Always be Evaluating. The what, how & why of ROI
By Lynn Norris - co-founder VA For VO
I’ve said it before and I (and others) will say it again. Being a successful Voice Over Talent almost always requires more business savvy than talent. Whether you can sustain a living in this industry isn’t only about how great you sound or whether you move us with your acting performance (although you need to do both, of course). To sustain a career as a voice actor, you have to excel at the un-sexy part of the work - you have to be a savvy small business owner.
Small businesses, well really any businesses, need to always be evaluating. And smart owners rely on data to drive growth. Because by paying attention to the numbers, you can identify trends, optimize operations, and make adjustments that lead to sustainable growth.
Tracking cash flow is pretty straightforward. Knowing when money is flowing in and out of the business helps maintain a healthy financial foundation, ensuring you can cover expenses and invest in new opportunities. Which leads to one great metric you should consider before making any expenditures, no matter how small.
Tracking ROI (return on investment), means you can identify which expenses drive growth and which ones are wasted, allowing you to make smarter financial decisions. This focus on return allows you to allocate resources efficiently, minimize unnecessary spending, and stay profitable in a competitive market. And voiceover is about as competitive as it gets these days.
What is ROI and why do I need it?
Here’s a textbook definition - Return on investment is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost.
That phrase "relative to the investment's cost" is very important. Running a business takes investments of time and money. You need a concrete, based-in-numbers measure in order to know whether something is worth your money or your time. Or whether it might be worth your money to let someone else spend their time doing it for you.
Often as creative entrepreneurs, we're not taught any metrics for running our businesses and so we go by guilt, or gut feelings that we SHOULD be doing it ALL ourselves. We sign up for every Pay-to-Play, we coach with every teacher someone says is good, we attend every conference, or make a bunch of demos without being strategic with our investments. Or we forget that skills we have and use every day to run our "behind the mic" business could be another way to make money altogether. Learning to think about ROI when considering how to spend our money and our time helps us put facts to feelings.
How do you evaluate if something is "worth" time or money?
To calculate Return on Investment, you need to know two things - what did it originally cost for you to “acquire” what you’re evaluating and what is its current value.
In a simple example, you buy a stock for $10. It appreciates in value and you sell it at $110 (for easy math).
The ROI calculation = (Current Value - Original Cost) / Original Cost
In the case of our stock, the Original Cost was $10 and the Current Value, or what we sold it for is $110. Which looks like this - ($110 - $10)/$10 = 10. This means you have 10 times as much money after the sale than when you bought the stock. You’ve 10-xed your money or gotten a 1000% return on investment. Man, we should all have these types of investments!
Now that’s all well and good for straight-forward buy/sell transactions, but when you’re evaluating ROI in the voiceover world, it can be a bit more 3-dimensional.
Stick with me.
ROI for casting site memberships
Let’s say we want to evaluate whether paying to join a casting site has good ROI. First we need to figure out the Original Cost and Current Value of the membership. Again, for easy math, let’s use general figures.
For this example, our casting site membership Original Cost is $500 and by being on that platform we book 4 jobs in the course of a year that pay us $500 each or a Current Value of $2000. We can calculate the ROI as follows -
($2000 - $500)/$500 = 3. This means you got back 3 times the money you invested, or 3x or 300% ROI. Not bad on just 4 jobs in 12 months that pay a normal fee of $500. Think about how much higher this number would be if you booked more than 4!
So deciding if the casting site membership is “worth” your money, you have to know how much money you’ll need to earn over the course of a year to evaluate that positively for yourself. Do you want to simply make sure you make your money back? Is 2x great? Or do you need to 10x your money to grow or sustain your business? Knowing the goal of what you need to book to hit that number can help you plan how much you’ll need to audition and what types of jobs you’re the most successful at booking.
** To really geek out on this ROI data, you could factor into your “cost” the value of your time spent auditioning - how long does each audition take? If you were recording a job in that same time period instead of auditioning what would your time be worth? Add up that opportunity cost (or money sacrificed to time) and add that to your Original Cost. Hint: the faster you are at auditioning, the lower your opportunity cost, the higher your ROI.
Trading time for money - the ROI of outsourcing
What if you’re trying to decide if you should hire some help to get more done in your business. Maybe you’re overwhelmed with keeping up on lead generation or need someone to edit your long-form narration. But money’s tight and you want to make sure you are squeezing every ounce of value out of it. Again, evaluate that with ROI. Let’s walk through some examples of how you might calculate some outsourcing ROI.
