This week I’m demystifying what a 6-figure income looks like in our industry. Over the last couple days I’ve done the math to dig deep when someone says that they can “show” me how to make a 6-figure income. (You’ll want to revisit our posts from Part 1 and Part 2 if you are just catching up.)
And, what did we learn? We learned that it is REAL HARD WORK. There is no quick way around this. But there is fine line between working hard and working yourself into the grave. And, depending on how your own business numbers work out in the equations I presented this week, you’re either looking at some achievable sales targets or not.
Today, I’m going to share some ways that you can still achieve a healthy income without killing yourself. Also, I realize that many of you aren’t trying to achieve 6-figures. I want to keep with this example, because this is what I keep being promised by lots of coaches and gurus out there. You find what income level feels good for you.
SOLUTION #1: INCREASE YOUR PROFIT MARGIN
To increase your profit margin you will raise your prices and cut your costs of services rendered (cost of labor, cost of materials).
This was the example we were playing with yesterday:
Income from 1 wedding: $4000
Cost of Services from 1 wedding: $300
Profit Margin from 1 wedding: $3700.
If we raised prices by 20% and cut out one assistant the profit margin would look like this:
Income from 1 wedding: $4800
Cost of Services from 1 wedding: $150
Profit Margin from 1 wedding: $4650
In yesterday’s example, we were aiming to achieve $130,000 annual profit.
$130,000 / $4650 = 27.95 weddings! (let’s round up to 28)
28 weddings x $4800 price = $134,400 in sales
Which results in:
Costs of Services Rendered – $4200 (cost of labor: 1 assistants at $150/each for 28 events)
Profit Margin $130,200 (see note)
Expenses – $30,000
Net Income $100,200 (BOTTOM LINE)
This is why pricing is CRITICAL to the financial viability of your business! By increasing your price by 20% you go from doing 36 events to 28 events! Even if your goal isn’t a 6-figure income, you can save yourself from insanity. I’ll spare you the math, but if your goal is $50k take-home income, raising your prices by 20% in this example shifts you from doing 22 weddings to 17 weddings. It’s still hard work, but it’s closer to *normal*.
PRICING is sooooo important to building a sustainable business! (There are a million other reasons why pricing matters, but this is the biggest one.)
SOLUTION #2: CUT YOUR EXPENSES
Naturally, if you cut your expenses, your income will increase. You know this. Some of the biggest offenders that I see are the following:
- paying for ads that aren’t bringing any return on the investment
- doing wedding shows that don’t result in any sales
- dinners and lunches and coffees
Keep in mind, these are REALLY important. Just make sure they aren’t eating into your bottom line too much and that they’re bring you the results you expect.
ALSO – interestingly enough – cutting expenses doesn’t have as significant of an impact on your bottom line as our first solution, increasing your profit margin. Your ability to boost your profit margin (increase your pricing) is going to have a much larger impact on how much you earn than solely cutting your expenses. Do the math and you’ll see that I’m right.
SOLUTION #3: ADD OTHER REVENUE STREAMS
And… I’m going to break right here…
This is a series of blog posts all unto itself. I want to give you a chance to let the numbers settle in. Please come back August 30th where I’ll talk about adding revenue streams to your business.
For this series, I’d LOVE for you to share with me! If you have some fun ideas you’ve seen out there for ways to expand your income, please email me at michelle-at-sageweddingpros-dot-com and I’ll share your tip in our series and credit you and your business.
Please come back tomorrow where we’ll be learning from and Industry Insider. Next week we have a fun series where the masters in our field share with us how they work to perfect their craft.