There’s a Russian proverb that roughly translates like this:
People like to count the money of others.
I often get asked how much I earn. It seems to be a bit of a mystery to many people, definitely something that seems to be very interesting. I usually don’t like to talk about it that much, money is a sensitive subjects that often elicits mean, self-righteous and smart-ass comments. Be that as it may, after our car was broken into in Barcelona, and stuff worth 30.000 Euros was stolen from me (which I made the mistake to communicate on my blog in the heat of the moment) the question came up everywhere how much I earn. The fact that I could leave items worth 30.000 Euros in my car ‘just like that’ appears to have sparked a number of misconceptions. Some people apparently understood I left 30k in cash in my car, others didn’t seem to pick up on the fact that the items that were stolen were mostly borrowed, and did not belong to me.
The incident drew plenty of mean comments along the lines of ‘I had it coming’, so I decided to compile a sort of ‘earning guide’ with some rough figures to give people on the outside an idea how much money is roughly involved as a full-time blogger, i.e. as a self-employed creative person. Of course this will not apply to everyone, but there are a couple of points in the following list that will apply more or less the same way to most bloggers and self-employed creatives out there.
Money is a Taboo
So, I do not enjoy talking about money – the subject is a minefield. There are so many misconceptions and illusions that reflect some fantasy land, but definitely not reality. Here’s a fact: I am not rich. That said, I can’t and won’t complain about the living I make. Despite the high expenses I rack up, I can live relatively comfortably from blogging, and also get to save a bit. What I make is sort of in the sphere of a decent salary, but it’s miles away from a top salary.
I can also tell you guys that over the course of the first three years I earned next to nothing from my blog. Once I started to professionalize my operation, I started making a bit of money. The decision to switch to full time blogging was very risky. At that point, it wasn’t clear at all whether I’d be able to make a decent living at any point in the future, i.e. ever, and the truth is I barely sraped by for a long time. Here’s an often overlooked point: the fact that blogger cooperations pay so well these days is largely a result of the risk that bloggers from the first and second generations took back in the day, fighting for every Euro. Self-employment is still very risky today. I get asked very often how I see my future, and the honest answer is: I don’t know.
I am going to be frank with you: when I have a bad month, I lose my sleep not knowing how to pay my team. I have made the experience though that in the end it all tends to work out somehow, but that’s also due to the fact that I pay my team before I pay myself.
The situation is different for, say, a magazine, who can generate a regular income stream from subscribers and through other avenues. A blog, by contrast, is completely free to the world. But somehow you have to make money – and that’s easier said than done. I have already talked about ways to make money as a blogger.
Disclaimer: when it comes to money, I am not the most resourceful and stingy girl on the planet. That doesn’t really make a difference to this text though, the headline here is not ‘how to scrape by as a blogger’, the focus is on my situation and the individual expenses I have. Sure, I do not have the cheapest phone contract or budget internet connection – I need some things to keep my basic operation flowing smoothly. It also does not matter to this text if anyone thinks what I make is justified or not, neither does the comparison with other jobs and what they pay. I am fully aware that it is entirely unjustified how lowe the wages are for nurses, teachers, and so many other jobs. You would not say no to a raise yourself if you were offered one, just because someone else is earning even less. In my case, I have no idea whether I’ll earn twice as much next year as I do now, or whether my income will half, or whether I’ll earn anything at all. I’m in a high risk profession. Being self-employed requires nerves of steel, and is not for people that need a feeling of permanent security.
Self-employment is a bit like gambling: you may hit the jackpot, but you run the risk of losing everything. Good and bad luck are definitely factors.
One more thing: I am not complaining in this post. All I intend to do is to objectively list my expenses to give you guys a realistic idea. I know that many of you are curious, some of you may be toying with the idea to start a professional blog yourselves, and you may appreciate a rough overview of what to expect. There are plenty of reasons to break the silence and to set the record straight.
And another point: most of my expenses are variables, just as my income fluctuates considerably. I I list net incomes, in other words: I earn the sum Y for a job, of which I pay 20% to my agency and then deduce taxes. What remains at the bottom line is the sum X. #justsaying
Ok, let’s dive right in!
