I Publicly Shared ALL Of My Studio’s Income, Expenses and Tax Numbers From 2014.
“Are You Really A Six Figure Home Studio?”
Since starting this blog, I’ve been asked this question a number of times. Although the answer is ultimately irrelevant to your personal lives, the question still remains. This article will answer this question, and show you what a “successful” home studio looks like behind the scenes.
I’m going to break down my total income for each month; going as far as showing you how that income is split between full production, mixing/mastering, or even just mastering exclusively. I’ll also show how much of my income comes from signed bands with label-backed budgets vs unsigned bands that are paying out of their own pockets.
This article basically includes every single number that I’d personally love to know from other home (and professional) studios. I guess I’m just nosey.
I’ve had mixed emotions about whether or not I should post this article. I’ve also had a lot of people tell me this is a bad idea. Unfortunately I’m a headstrong bastard, and I do whatever I want when it comes to this blog.
To finish things out, I’ll be sharing my expense breakdown, as well as some major changes I’m making to my studio due to the insights I discovered once I really dug into the numbers.
This isn’t just to answer the pointless question about my income. I’m also hoping this article can help answer some people’s questions about starting a home studio. Maybe you’ve just graduated from college, you’re paying off student loans, and you’re still trying to figure out if this is a realistic career for you.
Is there any possible way I could pay off my student loans doing this?”
Yes there is, but you are limited by your raw talent, hustle, relationships with people, your integrity, and your drive to succeed.
While that might sound like a load of Tony Robbins self-help bullshit, it doesn’t make it any less true.
(side note, I’m actually a fan of some of Tony Robbins’ more recent work)
I’m sure the majority of you guys are just here reading this because you’re nosey as fuck, but I figured these numbers could be insightful to some of the other DIY home studios out there, both old and new.
Why Share This “Private” Information?
These are mostly tech-related blogs, but they all have important lessons that can be applied to pretty much any industry.
A surprising thing I’ve notice about some of these blogs is how transparent they are with their businesses. Pat Flynn from Smart Passive Income posts an income report every month that breaks down every single penny of his (insanely high) personal income to show exactly where that money came from.
Buffer (a ~$100 million company) has even gone as far as showing their total monthly income, along with every single expense for their business. This includes every employee’s income, server costs, office rent, marketing costs, etc.
They also shared the exact formula they use to determine what each employee is paid.
This kind of shit would have been absolutely unheard of 10 years ago. NOBODY is supposed to be that public and transparent about their “private” business…except that attitude has recently changed for some of the more progressive companies around today.
People also think that it’s boastful for “successful” people to talk about their incomes. That may be true for some people, but there is definitely a point to it in certain situations.
The thought process behind this kind of “numbers transparency” is that it helps newer businesses set some sort of benchmark to compare their numbers to. This can help these newer companies stay on track early on, well before they have the proper experience or data to figure these numbers out own their own.
It also gives people an idea of whether or not a specific career is worth pursuing.
This kind of transparency actually works extremely well for the blogs I linked to above, with their total amount of email subscribers being in the high 100,000’s or millions combined.
Sharing these numbers with others enables people to shape their businesses around a proven model of success; it’s no different than your typical DIY home studio owner that wants to see how professional studios run their businesses.
“Noobs” will just always want to see how the “pros” do things.
While I would never consider myself “professional” (I don’t take myself seriously enough for that), I am most definitely “a professional” in the technical sense of the word.
Professional: a person engaged in a specified activity as one’s main paid occupation rather than as a pastime.
Since I will (reluctantly) admit that I am technically a “pro” at this home studio thing, this gave me the idea to share my studio’s numbers with you. The good, the bad, and the ugly. Full transparency.
There are definitely some interesting conclusions I’ve come to from breaking down my year’s income (which I’ll cover below). So without further delay, here are the numbers.
2014 Income breakdown
Table of Contents (for clarity)
- Full Production = Tracking + mixing + mastering + lodging + production + therapy. Basically every single thing from start to finish.
- Mixing\Mastering Only = The band tracked elsewhere at another studio, but sent me the raw files to mix and master.
- Mastering Only = Tracked and mixed at another studio, and sent to me to master.
- Misc = Just random bullshit like live tracks, stems or other random editing.
