how about leasing the equipment? afaik that would classify as an expenditure. you could also set up a leasing company offshore to lease the equipment from if you want to be a really bad boy =]

We buy equipment not just for the sole purpose of reducing our profits, but because we belive in constant improvement of our infrastructure, it just has the benefit that we can claim the depreciation, which incidentally is more than 5% of server equipment over a year.

Originally posted by UmBillyCord
This is a common misconception. You are getting hit by the tax man on server purchases. They are an asset. Taxable. Even after the standard deduction (probably 5 year depreciation?), you get hit on those servers. So, if you do not really need the equipement, don't buy it to think you are "balancing your books".
All that is dependant on your country's tax laws etc.

comphosting:

no sir, i mean %200, the ideal profit for hosting business is %100-%200 if you run it NOT a side business.

if you sepnt $5000 monthly on servers, marketing, .... then you have to make $10,000-$15,000 monthly.

if you spend $5000/mo just to make $6000 sales .. then you have to find another business.

by the way .. i have very good friend own big and known hosting business in NJ, when i thought to launch this business he said less than %100 profit means less than 1 year and you will gave up!

Originally posted by Unixhoster
if you sepnt $5000 monthly on servers, marketing, .... then you have to make $10,000-$15,000 monthly.
What about all your other costs? Staffing, offices, phones, accounting fees, legal fees etc. Sure, you spend 5k on your servers and make 15k revenue, but that's an awful long way from 10k nett profit. :)

33%, >>250k/yr
:)

- John C.

I know this person does
$350k yearly revenue (increasing)
66% net profit

nice huh? :)

mrbling > I think that "person" is lieing to you. I'd be hardpressed to believe anyone with that kind of revenue is pushing out 66% net profit.

unixhoster > Once again, unless the company is spending $15.00/month and making $30.00 there is NO way they are going to make 200% profit after expenses. In fact most stores don't even markup their product 200%.

Bob is exactly right, it's not as if you can run 25 servers all by yourself, you HAVE to include every expense, even your business telephone line.

Aussie Bob made a very valid point here
All things like Rent of office, Salaries, Utility bills like electricity, telephone , cost of internet ( for people like us who do not have own datacentre but need connectivity for office, homes to check mails and give support in non office hours) , cost of machines, training expenses, Chartered accountants and legal charges, taxation fees all have to be considered if you really want to make business viable. the list can go on and on

After deducting all this even if the net profit is in range of 20-30% it is good.

It is crazy to be calculating a profit % on basic cost of servers.

Regards,

Aussie Bob: i never said servers only .. in fact servers have small slice of total costs.

but please do not tell me that all hosts have special staff for support and other for sales and other for accounting ..

most of costs goto for support staff then marketing then servers .. 1 person can handle sales, billing and accounting work.

i think!

1 person can't handle sales billing and accounting for a company neting $25,000/month in revenue, unless you are charging an absorbant amount of money for your services.

Where is your facts, what are you backing this up with? Is your company neting $300,000/year and $150,000 of that is profit? From the sounds of things you're either pulling numbers out of your rear end, or your company is small and your doing 200%.

You show me a company in this industry that nets that kind of revenue and does 200% and I'll call you a liar until I see their books.

Unixhoster: you're talking about markup percentage, not gross profit margins.

As stated earlier, Gross Profit is Total Revenues (less refunds) less Cost of Goods Sold (servers, reseller accounts, etc).

Net profit is Gross Profit less General Overhead (i.e. employees, office expenses, rent, depreciation, etc).

BTW, the person who says that you pay taxes on Assets, this is only partially correct, you may pay Property Taxes, but you do not pay them on Fixed Assets, Inventory yes, but not Fixed Assets. If your accountant is footing those as Inventory, you need to seek a new accountant that understands the industry. You do get a deduction, either Section 179 (depreciation) or 5 year straight line. Personally, I know how quickly I go through servers, so I don't tend to book any of my servers for more than a year. They won't be around that long and have $0 salvage value (old parts are 1) reused in other servers, 2) donated to charity).

Trust me, as an tax accountant, bookkeeper and web host, I have to explain this to people *way* more often than you would think. < / Accounting 101 > ;)

Cya,
Cloak