Breakdown of expenses for my Blog
From all the money that I receive in my account, sales tax is deducted straight away, so I won’t include that here. As mentioned above, at this point we have a certain net amount. From that, other taxes are subtracted (income tax, solidarity tax and trade tax), plus an IHK membership fee (a trade organization for businesses based in Berlin).
Unfortunately, taxes are a super complicated and tricky subject matter, which requires me to work it all out with a tax consultant, who supports me and files my taxes for me. I do my own book-keeping, but then hand it to my consultant every month, who in turn tells me which expenses I can deduct. It’s impossible to stay on top of it as a layman, not least because the laws are also constantly changing. In order to stay out of really dangerous situations (for my business) having a tax consultant is crucial, I would have probably gone broke long ago without him. The bulk of businesses that fail go bust in the third or fourth year of their existence, when taxes spike and the business owners need sufficient reserves to stay afloat. In my case, I was at one point faced with an annual tax fee in the mid-5-digits, when I was upgraded into consecutively higher tax categories in the course of a single year, which also meant that first I was required to make advance tax payments annualy, then every three months and then eventually on a monthly basis. Reality check: it’s not you who decides when and how often you have to submit your files to the tax authority, it’s the authority! It was a valuable but very tough lesson to learn, and a really difficult period for me, which I didn’t want to talk about on the blog. Having overcome these hurdles, I am now happy to pay my taxes on a monthly basis – it makes it easier for me to stay on top of my expenses.
Bottom line: due to variable taxes and fees, my monthly income fluctuates.
my team (ca. 30 %)
My team is crucial for my blog, and it’s also one of the biggest cost factors. I work with two translators, one – sometimes two – photographers, an external editor and a programmer. Some team members get fixed rates, others are paid depending on jobs. This cost factor fluctuates as well, albeit within a certain general range. My combined expenses for the team are in the solid four-digits every month. Moreover, I have to pay what’s called artist’s social security of 5.25 for my team members, even for those who do not have artist’s insurance. The fees are calculated on the invoices I get from the individual team members. One point really annoys me in that respect: my agency also has to pay these insurance fees for myself and all the other bloggers that they work with. Conversely, however the artist’s insurer (in Germany it’s called Künstlersozialkasse – KSK) refuses membership to many bloggers (they also refused me at first). They’re happy to charge, but less happy to give back. A bit unfair, don’t you think?
Insurance (ca. 3%)
Self-employment means you are responsible for your own insurance, and the fees are often considerably higher than for regular employees. There’s health insurance, which is usually more expensive for women than for men, as well as additional insurance like household insurance (important also for private individuals), accident insurance, company liability insurance and legal protection insurance. Company insurances are more expensive than private liability insurances, but they are partly tax-deductible. I recently also added luggage insurance, which I would probably not necessarily need outside of my professional life.
Software, etc. (ca. 1%)
I ‘rent’ software from Adobe and other companies, i.e. I have subscription plans for set monthly rates (between 40 – 100 EUR, depending on what I use and need). Sure, there are probably cheaper otpions out there, and maybe I could use alternative products to edit my pics. But the results would not be the same. Also in this category of expenses are domain, server and web-hosting fees. The same applies here – I may be able to find cheaper alternatives to the providers I’m currently using, but there are some perks – like a German language 24h service hotline – that I wouldn’t want to live without, and you do not get that for a dumping price.
Monthly landline and mobile phone expenses: (ca. 3%)
We all have our monthly phone bills, the market is saturated and providers are falling over each other trying to bait us with cheaper and cheaper offers. If you’re requirements are pretty ‘standard’, and if you use the internet mainly privately, you won’t be stuck for good and cheap options. As professional blogger, the requirements are high, which means expenses grow disproportionately: I need the fastest and most stable internet connection on the market, the best mobile phone network (which I currently DO NOT have), and – here comes the biggest cost factor – a relativel large mobile data volume both at home and abroad. Snapchat (!) and all the other usual subjects rack up large amounts of data usage. I tend to need at least 10 GB of data volume in Germany, plus a couple of GB abroad. The largest factor on my phone bill is in fact surfing the internet abroad. The fees are sometimes so ridiculous that it can be cheaper to buy a prepaid card for, say, 60$ (which I did the last time I was in the USA), when there’s something on offer that includes a decent amount of data.