- Full Production: $6,380
- Mixing\Mastering Only: $6,610
- Mastering Only: $200
- Misc: $465
- Full Production: $0
- Mixing\Mastering Only: $5,500
- Mastering Only: $575
- Misc: $10
- Full Production: $3,350
- Mixing\Mastering Only: $5,130
- Mastering Only: $0
- Misc: $200
- Full Production: $4,860
- Mixing\Mastering Only: $10,420
- Mastering Only: $0
- Misc: $50
- Full Production: $5,060
- Mixing\Mastering Only: $5,940
- Mastering Only: $1,050
- Misc: $790
- Full Production: $10,060
- Mixing\Mastering Only: $3,040
- Mastering Only: $400
- Misc: $205
- Full Production: $2,870
- Mixing\Mastering Only: $4,870
- Mastering Only: $0
- Misc: $300
- Full Production: $2,700
- Mixing\Mastering Only: $7,756
- Mastering Only: $287.50 (no clue what the fuck that 50 cents is from)
- Misc: $80
- Full Production: $6,810
- Mixing\Mastering Only: $4,010
- Mastering Only: $100
- Misc: $200
- Full Production: $1,680
- Mixing\Mastering Only: $7,639
- Mastering Only: $50
- Misc: $250
- Full Production: $1,120
- Mixing\Mastering Only: $2,760
- Mastering Only: $337.50 (there’s the other half of that 50 cents)
- Misc: $80
Total: $4,297 (only worked a half month since I took some vacation time)
- Full Production: $2,000
- Mixing\Mastering Only: $5,670
- Mastering Only: $350
- Misc: $155
Full Production: $46,890
Mixing\Mastering Only: $69,345
Mastering Only: $3,350
Grand total: $122,370
Let’s Breakdown The Breakdown
There are a couple of things you’ll notice about the monthly income breakdown. The first thing is that my income varied by as much as 357% from month to month. (It’s actually varied as much as 800% monthly so far this year.)
Most full time freelancers will have an unstable monthly income, and that makes it important to budget your income so that you have plenty of cash for those slow months. This ended up being extremely crucial for me in January of this year, when I had to spend over $10,000 on a completely new studio setup.
The second thing you’ll notice is that the majority of my income comes solely from mixing\mastering projects that were tracked at other studios.
This goes back to my previous blog post that talked about focusing on your strengths. I love mixing bands, and that’s what I tried to focus on in 2014.
Can My Home Studio Make This Much Without Recording Signed Bands?
Let me first clarify that I am by no means anywhere near the top of the food chain in the home studio world. There are guys way above my level of income.
That being said, I’ve been hustling at this for the past 6 years. These results are not typical, and your results may vary. blah blah blah.
By far, the most interesting conclusion I came to when running these numbers was the percentage of income that came from record labels vs self-funded bands.
Out of my home studio’s total income this year, what percentage of that would you think came from record labels?
Nope. How about less than 10%.
Only $12,150 of the $122,370 that I made last year came from record labels. The remaining $110,220 were directly from self-funded, independent bands.
That’s incredible to me. It shows that you honestly don’t have to be on any label’s “go to” list of producers in order to make a sustainable living in this business. This should be encouraging news for any of you guys that struggle with getting signed bands into your home studio.
That’s not to say recording label projects are not something you should strive for, because it definitely is. I just think a lot of producers have the mindset that they can’t succeed without recording signed bands, and that’s not necessarily true.
Some would argue that recording unsigned bands is not a sign of “success”. This is an argument for another time, but I simply say it comes to your personal goals and mindset. I’ve worked with some really cool bands, met some great people (as well as some shitty ones), and mixed some very talented bands.
More importantly, I didn’t have to work a soul-sucking 9 to 5 job, and I basically get to do whatever I want.
This, in my mind, was a successful year.
If you like what you’re reading so far, sign up to the mailing list for a good time. If not, skip it and keep reading.
It Takes Money To Make Money
Lets talk about expenses now. It’s all fun and games to talk income, but expenses are where things get a bit more serious. It takes money to make money, and while I may have started my home studio with only a $5,000 investment, it takes many times that amount each year to keep it open and running smoothly.
To save time, I’m just going to show the gross numbers for the year instead of a monthly breakdown.
2014 Expense Breakdown
$16,669 – Contract labor: This includes all assistant engineer costs, as well as outsourced editing work.
$15,000 – Rent: I have a live/work setup for my home studio, so 90% of my rent and bills are a tax write-off. This beats having to pay for a mortgage on top of a lease for a separate building for my studio.
$8,575 – Gear/Software purchases: This number should be way higher, but it’s not. I think I have whatever the opposite of “Gear Acquisition Syndrome” is.
$6,927 – Misc: Random things like paper, office supplies, development costs for this blog’s redesign, and a bunch of other random things: Mostly hookers and drugs
$6,200 – Itemized deductions: I honestly don’t know exactly what this includes. This would be a question for my accountant, which is why I pay someone to handle this shit for me.
$5,306 – Utilities: This includes water, gas, electric, cable, and internet. As I mentioned above, 90% of this is a tax write-off.
$2,500 – Education: Online courses, books, and other training. The best investment you can possibly make is in yourself.
$2,197 – Health Insurance: One of the downfalls of being self employed. No benefits, and no 401K (although I do invest in a Roth IRA).
$2,400 – Retirement Savings: My yearly Roth IRA investment. While it is technically “savings”, I still count this as an expense since it’s basically a requirement if you’re self employed. When I’m old and shitty, I don’t want to be poor too.
$982 – Repairs/Maintenance: Shit breaks sometimes.
Grand Total: $58,156
What a depressing word; especially this time of year. This isn’t really an issue for those of you that are not self employed. When April rolls around, you’ll probably get a fat tax refund.
