On this blog I publish my passive income reports every three months. I’d found great value and inspiration from other bloggers who publish earnings online – Pat Flynn springs to mind as the best example – so I thought I’d do something similar. So on 12th July 2012, I wrote my first passive income report. I’d earned a massive $3331.07 in the first six months of that year. That was a big deal to me at the time.
However, you could argue that this is passive income revenue. I haven’t factored in the costs so people aren’t seeing the whole picture. Well, all that’s about to change.
I have to say that I always kept my expenses down to a minimum. I never spent a penny on advertising (OK maybe $50 on Facebook). Also, some of my expenditure is necessary for my active business of doing graphic and web design for clients (for example, hosting). So the passive “income” figures have been mostly profit.
A lot of my expenses are recurring. Here they are.
By far my biggest expense is outsourcing. I’ve been outsourcing using oDesk and Elance for years. Here are some of the tasks I outsource (both for the passive info-product business and the active graphic design business):
- Adobe InDesign, Illustrator and Photoshop design work (for client work)
- Video editing in ScreenFlow (for my video courses)
- Creation of Kindle Mobi files (for my e-books)
- Proof reading / Copy editing (for my e-books)
- Web development (HTML, CSS, PHP, JS) (for my site and client work)
The ability to outsource is a skill just like anything else and I’ve definitely learned the hard way. I’ve had bad experiences with inappropriate freelancers – at the time I thought it was their fault but now I realise it was my inability to explain the job or choose the right candidate.
I’m better at this type of outsourcing now. However, I have recently sourced a Virtual Assistant from Chris Ducker‘s Virtual Staff Finder. This marks a new chapter in my business as I now have a full-time employee. I’ll write more as I learn more about working with a permanent VA.
So, going forward, the minimum I’ll spend on outsourcing will be $800/month. The figure will rise even higher during certain months, for example, when I’m outsourcing a lot of video editing.
Warning: there are affiliate links throughout this article. If you make a purchase through any of these links then I’ll receive a commission. If you’re unhappy with that, please google the product and I won’t get paid. 🙂
Hosting is always a sticking point for entrepreneurs and bloggers. There’s loads to choose from and a baffling array of options and prices. When you reach a certain amount of traffic you should start to spend more on hosting so that your site loads quickly for everyone.
I have a VPS at a UK host Vidahost. I pay $100/month for this.
My second biggest monthly expense is with Aweber who are the company I use to collect email addresses and send out bulk mailouts. I will soon go over the 10,000 subscriber barrier, when I do I’ll have to pay $140/month but at the moment I’m paying $60/month for email marketing.
As I recently went “location independent” and can run my online business from anywhere, I have a Dropbox Pro account which gives me 1TB backed-up on the cloud. It also enables me to share large files with freelancers. Dropbox Pro costs £7.99/month or £79/year. I purchased the yearly option which means I spend $10/month on cloud storage.
Regular readers will remember that I’m the world’s worst podcaster. I started a podcast in 2012 and finished a nine months later in 2013 having recorded less than a dozen episodes. I’m not sure how, when or if I’ll start up again but in the meantime, I still have to pay Libsyn $10/month to host the audio files.
My membership site did cost a bit to set up and has some recurring costs: MemberMouse, the membership plug-in I use costs $20/month. I also had to purchase an SSL (Secure Sockets Layer) so I could take credit card payments this is an ongoing purchase at $5/month.
I always like to say that online business has an incredibly low barrier to entry. You can get started with a website for a few bucks a year. However, further down the line the odd premium plug-in here and the odd premium WordPress theme there (for example, Genesis themes, Sensei plug-in) – it soon adds up. Not to mention the latest new shiny object that’s going to make you a fortune!
I’ve always tried to NOT get caught up in the latest fad. I’m quite proud of myself that I’ve resisted getting LeadPages (so far).
However, I do tend to “splash out” when investing in myself. For example, I’m going to Chris Ducker’s Tropical Think Tank in May in Cebu, the Philippines. It’s a week long mastermind with speakers including Darren Rowse, Jon Lee Dumas & Kate Erickson, James Schramko, Dan Norris, Jason SurfrApp, Amy Schmittauer, Matthew Kimberley, Nick Unsworth and others.
The conference alone cost me $4,200 plus there will be travelling and other expenses. But, I couldn’t resist the opportunity to meet and spend time with people I really, really admire and respect. Plus it’s an excuse to visit another country in SE Asia.
What do you think of my decision to go to the Tropical Think Tank?
So, here’s the scary bit. How much do I pay on recurring expenses each month?
|What?||How much per month?|
|Outsourcing (oDesk, Elance and direct)||$800 (est.)|
|Email marketing (Aweber)||$60|
|Cloud storage (Dropbox)||$10|
|Video storage (Vimeo)||$10|
|Audio storage (Libsyn)||$10|
|Membership plug-in (MemberMouse)||$20|
That’s quite a lot. $13,500 a year. Of course, the VA that I’ve just hired has increased this figure a bit but, as I explained, I’ve always spent on outsourcing.
What do you think?
What do you think of my monthly outgoings now? Do I spend too much on hosting? Should I be spending more in order to grow my business? I’d love to hear your take in the comments.