Office & equipment (ca. 7%)
I have been running my blog for almost 6 years now, and finally, after more than 5 intense years, I have my own, dedicated home office! We have a spare room in our new appartment, my office, where I can work in peace and quiet, and where I can invite people for meetings. Not having a proper work space, no dedicated area for business, can be very exhausting, especially after longer periods. Here’s the thing: if your office is a separate room (it also needs to have a lock if I’m not mistaken), and if it’s used exclusively for work, it is partly tax-deductible. Equipment, decoration and things like that are also part of the work environment and can be very important for a good workflow. Camera equipment (camera, tripod, lenses), my laptop, smartphone – these things are basic tools that I use every day. In total, my equipment is worth about 6000 – 7000 EUR, and it needs to be replaced roughly every two years. I break it down to about 250 EUR per month – plus rent for the office space, which also comes into the calculation here.
Travel expenses (ca. 8%)
Being a blogger means being on the road a lot, and my trips are by no means always paid for. The Fashion Week season is a good case in point: the month starts in New York and ends in Paris, and the whole circus moves to a different town every week. Unfortunately it’s next to impossible to sort out hotel cooperations in this period (and the ones that are offered tend to come at the worst possible terms). Same goes for the additional travel expenses, few of which are ever taken care of by any third party. Nevertheless, Fashion Weeks are great for business, not only because of the fashion itself, also because of the networking opportunities with agencies and people from the fashion industry. All of a sudden everyone’s in town, and if there’s on thing I learned it’s this: good contacts are everything. With all this in mind, I shoulder the expenses and fly from city to city. If I decide to take a photographer with me, costs more than double straight away. Travel expenses fluctuate enormously, but they can easily reach the mid-4-digits if I travel to New York with a team member. If you take into account that I usually spend at least a third of my time on the road each month, you can imagine that this can lead to high expenses. In this breakdown, it makes most sense to give an average annual value, considering how wildly the travel expenses fluctuate from month to month My calculation shows me that on average I spend about 8% of total expenses on travelling.
Private expenses (ca. 22%)
that’s what’s “left” for me and include some items that I’d like to briefly explain here:
– Transportation costs. I use public transport and car sharing a lot, especially in private life, but going to events I usually need a taxi. It’s too much of a pain in the neck to cut through the city in high heels to get from A to B, only to arrive at the event completely knackered. My taxi expenses are exorbitant.
– Investments. These include expensive items of clothing / accessories, e.g. bags, shoes or other items that I can use for outfit posts. The truth is, things can get boring very quickly on a blog, too much repetition doesn’t do, I have to constantly change things up. In order to stay interesting for high end customers, I need to purchase and show high end products, which can get costly very quickly. I decided to exclude this point from the overall cost breakdown, as the expenses are in part professional and in part private, so to speak. We all need to spend some money on clothes, after all (just not always expensive ones).
Eating out. I often eat out with colleagues or team members to discuss projects.
– Private expenses. like food, rent, gym, housekeeping and private restaurant bills.
The bottom line:
As a successful blogger you can make a serious amount of money, but the reality is that you’l have to spend the lion’s share of your earnings to keep it all moving. Honestly, doing this breakdown I was quite shocked to see how relatively little I am left with at the end of the day. Here’s the sad reality: cooperations can contribute to earnings that allow for a good life, but you won’t get rich, at least not if you stick to the regular advertorial avenue. The really big deals tend to be ambassador contracts, that bind you to a product. The other route would be launching your own product. Meanwhile, the risks of self-employment are considerable, and you are under constant pressure to keep the blog exciting and to offer engaging content, lest you sink into obscurity. If you really want to make it big as a blogger, you will have to launch your own product at some point, be it shows (Chiara Ferragni), clothes (Kenzas) or a beauty line (Michelle Phan). Chiara Ferragni is considered to be a blogging millionaire. At the same time, she herself said that 80% of her earnings are generated by her shoe line. It’s an exemplary case in point for this industry. As far as I’m concerned, I really can’t tell yet whether I will be a blogger for the rest of my life. Right now, I still love my job, and I will pursue my work with all my heart, for as long as I can :)