The SP unrealistic business model

[LifeLongJourney 14]

I have a lot of respect for SP's, they are self employed entrepreneur's. A common theme I read and hear is how people try to negotiate better rates. So let's explore this a bit mathematically. We'll work on the ideal premise of a 40 hour outcall only workweek, with two weeks off at Christmas and two in the summer. We'll also assume a $200/hour rate, and each month will incorporate a weeks (7 days) travel for work.

 

40x200x48= 384,000

 

Now let's let the government have their share of the pie, though they provide no support. (I'll use NS and 2020 as an example) remember self-employed so they cover both employee and employer costs.

 

CPP 5796, EI 2055, Fed 102,357, Prov 70,148 =

180,364

384,000-180,364 = 203,636

 

Let's plan for when we retire, we'll contribute to TFSA's primarily and RRSP's (not going to count the tax effect). We'll go with the average public servant and contribute 10%.

 

203,636x.1 = 20,634

203,636-20,364 = 183,272

 

Sounds like a lot doesn't it. Let's take out the 12 weeks hotel and food. 70 for food and 150 for a decent hotel per day. Also a minimal 1000 each trip for travel costs.

 

(70+150)x7x12 = 18,480+12,000 = 30,480

183,272 - 30,480 = 152,792

 

Let's take care of some basic SP business costs shall we. So we'll cover internet, cellphone, and transportation. We'll go with $100 as an average for Cellphone, $100 for reliable internet, a low ball $400 per month car payment, and we'll say about $20 dollars in gas a day.

 

(5x4x20)+100+100+400 = 1000x12 = 12,000

152,792 - 12,000 = 140,792

 

So let's calculate the hourly take home and give our SP's a paid vacation as well. We started by calculating an 8 hour day, that's unrealistic so let's add in the travel and prep time between appointments. We'll figure that to prep and travel takes a minimum of an hour between appointments so their 8 hour day is essentially doubled.

 

140,792/(16x5x52) = 33.84 per hour

 

That looks like a lot, but this is the ideal. I don't think anyone can meet this business model. This does not account for sick days, medical insurance, assumes full bookings, doesn't account for marketing costs, doesn't account for cancelled appointments, doesn't account for travel time, nor the prep time between appointments, clothing costs, hygiene costs. These others factors will drastically lower their wages.

 

So when someone tries to lower their price it really isn't worth it for them.

 

This Business model is unrealistic and idealist. I'd like to hear about unaccounted for factors. A more realistic idea of how many hours are booked a week on average. Monthly costs for clothing, make-up, hygiene, and safety (condoms, dental dams, birth control etc.)

 

[NotchJohnson 214123]

Don't forget that for every appointment the lady takes she took some time to wash, makeup, do her hair(maybe once a day anyway) brush her teeth(I hope), clean the room, make the bed prepare a snack(sometime) drinks etc...  So if you only booked one hour or more, it took her at least an extra hour total some time before you meet and some after you left.  It's not only wash her hands and wait for the next dude to come in. 

[Guest]

  The primary goal of a business/private contractor of any sort should be to break even with their current lifestyle. There been young women(legal aged) who were able to get very good years from the adult industry to pay for school to pave the way into a more mainstream occupation. But for all the success stories, too many are not so great with young sex workers making poor financial and life decisions.

   Whatever their goal, financial and personal discipline will provide far more than realistic expectations.

   Also, unless being an high end stripper with a clear paper trail to explain her income, I doubt many SP would declare a $250K annual income to the CRA. I understand this was for demonstration purpose. But the reality would end up with an audit and a major bust.

[roamingguy 300292]

Seeing as I know nothing about business (guess that's why I didn't make any money on my paper route as a kid LOL) but I recall a thread (on CERB of all places) I thought I'd post the link here

https://www.lyla.ch/topic/10838-slow-times-in-this-business-ever-wonder-what-causes-them/

I remember this thread when I was just a wee newbie both to CERB and this lifestyle.  Thread was informative then and now

A Rehashed Rambling

RG

 

[StephanieMystique 1891]

Great thread! 

 

Big thing you missed, as being self employed we also pay hst on the amount brought in too. On top of income taxes. Bye bye 15% off the top. It's been something I have been having a conversation with clients about. I am still a 250/hr companion, but since I claim I have to pay hst on my services it's 287.50. I still need the 250 to cover expenses and my day to day stuff, so I rounded up to 300 and my accountant does the math from there.  Generally marketing that way doesn't make sense to the masses. 

Thankfully we do have deductions like any other buisness. So things like makeup, rent, office supplies (condom, lube, ect), food, travel, marketing, car and such are able to be written off. 

Rough numbers from my tax stuff last year; Rent costs last year were 17000, travel costs were 20000, marketing was 6000 (marketing for Toronto is more than here). That was just a few numbers. By the time I finished paying taxes, had all my deductions, I had about 32000 left of what I made last year.  

Using your numbers @LifeLongJourney for a week's worth of work. That would bring me to 7.69/hour take home.

I will say, I have always had a mind set of finding ways to write off things you are already paying for and have a goal. My end goal is to buy a property/house. I needed a track record of min. 2 years as a self employed person to get approved. 

 

[Ice4fun 78407]

I certainly get the point of the OP and have never questioned the rate a lady charges for her time.  

The reality is this is a business so the goal is to provide a reasonable income for the lady after all business costs have been covered.   The hourly rate is a professional service rate no different then other services... plumber, electrician, lawyer, hairdresser  etc it us not comparable to an employees hourly rate of pay.   

The amount subject to tax would be net income after expenses not total revenue.

In regards to HST this can be included in price or charged extra ie $250/hr plus tax.  If the lady is registered for HST/GST she is entitled to deduct the HST she is charged for her business purchases. Clothes, makeup, hygiene products, hotel costs, meals when traveling. Marketing cost, phone etc.