I’ve never actually gotten one of those in my entire life. Every quarter, I send out thousands of dollars in estimated tax payments to the government, but every April, I still owe thousands of dollars to the government.
I’m not going to go into that much detail here, since this isn’t really an article about taxes. I just thought “Fuck it, I’ve shared everything else with you, I might as well go over my tax numbers for 2014.”
Let me begin by saying this: These numbers may be a bit off. I pay an accountant to do this shit for me, and I’m just reading off the 1040 he sent back. Tax papers are nothing but a clusterfuck of small letters and long words, so I’m sure I’ve misread some things.
Total Income: $122,370
Total Tax Write-Offs: $70,722: This includes some tax exemptions and other bs that I don’t understand. All I know is that this number is obviously higher than my total expenses for the year, which is cool.
Total Taxable Income: $51,648
Income tax: $8,763
Self Employment tax: $9,730 (yes…you get to pay more in taxes if you’re trying to run your own business).
Total Taxes for 2014: $18,493
I mentioned above that I pay quarterly estimated tax payments, which came out to be $2,990 per quarter, or $11,960 for 2014.
Unfortunately I made too much money last year (poor me), so I actually underpaid on estimated taxes. This means that this coming April, I still owe $6,533. This is in addition to paying my first quarterly tax payment for 2015, which will be around $4,500!!
So on April 15th, I will be roughly $11,000 poorer, but life moves on.
My “Oh Shit” Moment
While adding up the numbers for this article, I actually came across another very important insight into my previous year.
My full production income (tracking\producing\housing bands) was $46,890, as opposed to the $69,345 I made from my mixing\mastering projects.
What do those two numbers show you? Well, probably not much by themselves, but allow me to break this down.
Full Production Income: $46,890
Contract Labor Expenses: $16,668 (my hired help for tracking bands)
Net Income For All Full Production Projects: $30,222
That’s quite a drop in net income there, but it goes further than that. If I didn’t track bands, I could rent out one of the extra rooms at my studio for at least $500\month.
That’s an extra $6,000/yr of lost income.
All of a sudden, the $46,890 I earned last year from recording bands turns into $24,222. Now are you starting to see the bigger picture here?
The 80\20 Principle Bends Me Over
(And Has Its Way With Me)
I spent 186 days actually tracking bands last year. That’s 186 days of housing bands, listening to their arguments, and dealing with whatever petty bullshit that living with 5 band dudes can bring each day.
That’s 186 days of having my entire home studio overrun with people.
186 days of very limited access to my own kitchen, laundry, bathrooms, and living room.
Of course, I don’t want to make it sound like I hated every bit of it. Not all bands were hard to live with, and not all bands brought petty bullshit into my home studio.
Still, I can honestly say that 80% of my problems last year came from bands that I recorded in-house. This means 80% of my problems came from roughly 20% of my income.
That amounts to about $130\day of profit in exchange for 80% of my problems. That may sound like a decent amount of income to some of you, but if I’m looking at the percentages and factoring in what parts of my job I really enjoy, then there is no doubt in my mind what needed to change.
If you read my last article about the 80\20 principle, then you know what’s coming next…
Between the time I started writing this article(at the end of February) until right now, I cancelled my remaining full production projects for 2015. This meant I had to refund thousands of dollars in deposits, which is never fun.
A bit extreme? Maybe.
Was it the right move? I think so, but I won’t have the answer to that until the end of the year. What’s the point of digging into your business if you’re not going to take action?
I actually had a “dry run” of this over the final 4 months of 2014, where I didn’t have a single band in my studio. I only did mixing\mastering work, and it was the 4 most productive months of my entire life.
Yes my income may drop a bit, but I’m able to maintain a much better work-life balance. I’m also able to work on other business projects with scalable forms of income. I love what I do, but I always want to plan ahead 5-10 years into the future.
There is no guarantee my services will be in demand 5 years from now. The music industry changes quickly, and the producer world has no shortage of extremely talented up-and-coming guys popping up every year. This is exactly why it’s important to diversify your life, as well as your sources of income.
What does this mean for 456 Recordings?
1. I’m focusing on mixing\mastering projects.
*This is the 20% of work that I did last year that brought in nearly 80% of my total income.
2. If I do any more full production projects this year, I’m going to be extremely selective about who I work with.
*Maybe my faith in humanity will be restored this year.
3. I’m working on a very fucking awesome online mixing course, the details of which are still TBA.
* I’ve finished about half of the filming and video editing in the past 3.5 months.
* I’ll probably “officially” announce it in a few months.
* It’s way cooler than I’m making it sound right now.
* Email [email protected] if you’re interested in being part of the small beta group.
If this blog seems interesting to you, here is how you can stay up to date:
1. Enter your email address in the box below.
2. Hit subscribe (aka “Hell Yeah!”).
This will give you occasional emails letting you know when a new post goes live (weekly at most, monthly at least). I’ll also send you a free mastering video tutorial that shows how to master a song using only plugins.
I’ll never share or spam your email address, and there will be an “unsubscribe” button at the bottom of every email for an easy 1-click removal from my email list.