The "NEW" Plugin Alliance?

VST, AU, etc. plug-in Virtual Effects discussion
perpetual3
KVRian
950 posts since 28 Sep, 2012

Post Thu Jul 18, 2019 7:00 am

jochicago wrote:
Thu Jul 18, 2019 6:17 am
perpetual3 wrote:
Thu Jul 18, 2019 6:06 am
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.
That'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.

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.
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
KVRian
538 posts since 26 Feb, 2018

Re: The "NEW" Plugin Alliance?

Post Thu Jul 18, 2019 7:10 am

perpetual3 wrote:
Thu Jul 18, 2019 7:00 am
Yeah, that was kind of my point: just working off what was told by Dirk, those are the best case scenarios.
I didn't know about the 30k claimed customers, you brought up a good angle of discussion.

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.

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lnikj
KVRAF
2108 posts since 23 May, 2005 from the North Cornwall coast

Re: The "NEW" Plugin Alliance?

Post Thu Jul 18, 2019 7:16 am

I contend that I can fit 271 angels on the head of a pin.

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plexuss
KVRAF
3219 posts since 8 Jul, 2009

Re: The "NEW" Plugin Alliance?

Post Thu Jul 18, 2019 7:21 am

jochicago wrote:
Thu Jul 18, 2019 6:53 am
plexuss wrote:
Thu Jul 18, 2019 6:24 am
Dubious. From direct experience employee overhead is in the 20-40% range over-and above salary.
When you count management (HR), taxes, benefits, plus all the costs of office space and supplies, you'll cross the 2x line in every scenario. You can only stay at 30-40% if you are only focusing on salary-related costs, not business-running costs.
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.

yehboy1
KVRist
454 posts since 13 Mar, 2017

Re: The "NEW" Plugin Alliance?

Post Thu Jul 18, 2019 7:21 am

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?

DawnInEden
KVRist
74 posts since 19 Oct, 2018

Re: The "NEW" Plugin Alliance?

Post Thu Jul 18, 2019 7:25 am

yehboy1 wrote:
Thu Jul 18, 2019 7:21 am
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?
Who told you that? And I do not work for PA :party:

yehboy1
KVRist
454 posts since 13 Mar, 2017

Re: The "NEW" Plugin Alliance?

Post Thu Jul 18, 2019 7:29 am

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.

DawnInEden
KVRist
74 posts since 19 Oct, 2018

Re: The "NEW" Plugin Alliance?

Post Thu Jul 18, 2019 7:33 am

yehboy1 wrote:
Thu Jul 18, 2019 7:29 am
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.
I was kidding and more or less referring to the coding in underwear :). I am a freelance developer, but not in audio.

yehboy1
KVRist
454 posts since 13 Mar, 2017

Re: The "NEW" Plugin Alliance?

Post Thu Jul 18, 2019 7:37 am

Ohhhhhhhh. I misread that.

DawnInEden
KVRist
74 posts since 19 Oct, 2018

Re: The "NEW" Plugin Alliance?

Post Thu Jul 18, 2019 7:39 am

yehboy1 wrote:
Thu Jul 18, 2019 7:37 am
Ohhhhhhhh. I misread that.
All good. Maybe I should have made my "joke" a little bit more obvious.

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vurt
addled muppet weed
48540 posts since 26 Jan, 2003 from through the looking glass

Re: The "NEW" Plugin Alliance?

Post Thu Jul 18, 2019 7:40 am

you get paid more if you code naked.

PieBerger
KVRist
388 posts since 23 May, 2012 from London

Re: The "NEW" Plugin Alliance?

Post Thu Jul 18, 2019 7:43 am

vurt wrote:
Thu Jul 18, 2019 7:40 am
you get paid more if you code naked.
Naked coders premium, that's the real reason for PA moving to a sub model. DOAL is actually for the programmers getting that sweet breezy breechers salary uplift!
Always Read the Manual!

DawnInEden
KVRist
74 posts since 19 Oct, 2018

Re: The "NEW" Plugin Alliance?

Post Thu Jul 18, 2019 7:44 am

vurt wrote:
Thu Jul 18, 2019 7:40 am
you get paid more if you code naked.
20 years ago maybe. Today I get paid extra, if I don't take off my clothes at all.

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Forgotten
KVRAF
2115 posts since 15 Apr, 2019 from Nowhere

Re: The "NEW" Plugin Alliance?

Post Thu Jul 18, 2019 7:54 am

vurt wrote:
Thu Jul 18, 2019 7:40 am
you get paid more if you code naked.
You need the extra money for replacement chairs...

jochicago
KVRian
538 posts since 26 Feb, 2018

Re: The "NEW" Plugin Alliance?

Post Thu Jul 18, 2019 8:11 am

plexuss wrote:
Thu Jul 18, 2019 7:21 am
From 300% to 200%. So this is negotiable. :)
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.

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