I've harped on this in a couple of threads lately. I could certainly be wrong but to me it seems like a lot of mystery shoppers don't have a natural propensity for running a business. As I've said before, there's absolutely nothing wrong with that. A huge majority of Americans don't. So, in the spirit of that, what are some of the things you think many shoppers don't fully "get"? I'm not talking about the actual shopping part. I'm talking about the actual running of a business. The things that would translate to any business you might run. Full disclosure I'm hoping to learn a lot in this thread too.

I'll start. I think a large number of shoppers fail to accurately account for vehicle replacement costs. And it runs the gamut from way high to way low. I know some shoppers think oh I get 35 miles to the gallon and gas is $3.50 a gallon so that's $.10 a mile and that shop is only 5 miles each way so it only costs me $1 to do this shop. On the other hand you have people who think because the IRS mileage is $.575 (or whatever it is currently) then that must be what I need to account for. Then there are the people who figure gas plus maintenance costs and insurance. In all actuality none of those are very accurate. The IRS mileage is very likely quite high and even figuring gas and maintenance is too low. Because many people fail to account for replacing the vehicle. Every mile you drive is a mile less you will get out of your vehicle. I'll give an example.

Let's say you buy a brand spanking new $25,000 car (not recommended for mystery shopping I'm just trying to make the math easy) and you expect to drive that car for 250,000 miles at which point you expect it to be worthless. If that was accurate (foresight is never absolutely accurate for such things) then the replacement cost for that vehicle is $.10 per mile. You absolutely have to include that in your profit calculations. Otherwise you end up using up your vehicle and overstating your profit because you didn't figure for buying a new car when you wore out the old one.

For my vehicle I use the following calculations:

Vehicle Replacement Costs: $17,000 / 170,000 miles = $.10 per mile
Gas: $3 per gallon / 35 mpg = $.085 per mile
Scheduled Maintenance: $200 per / 10,000 miles = $.02 per mile
Expendables (brakes, tires,etc) $1000 / 50,000 miles = $.02 per mile

That's a total of $.225 per mile. I round that up to $.25 mainly to make the math easier in my head and to account for break downs. Over 170,000 miles that would be an extra $4250 for break downs and repairs. Over the life of a 250,000 mile vehicle that would probably not be high.

Some people include a portion of insurance in their calculations as well. I do not for the simple fact that I would have the exact same insurance as I do now, the only difference is the higher mileage and while that did make a small change to my insurance premium it was a statistically irrelevant amount.

Reportable taxes, i.e. fees/bonuses v. reimbursements.

Oh geez taxes are a whole other story!

To successfully run a business, one needs to put together some form of a business plan. A basic set of objectives at minimum.

One should use some basic accounting software or ledger to track all expenses and payments. If they use their vehicle, keep a log to document each trip for business purposes.

After about 90 days in, one should be able to use the information they have been collecting to understand the direction they are going in.

As far as taxes go, the more one earns the more likely they may need professional guidance.

For those who reply with other topics, can you give examples of what you're talking about in your replies? Not to single out BOBW but saying people don't understand the difference between fee and reimbursement for tax purposes doesn't actually help people understand the difference between fee and reimbursement. Or saying they need a basic business plan doesn't help them understand what you mean.

I actually do a base business plan in my head, and sometimes on paper. As a part of that I know fairly accurately what percentage of my fees are profit. My percentage will be much different from someone else's percentage. So let's say that after doing this 5 years I've come to find that my end of year profit seems to be really close to......80% of my total fees. So if my total fees for the year are $100,000 my profit tends to be close to $80,000. (all numbers are for demonstration purposes only and are not indicative of my actual amounts lol). So let's say I have a profit goal of (gee let's make the math easy) $80,000 then I know I need to do about $100,000 in fees this year. At the beginning of the year I knew I had 6 routes preplanned and I knew about how much each one was going to be. So I looked at that and said ok, I'm $x short I need to find another $x in work sometime this year.

To expound on my OP. If you have a car note you absolutely have to include interest in your calculations! That's a car expense and should be included. Also, from my post, I said I account for $.25 per mile for vehicle cost. Obviously, the smaller that number is the better not only because it increases your actual profit but it increases your profit with no additional tax liability.

I am impressed that your cost of doing business is so low. I use the IRS mileage rate, and after doing this for 11 years, find that mileage accounts for 1/3 of fees (if I reimbursements into the equation, mileage is about 25%). A few years ago, I decided to expand my radius for shops, and after a few months, mileage grew to 50%, so I cut back since I was not only driving more miles but spending more time driving, which I decided was not worth it.

