Chapter two · about six minutes
What you actually keep
The number on your booking app is not your money. Here is where the rest of it goes, and why seeing that changes every decision you make.
By Issa and the IssaBudget team
The month that looked great
You had a good month. Busy most days, barely a gap in the calendar, and the number on your booking app was the biggest you had ever seen on it.
Then you looked at your bank account, and somehow it did not feel like a good month at all.
If that has happened to you, nothing went wrong and nobody took anything from you. You were simply looking at a number that was never the whole story.
Following one appointment
When a client hands you money, not all of it is yours yet. It passes through a few hands on the way, and most of those hands are very quiet about it.
So let us follow one appointment all the way to the end. Say a client pays you $100.
The card company took its piece before the money ever reached your account, so you never watched it leave. The products came out of a box you bought weeks ago, so that did not feel like spending either.
Neither one was hidden from you. They were just invisible.
That appointment did not make you $100. It made you $85. And $85 is still good. It is simply true.
Then the month sends its bills
Now imagine every appointment of the month, each one followed down like that. Add them all together. That is your pile.
Out of that pile come the things that arrive whether you work or not. Your rent or your booth. Insurance. Your booking software. The card reader. Your phone. These bills do not check whether you had a quiet week. They come anyway.
Some of those do not arrive every month, and those are the ones that catch people out. The insurance that renews once a year. The license. The software you pay for annually because it was cheaper that way. They are exactly as certain as the rent. They just queue up quietly and land together, usually in a month you were not thinking about them.
They belong in this pile every month all the same. A bill you pay once a year is not a smaller cost than one you pay monthly; it is the same cost arriving in a lump. Chapter nine makes that painless with one division.
Say the month held eighty of those appointments. Your booking app shows $8,000, and it looks like the best month you have had.
The app said $8,000. The month made $5,000. Nothing went wrong in between; three thousand dollars simply had somewhere else to be, and none of it was ever going to feel like spending.
Whatever is still standing after all of that is your profit. In the month above it is $5,000. That is the real number. That is what the month actually produced.
A share of what is left also belongs to income tax. And if you sell products as well as services, some of what your client handed over was sales tax, which was never yours for a moment. Those are two different taxes, they get two different envelopes, and chapter eight is about both, because nobody should meet them in a hurry.
The part almost everyone gets wrong
Paying yourself is not a business expense. It comes out of the profit.
When you take money out for yourself, that is not a cost of running your business. It is you taking your share of what the business made.
That sounds like a small distinction. It is not. Most owners pay themselves whatever is left at the end of the month, and if you call that a bill, every month shows the same profit: nothing. The $5,000 month above and a $3,000 month both end at zero, because you took the difference home without ever seeing it. Two very different months, and the books cannot tell them apart.
Keep the two apart. First find out what the business made. Then decide what you take.
That holds while you work for yourself without running payroll, which is nearly everybody reading this. If you have set the business up so that it pays you as an employee, your pay really is one of its costs and the picture changes. That is an hour with an accountant, not a paragraph here.
You do not have to change your prices tomorrow
Here is the calm part, and it matters more than the arithmetic.
None of this means you are charging too little. It does not mean you have been doing it wrong, and it is not a reason to raise your prices this week in a panic.
It only means you have been steering by a number that was never the full picture. Once you can see the real one, everything else becomes easier to decide. Whether that service is still worth its spot on your menu. Whether that supplier is worth what they charge. Whether you can afford the thing you have been wanting for the studio.
You cannot make good decisions with the wrong number. You can make very good ones with the right one.
When you do want to look, calmly, the free tool What if I raise a price? shows what a few dollars on one service adds up to in a year, and how many clients you could lose and still come out ahead.
How to start seeing it
You do not have to do arithmetic for any of this. You only have to stop reading one number and start reading three.
The first is what an appointment costs you to deliver. Most of that is the products you used, and a smaller piece is what the card company took on the way through. The products are usually the bigger of the two, and they are the one you can actually do something about.
The second is everything that arrives whether you work or not. Rent or booth, insurance, your booking software, the card reader, your phone. Some of it monthly, some of it once a year and easy to forget until it lands. That pile does not care how your week went, and it is almost always larger than people expect when they finally add it up in one place.
The third is what is standing after both. That is your profit, that is where your own pay comes from, and it is the only one of the three that tells you whether a month was any good.
Write the first two down as they happen and the third works itself out. That is the whole of the next chapter, and it costs about a minute a day.
Busy and profitable are not the same thing, and you deserve to know which one you are having.