How I Wasted $10,000 Plus What I Learned and How It Applies to Business

Jan 26, 2017

JP Danko

JP Danko is a commercial photographer based in Toronto, Canada. JP can change a lens mid-rappel, swap a memory card while treading water, or use a camel as a light stand.

How I Wasted $10,000 Plus What I Learned and How It Applies to Business

Jan 26, 2017

JP Danko

JP Danko is a commercial photographer based in Toronto, Canada. JP can change a lens mid-rappel, swap a memory card while treading water, or use a camel as a light stand.

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How I Wasted Ten Thousand Dollars What I Learned And How It Applies To Business

You can’t learn anything in life unless you make mistakes. Some mistakes are obvious. Some mistakes are a lot more subtle.

In this article I will share a subtle mistake that cost me over ten grand (plus a few other ongoing mistakes that are costing me money right now) and what lessons can be learned and applied to running a photography business.

How I Wasted $10000

This is not a business mistake, it’s just a dumb-a$$ everyday mistake – but this is a category of mistake that definitely applies to how you run your business.

Our forced air home furnace has a fan that circulates air – even when it’s not heating or cooling. Due to a defective control relay, this fan has been in continuous operation for, oh….about 12 years (at least since we bought the house). We only discovered this problem because we installed an Engage home energy monitoring system and couldn’t figure out why our home’s base load was so high.

So how much can it possibly cost to run a fan 24 hours a day, seven days a week, 365 days a year for twelve years? Well, way more than you’d ever realize!

According to the Engage system, this single fan (which is a pretty big fan) draws around 0.6 kWh of electricity. We pay on average around $0.16 per kWh (including distribution and tax) so running this fan for a month – which is 100% pointless – costs us just over $70. That’s more than I pay for my Adobe CC subscription. Multiply that by 12 months over 12 years and the total cost of running a stupid fan adds up to just over TEN THOUSAND DOLLARS.

(To be fair, electricity is more expensive today than it was 12 years ago – and there is some estimation on the actual usage load, but you get the point – it’s a ton of money wasted for no good reason.)

How I Wasted Ten Thousand Dollars What I Learned And How It Applies To Business

Where I’m Wasting Money Right Now

The fact that I could have wasted that much money without even realizing it has got me seriously thinking about all the ways I am wasting money right now.

For example, my mobile phone contract expired over a year ago. Instead of switching over to a low cost provider the second my contract was up (and saving roughly half the monthly fee), I just kept paying my contract rate because frankly, I have been too lazy to simply switch it over.

That’s $45 every month, $540 over the past year – donated through my good will to a multinational telecom provider. Over $1000 if you include my wife’s mobile plan.

Speaking of mobile phones – I somehow agreed to purchase the $16 per month additional insurance plan when I first got this phone. I tried to claim a new battery once – but they said that the phone had to be re-set to it’s original configuration to test the battery performance. Since that would mean I had to re-configure the whole thing, I figured that it wasn’t worth the PITA, so I bought a new battery from Amazon for $15.

So, I’ve been paying $16 per month for three years for absolutely nothing. That’s $576 – or a good chunk of the purchase price of a new phone straight up.

Besides smarmy mobile phone service providers, online subscription services are especially sneaky and expensive.

Almost all offer you a free month (as long as you give them you’re credit card or PayPal info), but if you go over that first month, you’re now billed a monthly fee…every month…indefinitely.

For example, I use Animoto to occasionally put together slideshow videos. When you sign up, you can either pay $312 for an annual subscription or a $39 monthly subscription. The problem is, even if you only sign up for a month, you get billed for that month, plus every subsequent month – until you manually cancel. (For me, it is way cheaper to sign up for a single month here and there whenever I need it than an entire year).

The same goes for the annual subscription – forget to cancel before the renewal date – boom there goes another $312.

I’ve even been suckered by subscriptions that I’ve signed up for my kids. There was one year that they were really into playing Prodigy Math. In that game, they push pretty hard to get the kids to sign up for a membership. It’s a math game so why not right? Plus, $60 for an annual membership isn’t too bad. Except that they stopped playing it after a few months, and then a year later – I got charged another $60 that I didn’t even notice. And a year later – another $60 – which I finally noticed and then canceled the subscription (but not without having to pay for an entire year’s subscription that was never used).

Another example of a small fee that adds up over time: when I set up my business Twitter account, I thought that it would be important to set up an auto-responder to thank people for following me and direct them to my business website. So, I used a Twitter automation service to take care of it – for the low price of $2.79 per month. Indefinitely.

So far that’s added up to just over $100 (for my 388 followers). Not a disaster, but not a wise use of money either.

And I’m not even going to talk about gym memberships – the ultimate subscription money siphon!

How I Wasted Ten Thousand Dollars What I Learned And How It Applies To Business

Business Lessons

The bottom line is anything that costs you money on a daily or monthly basis has the potential to cost you a substantial amount of money over time.

The day to day amounts are small, so you don’t even notice the cash flow – but over time you realize that you’re burning cash for no good reason.

If you use PayPal, you can easily monitor what preapproved payments you have authorized on your account, and cancel anything that you don’t want to auto-renew (here’s how).

However, remember that there are some things that you absolutely do want to auto-renew: like your web domain name and hosting!

It also seems to be almost always less expensive to pay for something once, up front, versus a subscription (which is why everyone wants to sell you a subscription). This gives you the added benefit of thinking about the total cost of the purchase instead of being lulled by a small recurring fee.

If you do sign up for a subscription, only sign up for things that you absolutely need to run your business (like Adobe CC or cloud backup), and keep track of renewal dates so that you can cancel subscriptions before they auto renew.

The flip side, of course is that it can be very profitable to sign customers up to subscription services.

If you are a portrait photographer, you’ll make way more money signing up clients to a monthly or annual “portrait club” subscription versus selling one-off portrait sessions.

If you are a commercial photographer try to sign your clients up for a monthly or annual retainer agreement instead of individual bookings whenever they need you.

If you are a fine art photographer or sell stock photography directly, you’ll make a lot more money selling subscriptions for access to your work than selling individual pieces.

What Have You Wasted Your Money On?

I’ve shared a few of the things that I’ve wasted my money on – now I want to know what you’ve wasted your money on!?

Subscriptions, gear, auto-renewals – where have you spent way more money than you realized?

Leave a comment below and let us know!

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JP Danko

JP Danko

JP Danko is a commercial photographer based in Toronto, Canada. JP can change a lens mid-rappel, swap a memory card while treading water, or use a camel as a light stand.

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