@bgriffin wrote:

So let's say that after doing this 5 years I've come to find that my end of year profit seems to be really close to......80% of my total fees. So if my total fees for the year are $100,000 my profit tends to be close to $80,000. (all numbers are for demonstration purposes only and are not indicative of my actual amounts lol). So let's say I have a profit goal of (gee let's make the math easy) $80,000 then I know I need to do about $100,000 in fees this year.

Oh no my costs are much higher than 20%. As I said those numbers were just for demonstration purposes, lol.

@myst4au wrote:

I use the IRS mileage rate

Why? I mean obviously for your taxes you would use that but for your personal accounting it's probably very high. To get to $.575 you would probably have to be driving a new, fairly expensive car. Let's say it's a full size SUV that gets 20mpg and cost $50,000. Just off the top of my head without breaking out the calculator gas costs would run you about $.15 per mile, replacement would run another $.20 per mile, if you doubled my maintenance and expendables cost to another $.10 per mile you're still only at $.45. If you have a car loan you would have to add interest but at a reasonable expectation of 250,000 mile life you've overstated your cost internally by about $32,000 over the life of the car.

Edited to add:
If you trade cars fairly often that would make a decent size dent in that $32,000 but not that big of a dent.



Edited 1 time(s). Last edit at 04/30/2019 03:49AM by bgriffin.

@bgriffin wrote:

I've harped on this in a couple of threads lately. I could certainly be wrong but to me it seems like a lot of mystery shoppers don't have a natural propensity for running a business. As I've said before, there's absolutely nothing wrong with that. A huge majority of Americans don't. So, in the spirit of that, what are some of the things you think many shoppers don't fully "get"? I'm not talking about the actual shopping part. I'm talking about the actual running of a business. The things that would translate to any business you might run. Full disclosure I'm hoping to learn a lot in this thread too.

I'll start. I think a large number of shoppers fail to accurately account for vehicle replacement costs. And it runs the gamut from way high to way low. I know some shoppers think oh I get 35 miles to the gallon and gas is $3.50 a gallon so that's $.10 a mile and that shop is only 5 miles each way so it only costs me $1 to do this shop. On the other hand you have people who think because the IRS mileage is $.575 (or whatever it is currently) then that must be what I need to account for. Then there are the people who figure gas plus maintenance costs and insurance. In all actuality none of those are very accurate. The IRS mileage is very likely quite high and even figuring gas and maintenance is too low. Because many people fail to account for replacing the vehicle. Every mile you drive is a mile less you will get out of your vehicle. I'll give an example.

Let's say you buy a brand spanking new $25,000 car (not recommended for mystery shopping I'm just trying to make the math easy) and you expect to drive that car for 250,000 miles at which point you expect it to be worthless. If that was accurate (foresight is never absolutely accurate for such things) then the replacement cost for that vehicle is $.10 per mile. You absolutely have to include that in your profit calculations. Otherwise you end up using up your vehicle and overstating your profit because you didn't figure for buying a new car when you wore out the old one.

For my vehicle I use the following calculations:

Vehicle Replacement Costs: $17,000 / 170,000 miles = $.10 per mile
Gas: $3 per gallon / 35 mpg = $.085 per mile
Scheduled Maintenance: $200 per / 10,000 miles = $.02 per mile
Expendables (brakes, tires,etc) $1000 / 50,000 miles = $.02 per mile

That's a total of $.225 per mile. I round that up to $.25 mainly to make the math easier in my head and to account for break downs. Over 170,000 miles that would be an extra $4250 for break downs and repairs. Over the life of a 250,000 mile vehicle that would probably not be high.

Some people include a portion of insurance in their calculations as well. I do not for the simple fact that I would have the exact same insurance as I do now, the only difference is the higher mileage and while that did make a small change to my insurance premium it was a statistically irrelevant amount.

In February, I was on a route and was hit by an unattentive driver. The rear end accident totaled my 2016 Honda CRV Touring. I found out real quick about the devaluation for excessive mileage. The at fault driver's insurance company devalued my car $8,000 for the excess mileage. BTW they used 21 cents per mile over 13000 per year. I used to think nothing of driving 3 or 4 hours each way if I was going to work for the week, now a different story.

The mileage rate is supposed to cover gas, maintainence, and depreciation. Maintainence is higher on older vehicles, and depreciation is higher on newer ones. The rate from the IRS theoretically finds a balance between the two, but is usually much higher. Be thankful, as this helps offset thise nasty self-employment taxes.

I have a basic business plan which sets goals for hourly and monthly income, accounts for expenses, and includes software to track expenses, income, mileage, and taxes. I keep records religiously, and upload all receipts to my tracking software.