But keep in mind that there are now TWO PEOPLE (you and the VA) involved in handing over money to get back time and you’ll need to consider both of you when figuring out Original Cost and Current Value.
ROI on getting someone else to do your Lead Generation
You hire a Voiceover Adjacent helper for $20/hr to do your lead generation for 5 hours instead of doing that yourself. Which frees up your 5 hours to focus on email writing, connecting with clients and building relationships. Let’s say this nets you one new client and a $300 video job.
For this example, $20/hr for 5 hours means our Original Cost is $100 and your new customer brings you a Current Value of $300. We can calculate the ROI as follows -
The ROI = ($300 - $100) / $100 = 2. So you got back twice your money, or 2x or 200% return on your investment of $100 and 5 hours of your time more effectively and profitably spent. And this isn’t even factoring in that if the leads found are WARM, you have even more earning potential!
ROI on getting someone else to do your Audio Editing
You hire a Voiceover Adjacent helper for $40/hr to do the audio editing on your long-form e-learning narration job and it takes them 2 hours. Which means you give your client back error-free audio in a fraction of the time it would take for you to record and then QC and edit the audio yourself. Let’s say this nets you one more e-learning job from this client that pays you $900. At $0.30/word, this is a 3000 word module. Not small, not huge.
For this example, $40/hr for 2 hours means our Original Cost is $80 and your new module brings you a Current Value of $900. We can calculate the ROI as follows -
The ROI = ($900 - $80) / $80 = 10.25. So you got back 10 and a quarter times your money, or 10.25x or 1025% return on your investment of $80. AND you didn’t have to spend ANY of your time doing the editing, file splitting and QC yourself!
ROI on hiring a Virtual Assistant
You hire a Voiceover Adjacent helper for $25/hr to be your virtual assistant for 20 hours a month (5 hours a week, 1 hour a day). They help you with everything from optimizing and maintaining your casting site profiles, to lead generation, email marketing, CRM maintenance, etc. This helps you have more time to audition and build client relationships and that means you book a monthly income of $6000. That might sound like a lot, but annually that’s a respectable 5-figure income and not out of reach for a full-time voice actor.
For this example, $25/hr for 20 hours means our Original Cost is $500 and your monthly income is your Current Value of $6000. We can calculate the ROI as follows -
The ROI = ($6000 - $500) / $500 = 11. So you got back 11 times your money, or 11x or 1100% return on your investment of $500. If both you and your Virtual Assistant are focused on the areas where you see the most positive response, be it email marketing or keeping those P2P profiles at the top of search results, or making sure your website ranks for the right search terms, etc. you may have even better results.
Figuring out when something isn’t worth your time or money
Once you get good at identifying Original Cost and Current Value, you can figure out when things that you have a feeling aren’t working out in your favor actually aren’t. Again, facts over feelings, people.
For this example, we’ll examine a voice actor who was also a video producer making demo videos for fellow voice actors. This service came with sourcing video content for each spot, matching sound and special effects to picture… the works. And the time totaled about 24 hours per demo (not consecutively, but total). They charged $500 per demo.
The video producer had a sneaking suspicion that they weren’t charging enough. Mostly because they were getting pretty salty over the low amount they were earning for all the time they were putting in. Which got them curious about what their time was actually worth.
Using a low basic studio fee, not even considering usage, they realized that if they were doing voiceover work in those same 24 hours, they’d make at least $150/hr. So for them, the Original Cost of their time was $3600 ($150*24) and the Current Value of the video, $500.
And one last time, here’s the calculation. The ROI = ($500 - $3600) / $3600 = -8.61. So they were making 8.61 times LESS making videos than they would have made doing voiceover - or a negative 861% ROI. Definitely time to raise the video demo prices!
One more time for good measure
See what I did there? If you aren’t a data geek and don’t track every metric possible to know how your business is doing in any given time period, at the very least, I recommend you get really good at identifying Original Cost and Current Value and do the ROI math. For everything you spend your money on.
I also recommend you track your audition to booking ratio per source (agent, each casting platform, etc) and genre. This can help you quickly identify where you’re excelling and where you might need to invest in some more coaching to improve your odds of landing the work. And then you can evaluate the ROI for that too.
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Lynn Norris is a full-time voice actor (www.VoicedByLynn.com) and the co-founder of VA for VO along with Brigid Reale. VA for VO is the ultimate outsourcing resource, connecting busy VO entrepreneurs with VAs (voice over adjacent resource providers) who can help them in their business. Both VO and VA memberships come with Education, Connection and Community. Find out more at www.vaforvo.com.