I am in the process of determining the pricing details for a subscription service (I have the standard, premium and plus accounts) and I'd like to create a spreadsheet of what expenses are involved in operating this business annually. So far, I have the following items:
Note: I do understand that the expenses vary based on location and the type of subscription service. I am trying to determine the average cost of running a business in IL on a annual basis. Although I hope some day I will be doing this full time, currently it's something I am doing on the side. The nature of the service requires me to have cloud server and cloud files.
Does this look like a good starting point? Are there any items missing or any items that stand out as either being too expensive or too cheap?
All of my businesses now are subscription based. Over the last 10 years i have weaned off retail and consulting because i have done so well with subscription services.
Here are some concerns looking at your pricing:
Your development cost seems VERY Low. If you are building a very basic subscription service, and plan to integrate with merchant accounts, refunds, credits, etc, that alone would cost a good bit to code. I understand you are using offshore talent. I have offshore talent on payroll (about 1/2 what they would work for if you contracted them shorty) and the numbers seem way off. If you are being quoted that for the work, then you might be getting very low level quality, a steal!, or taken in by a "we need more money" business model.
2nd. You should not take your tech support and customer support offshore for a startup. You can, once you are established. You tech support is your pipeline for feedback, errors, user suggestions. Taking this offshore is not wise until you are established and have everything on cruise control.
3rd. SEO costs should not exist. Good seo is part of your development. Your site simply needs to be structured in a way that it is SEO friendly.. Stay away from the scams or subscription SEO services. They dont yeild a good return. Good SEO can only be done by yourself. Make sure you are tied into the usual (twitter, rss, facebook). Write new content about your product often, and publish your own news releases and blog posts. Encourage reviews of your product by making it a focus on brand development and marketing. Just traditional offshore per month seo services do nothing but flood the internet with your link, to sites that are junk to begin with. They do not work.
5th. While good that you have a budget for paid advertising, you really should start by creating a full marketing plan (free and paid). You tailor this daily, weekly, monthly or whatever makes sense after you launch. It is a full time job, making sure you get the most out of your marketing dollars. Make sure you just dont put an arbitrary number there. Marketing is about results. My forumla is that i reinvest 15-25% of gross income (depending on site) back into marketing, the second part of that is, for every marketing dollar I spend my goal is to make $1 per year income. It doesnt always happen.
6th. CPA costs vary. You cannot estimate them without knowing the type of business you will run. At the beggining plan for more because of consulting on your corp structure, account charts, etc. Over time it will be just plain old bookkeeping.
Best of luck on your venture.
Obviously without any information on what this start-up service is, it's hard to say. But some quick feedback.
5.CPA costs - ???There's bookkeeping, managerial accounting, and taxes. A CPA can show you how to do your own bookkeeping, help you understand accounting, and do your taxes. Ballpark a $1000-$2000/yr depending on the complexity.
6.Development cost (offshore) about 3 mos full time per year - $2500Seems pretty cheap, even for offshore. You get what you pay for.
7.SEO (onsite and offsite) $50/month - $600I'd keep these in the same budget (marketing). And, I'll also say it's woefully inadequate. Add another zero ($5K/mo) if you expect to get any traction from marketing.
8.Marketing/Google Ads - $500
11.Web Design - $400This is on the low-end. I'd budget 2-3K for a competent designer.
You're also forgetting a few important items:
In regards to some of your stated costs, you're going to get very poor results from your budget for the technical aspects like web design and development cost. For $400, you'll get a template website with no options. That is absolutely not the way to build a successful web service. I would say that you need to look at $10k minimum to get a decent site, not including development costs for your service itself. Again, there you will be looking at $10k minimum to get any type of quality. If the core of your business is on the web, don't skimp in either of these areas. You're just not going to get the level of professionalism that you need for a successful business from anywhere near the budget that you currently have. Make sure you get quality and reliability. Look for people who understand the business goals of your website and service as well as the technical side, otherwise you're going to get an incomplete and ineffective product.
Also, as Alex stated, you're low on SEO and marketing as well. Don't underestimate the problem of getting people to your website. You need a solid plan before you begin everything else, otherwise you're going to be playing catch up and losing a lot of money. Marketing simply cannot be an afterthought. As far as forming a budget for PPC, use Google's Keyword Tool and lookup the estimated CPC for your targeted keywords. Also make sure that your target market is big enough to support your service.
You should also take a long look at risk management. What happens if your outsourced team doesn't deliver? What do you do if your service goes down for a few hours or even a few days? What if you get hacked? All of these scenarios and more should be considered and planned for in your budget.