Most importantly, I reevaluate my goals and progress every few months. I have occasionally been surprised when I realize that what I thought was a profitable month was actually offset by higher expenses. Never assume, always look at the numbers and learn from them.

Don't forget to account for your car's warranty expiration. Warranties always state a specific time period and also a mileage expiration, WHICHEVER comes first. I have NEVER had a warranty last as long as it was supposed to. As a matter of fact, my 3 year warranty on a car I bought 5 months ago expired last week due to mileage.

I bought a highly reliable used car. (Honda Fit Sport) Former owner takes the largest part of the depreciation hit. It also gets 38 mpg on the highway and 28-30 in town. My cash costs over 75,000 miles of ownership have been: 1 battery; one set of Michelin tires; one super major tune-up; one brake job; radiator flush and fill every 2 years. Every oil change has been covered by a shop, with a small fee. Car washes, ditto. As a Costco member, tire rotations are free. As a long time Erie Insurance customer with a good driving record, very comprehensive auto insurance costs less than $100 per month. I am on track to get 200,000 miles from this vehicle. Road service (Needed only when I have left the lights on and need a jump start.) is included in my auto insurance so no need for AAA. Oh, yes, and I use my grocery store's rewards program and get 20 to 40 cents per gallon off of every fuel fill. Several thousand dollars of the vehicle purchase price went onto a rewards credit card (THAT took some negotiation! !) , which was then paid off immediately. All subsequent auto casts except insurance, ditto.

So, not only business savvy, but also, consumer savvy, needs to be part of the plan. Knowing what things MAY cost and then having a plan to systematically reduce those costs to a minimum, with little time or effort, can pay big dividends.

@bgriffin wrote:

I've harped on this in a couple of threads lately. I could certainly be wrong but to me it seems like a lot of mystery shoppers don't have a natural propensity for running a business. As I've said before, there's absolutely nothing wrong with that. A huge majority of Americans don't. So, in the spirit of that, what are some of the things you think many shoppers don't fully "get"? I'm not talking about the actual shopping part. I'm talking about the actual running of a business. The things that would translate to any business you might run. Full disclosure I'm hoping to learn a lot in this thread too.

I'll start. I think a large number of shoppers fail to accurately account for vehicle replacement costs. And it runs the gamut from way high to way low. I know some shoppers think oh I get 35 miles to the gallon and gas is $3.50 a gallon so that's $.10 a mile and that shop is only 5 miles each way so it only costs me $1 to do this shop. On the other hand you have people who think because the IRS mileage is $.575 (or whatever it is currently) then that must be what I need to account for. Then there are the people who figure gas plus maintenance costs and insurance. In all actuality none of those are very accurate. The IRS mileage is very likely quite high and even figuring gas and maintenance is too low. Because many people fail to account for replacing the vehicle. Every mile you drive is a mile less you will get out of your vehicle. I'll give an example.

Let's say you buy a brand spanking new $25,000 car (not recommended for mystery shopping I'm just trying to make the math easy) and you expect to drive that car for 250,000 miles at which point you expect it to be worthless. If that was accurate (foresight is never absolutely accurate for such things) then the replacement cost for that vehicle is $.10 per mile. You absolutely have to include that in your profit calculations. Otherwise you end up using up your vehicle and overstating your profit because you didn't figure for buying a new car when you wore out the old one.

For my vehicle I use the following calculations:

Vehicle Replacement Costs: $17,000 / 170,000 miles = $.10 per mile
Gas: $3 per gallon / 35 mpg = $.085 per mile
Scheduled Maintenance: $200 per / 10,000 miles = $.02 per mile
Expendables (brakes, tires,etc) $1000 / 50,000 miles = $.02 per mile

That's a total of $.225 per mile. I round that up to $.25 mainly to make the math easier in my head and to account for break downs. Over 170,000 miles that would be an extra $4250 for break downs and repairs. Over the life of a 250,000 mile vehicle that would probably not be high.

Some people include a portion of insurance in their calculations as well. I do not for the simple fact that I would have the exact same insurance as I do now, the only difference is the higher mileage and while that did make a small change to my insurance premium it was a statistically irrelevant amount.

My last car that I still own has 485k miles on it. I replaced the brakes once. It was 30k new. We bought another one in 2017 and it now has 92k miles. I average 50k miles per year. I'm not worried about the cost of any additional mystery shopping miles. We average 65 mpg. Buy a Prius!! (Last car before the Toyotas was a Jaguar, blew up at 60k miles. Never again)

I don't think that you have to have a business mindset to be a successful shopper. But I do think that the business mindset has many similarities to what makes a shopper successful. A self starter who doesn't sit around waiting to be told what to do, likes to negotiate and can think on their feet will probably be a very successful shopper.

