We have already discussed the forward-thinking nature of the Pandora business plan and how it’s designed to benefit our models over the short and long terms. We would now like to break the numbers down a bit further so that this aspect of the webcam modeling industry is clear to every prospective model who reads this.
The most important thing to know is that we here at Pandora are a meritocracy. We start every model we hire at our base rate commission of 27.5% of total sales. As we have stated already, we are selective when it comes to hiring and we only choose to represent models we feel will be able to attract an audience of clients willing to pay to spend time with them. And because of our business model that stresses one-on-one interactions with clients and the building of long-term relationships, we know that our models earn more with us than they do with other agencies.
But you may be wondering why we settled on the base rate of 27.5% commission for models starting out. More importantly, you may be asking yourself, “Does Pandora pocket that other 72.5%?” The answer is a firm “no”. Absolutely not. What is the breakdown as to where it actually goes? We’re happy to share that with you. We’re all about transparency.
Webcam modeling has four basic costs:
Broadcasting costs, which include the models and the studios. Studios, like Pandora, have expenses relating to the recruitment and training of models, for instance.
Customer acquisition, that is, the affiliate department and whatever media strategy they devise—essentially advertising and promotion.
Credit card processing fees.
The technical side of things, meaning the network, which includes the equipment, the servers, the databases, and the staff required to keep them operating.
Some of these costs are fixed and don’t leave much room for cuts or streamlining. The expenses associated with running a network are going to be around 20% of sales revenue. There’s not much room for flexibility here, since the site needs to be kept online all the time and technicians need to be employed to maintain it.
Another cost that is largely out of our control is credit card processing fees, which end up being 12%-15% of all network sales. This percentage may seem high, and indeed it is, compared to the fees associated with more “normal” and “mainstream” businesses. The reason is that porn is considered to be a high risk enterprise by credit card companies, which is justified to some degree by the fact that fraud is more prevalent in porn transactions than it is in other sectors. Not much can be done about reducing these costs either, until bitcoin becomes ubiquitous.
Recruiting models and gaining customers are the two areas where there is some amount of freedom to strategize on how to spend money according to different business philosophies. Should you pour a ton of money into efforts to enlist as many models as you can, or should you strive to maximize the amount of traffic you can drive to your site? At Pandora, we want to get as much money as possible into our models’ bank accounts, full stop. More customers means more sales revenue, and more sales revenue means more income for our performers. A major factor in this success comes from how Flirt4Free’s affiliate department structures their site, which encourages loyalty to certain models among customers and facilitates spending battles between different fan bases. But this is not all there is to it.
If you worked as a freelance performer and used Flirt4Free as your platform, you would make 27% of all sales revenue. If Pandora represents you and you use Flirt4Free, you get 27.5% as a modeling novice. But our savviness in choosing to represent performers with the most potential and teaching them the strategies they can use to gain long-term loyalty from customers ends up being worth far more than just that 0.5% in the long run.
Not only that, but with Pandora, you will earn a higher percentage when your total sales exceed a certain threshold both within a pay period and over the course of your lifetime as a performer with us. We have roughly 150 models working with us right now. In 2016, our top 20 models each made an average of $80-$100 per hour when earnings for the entire year were taken into account. Some of them ended up making an average of over $100 per hour over the course of the year, and one even averaged over $200 per hour.
At Pandora, our operating margin is around 3% of total sales. The cost of acquisition for a new model’s account is around $70. The cost of investing in a long-term successful model is anywhere from $7,000-$10,000. We have to bring in enough money to stay in business, of course, and right now, we gross about 12%-13% of our models’ earnings. Our aim is to get that number to 10% or below. This is totally doable, since our fixed costs won’t increase much, even if we double our sales. Because of our graduated earning scale for longtime performers, our average payout to models at the end of 2016 was 32%, though this number constantly fluctuates. We make a bit more off of brand new accounts and the take home percentages for models increase quickly as they earn more money. Right now our 12-13% has been a function of a high volume of sales coming in from new models over the past 6 months.
We give you a better deal as a rookie model than other agencies do, but the numbers move even more in your favor the longer you stay with us and the more you earn with us. Plus, if you’re one of our performers, but you feel that you can find a better deal elsewhere, we’ll let you go. Other studios try to keep a lock on models and can make it hard for them to seek representation with a competitor. But this is not how we operate. Mostly, that’s because we feel that it’s just plain wrong to treat people that way. But—and this is important—we make it easy for models to leave us because we know that once they learn how we do business, they won’t want to.
We think it’s important to know the numbers and to know how they’re arrived at. Success in the camming industry is a team effort. Without the network and the affiliates and the payment processors and the dozens of other essential service providers, no one would make any money. We’ve watched hundreds of individuals over the years try to make a go of the Self Promote + Skype business model. Almost no one makes any significant money from it. You just can’t compete. The effort required by an individual to build the sort of customer flow that our models have access to just by logging in isn’t feasible at an individual level.
Our top performers will have 500-1,000 qualified (have an account with a credit card attached) customers go through their public chatroom per hour. People that do Skype spend 3 hours negotiating with customers that don’t ever pay them for every 30 minutes they spend actually doing a show, and maybe they keep 100% of that $100 for the 30 minute show and think “cool, I just made $100 in 30 minutes.” Only they didn’t. They made $20-30 an hour, hard fought. While our people make $100/hr without having to negotiate anything or violate Paypal/Venmo/SquareCash T&C.
We care about dollar per hour income. That’s it. And we’ve been working for years to negotiate arrangements that facilitate our models having the highest dollar per hour income possible, with good results. Company wide our models earn $42/hr on average. More than 10 earn over $100/hr.
The last point we’d like to make about numbers has to do with room to grow. The reality is that we’ve never had a situation where a highly qualified model started on the site and wasn’t able to make money. The demand for high quality models is nearly infinite. If we think someone will get on and make $50/hr, they almost always do. The demand for cool models always outpaces the supply, because the best models manufacture demand for themselves just by being available.
We hope you found this educational, or perhaps inspirational.