Yeah, that was kind of my point: just working off what was told by Dirk, those are the best case scenarios. I know first hand the expense of having employees, having had to fire some. You’re right, not entirely accurate, and thanks for the elucidation.jochicago wrote: ↑Thu Jul 18, 2019 2:17 pmThat's not how business works. The cost of an employee is a lot more than their salary. It's office space, workstations, electricity and other services, insurances, taxes, benefits mandated by the law, etc. A worker can cost a business 3 times as much as their salary.perpetual3 wrote: ↑Thu Jul 18, 2019 2:06 pm I’ve read that Dirk claims 30,000 customers. And 30 employees.
If he can retain 1/3 of those on to the sub, that’s 1.5 mill a year @ $150 a sub. If he pays 30 employees, on average each employee makes about 50k.
In short, in your scenario, PA has to fire 20 people to survive at $50k salary. Also worth of note, software engineers don't average $50k salary, it can be quite a bit more. Glassdoor puts the starting salary at $71k, with an average of $103k.
The "NEW" Plugin Alliance?
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- KVRAF
- 2402 posts since 28 Sep, 2012
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- KVRian
- 1030 posts since 26 Feb, 2018
I didn't know about the 30k claimed customers, you brought up a good angle of discussion.perpetual3 wrote: ↑Thu Jul 18, 2019 3:00 pm Yeah, that was kind of my point: just working off what was told by Dirk, those are the best case scenarios.
As mentioned, that probably includes all the people that bought a $9 plugin once, so not all active customers that are ready for a long-term subscription.
Even in a best-case scenario, getting to 10k subscribers would be climbing Everest, and even that is not enough income to keep PA running on its own. There's no way they will stop selling plugins anytime soon. And to sell plugins they are going to need to keep up with the discounts and sales since that's the environment they created.
I think there's no immediate fear that people won't be able to buy plugins anymore. Perhaps the next concern is a potential WUP scheme on the horizon, which I think as a whole nearly all of us oppose.
- KVRAF
- 5948 posts since 8 Jul, 2009
From 300% to 200%. So this is negotiable. I've never seen a business with a 200-300% employee over-head. We must work in different industries. Even those in a couple other industries I know that are employers have confirmed the 20-40%, maybe 50% in extreme cases, of over-head. But no matter... just trying to provide a different validated reality.
Think about it: you are saying that a $50k employee costs the company an additional $50k-100k in over-head?? Sorry. Maybe if they are a company that is about to go out of business.
Perhaps you can provide some real examples? Here's mine: In my industry, digital design, I know the over-head in agencies per employee is around 40%-50% from conversations with HR people. In automotive, my dads industry, its about the same. I also know a dentist with a large practice and he confirms 40-50%, which is why associates working there on contract only get 40-50% of their billings.
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- KVRian
- 697 posts since 13 Mar, 2017
Don't a lot of tech companies using freelance labor nowadays? Does the 30 PA employees number include the guy that codes for 10 hours a week from home in his (or her) underwear?
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- KVRist
- 144 posts since 19 Oct, 2018
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- KVRian
- 697 posts since 13 Mar, 2017
Who told me what? That tech companies use freelancers? Or about the guy coding 10 hours a week? The latter was a way of talking about today's reality, not that I literally mean that PA uses a freelancer that code 10 hours a week for them.
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- KVRist
- 144 posts since 19 Oct, 2018
I was kidding and more or less referring to the coding in underwear . I am a freelance developer, but not in audio.
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- KVRist
- 144 posts since 19 Oct, 2018
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- addled muppet weed
- 105872 posts since 26 Jan, 2003 from through the looking glass
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- KVRAF
- 2024 posts since 23 May, 2012 from London
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- KVRist
- 144 posts since 19 Oct, 2018
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- KVRian
- 1030 posts since 26 Feb, 2018
We can move to PM not to derail, but I meant that you'll be at 2X in pretty much any scenario and goes up to about 3X. You said it yourself in your analysis, the overhead percentage of someone who is making $35k will look worse than that of someone making $150k. And from what you suggested, already about 40% from conversations with HR people, but you are looking at it from a salary-related cost analysis. Have the same conversation with a business planning consultant and you'll hear from a perspective of the company's entire budget and direction. An HR person cannot determine what size building we rent, or how long the lease will be, that's an executive decision. So HR people don't account for things like workspace costs the way a business planner would.
For instance, when you make a choice to hire 5 sales people.
HR thinks "ok: salaries, payroll, taxes, unemployment, benefits, insurance".
A business planner thinks "additional accounting overhead, more load on IT and infrastructure, training, new sales software licensing, travel budgets, car leases, new phone lines, workstations and portable devices, restructuring the marketing department and probably need a new VP, we need to lease more office space that is customer-facing".
So don't just focus on HR's world, that overhead is half or less of the total overhead cost. If the salary of each new sales person is $50k, you won't just need $250k to budget a new sales department. It won't be $350k either (+40%). It's at least $500k.