It's been demonstrated many times on this forum, that location determines much of a shoppers success. I think even the most determined and businesslike shopper can't overcome the limitations of their location.

All that being said, sometimes I approach it like a business and sometimes I don't. Sometimes I just do my high paying routes and forget most of the rest. Sometimes I go after everything in reach with gusto and spend more time with my car than my wife. It depends on the needs/opportunities of the moment, and also my mood.

But I always keep records and spreadsheets. It's my least favorite part of the whole thing.

For me, the one of the biggest keys is to take the time to research and develop a plan. My first month shopping, I was just grabbing shops and I could and didn't think a lot about whether or not they were "worth it." Any money was better than no money. However, after finding this forum, I became intrigued by stories folks told about how they made a living doing this and, knowing that I preferred "more" money over "less" money, I began to really read about mystery shopping - especially on this forum. I asked questions. I was "corrected" by more experienced shoppers many times. I learned.

Once I had a sense of just how vast the mystery shopping world is, I reflected on what I did well within the community and where I could excel. I signed up for many, many companies and specifically sought out opportunities that fit my skill set. By my third month of shopping, I recognized that my niche would largely be apartments and video. However, I also began to find patterns with how different MSC's operate and began to plan my different types of shops for different times of the month/quarter so that I could work for each MSC at their time of highest need - think "highest bonuses." I began to recognize what my time was worth within this industry and learned to self-advocate when negotiating fees.

As I continued to grow my effectiveness as a shopper, I expanded my area and started to look at locations far enough from home that they would require an overnight stay. I found several places that were severely short of shoppers and began to make them a part of my regular searches for work so that I could make a trip when I have time off work. I purchased a car with fantastic gas mileage and a reputation for excellent reliability - which I knew would help to make my longer trips more profitable.

I continue to learn - largely by reading this forum. I continue to sign up with more companies (albeit more slowly than I had been). My entire reason for starting to shop was to make money (profit) and, as such, increasing income while decreasing labor time, has always been a primary goal of my plan. To that end, I have continued to alter they types of shops I take - I rarely take car dealerships and, as I have learned to play a couple of table games very well, I seek out casinos.

I do think that many shoppers would benefit from sitting down and really deciding that they want to accomplish and then taking the time to research how than can accomplish it. Shopping income is not something that happens to us, it is something we have to specifically seek out and take. I am convinced that there is more money out there fore me to claim, despite the time I have put into doing my research already. For that reason, I am convinced that nearly all shoppers who want to increase their earnings could do so as well.

I do recognize that the optimal plan is going to be different for every shopper, based on geography, skill sets, family lives, etc.. For example, those in rural areas could make a fine income shopping. However, they would more likely have to spend a lot of time on the road doing multi-day routes, which may not be reasonable for them personally. (If I can fly to San Francisco for a week and earn $3,000, so can they. However, folks needing to care for their young children, who have specific disabilities, etc. might find such trips impossible.)

@CoffeeQueen wrote:

It's been demonstrated many times on this forum, that location determines much of a shoppers success. I think even the most determined and businesslike shopper can't overcome the limitations of their location.

I live in a small town that's population is a few dozen over 24,000.

My SO believes in warranties on cars, I do not. For her car, her decision rules. When she bought it 18 months ago, they offered a slew of different warranty options. She picked one with much higher mileage limits so that she would not "time-out". That was the first time I had seen those types of options. Of course, the warranty companies have all the data and on average are going to make a lot of money on warranties.

@Aquiest wrote:

Don't forget to account for your car's warranty expiration. Warranties always state a specific time period and also a mileage expiration, WHICHEVER comes first. I have NEVER had a warranty last as long as it was supposed to. As a matter of fact, my 3 year warranty on a car I bought 5 months ago expired last week due to mileage.

If you buy a new car, a warranty is going to be included whether you believe in them or not. If you buy used and finance, some banks require it.

Also consider the dangers of being on the road, aside from the financial aspect of it. Late last year my vehicle was totaled at the fault of an uninsured driver while on my way to a revealed inspection. Luckily I was not severely injured, but it brings to attention that we are at risk the more we are out there. And also more opportunity to fork over hard earned money & be susceptible to insurance hikes via traffic violations.

Edited 1 time(s). Last edit at 04/30/2019 03:14PM by Aquiest.

@bgriffin wrote:

@CoffeeQueen wrote:

It's been demonstrated many times on this forum, that location determines much of a shoppers success. I think even the most determined and businesslike shopper can't overcome the limitations of their location.

I live in a small town that's population is a few dozen over 24,000.

My city has just shy of 1M. There are losts of the common shops (oil change, cell phone, grocery, apartment, etc.) but not so many specialty shops. I can pay the basic bills doing local work, but to make a decent living I have to take travel routes. My preferred shopping style is to do the same 2-3 shops on a long route, with app work for fillers.

Route work isn't for everyone, but if you can do it, I recommend it.

@Aquiest wrote:

Also consider the dangers of being on the road, aside from the financial aspect of it. Late last year my vehicle was totaled at the fault of an uninsured driver while on my way to a revealed inspection. Luckily I was not severely injured, but it brings to attention that we are at risk the more we are out there. And also more opportunity to fork over hard earned money & be susceptible to insurance hikes via traffic violations.

I have contemplated that scenario many a time when I was 100 miles or more from home doing this. That is just about my worst nightmare.

I think one of the biggest things newer shoppers do not figure as a cost is their time. Time and again when a thread discusses the shop pay few mention the actual time involved from start to finish. The time you leave your house to the time you return home plus the time to enter the report are all part of your cost.

Yes but add to that the time it takes to search out jobs and read rules etc. This time would not necessarily be applied to an individual shop but overall time during any week to do job searches, writing back and forth to schedulers etc can really add up. If I spend a half hour every morning looking for work that adds 2.5 hours per week. And getting ready for each job also takes some time.
As for the car it is very particular. My late Jeep got around 11 mpg and it also had expensive repairs fairly frequently. But that was the car I had at the time. So that car came pretty close to the IRS amt. in costs per mile. I did not need to figure in the cost of the car anymore as it was pretty worthless by that point. The insurance costs, as mentioned above, can really add up too and be varied a lot more by mileage than I suspected. I now have 2 cars and one driver (me). They are both fairly new. The insurance on one that I reported as 1500 miles per year (my husbands car that sat outside unused for a year after he died) is about half the cost than the insurance on the other that is reported as 4500 miles per year. Yes low mileage but most of it is for mystery shopping these days and those 4500 miles and a large percentage for mystery shopping takes me 5x longer to drive than those of you on the open road. I always figure time driving, parking and walking as in a big city you can rarely park right in front of the store you are shopping at.
Other time costs which some might not count would be time to return an item for a purchase return shop if you do them. Some days you might be in the area anyway for other jobs, other times you might end up making a special trip due to circumstances. Even if the return is a few miles away, the time counts to get there and back.

@cjbstar wrote:

I think one of the biggest things newer shoppers do not figure as a cost is their time. Time and again when a thread discusses the shop pay few mention the actual time involved from start to finish. The time you leave your house to the time you return home plus the time to enter the report are all part of your cost.

I would like to add to this discussion, that if one truly looks at this as a business, then one should consider setting up an LLC (Limited Liability Corporation). I was advised to do this when my wife and I sat down with a financial advisor a few years ago. The most compelling argument for doing this is the protection it offers from lawsuits. So what type of lawsuit would a mystery shopper risk being involved in you ask?

Several years ago, prior to the set up of my LLC, I hit a young boy with my vehicle in the forecourt of a gas station that I was doing a revealed audit for. I was pulling away from a pump and this kid comes out of nowhere on his bicycle and rides it directly in front of me as I'm pulling away. I couldn't have been going more than five miles an hour at the moment of impact. The boy fortunately was not hurt. The bicycle was slightly damaged. The police were called and reports were filled out. My insurance company ultimately paid for a new bike for the kid as well as an emergency room visit. Case closed. However had the incident been more serious, I would have been open to a lawsuit for medical costs.

I was advised that plaintiff attorneys tend to look at the limits of your insurance coverage as well as your overall net worth and sue for as much as they think they can get, even if that amount exceeds the limits of your insurance. An LLC limits your liability to the assets in your business. If used properly, It shields all your personal assets. Fortunately I have had no further occasions to test the LLC shield, but I personally would not continue shopping without it.

@Aquiest wrote:

If you buy a new car, a warranty is going to be included whether you believe in them or not. If you buy used and finance, some banks require it.

Finance companies can not require an extended service contract (warranty). They can restrict their offers to age and mileage, that still does not force adding coverage beyond what the factory provided when the vehicle was new. Any dealership associate that says adding Gap or a warranty is required, better be showing you the requirement is from the finance company.

I have seen some very rare circumstances where a finance company requires certain customers to have Gap. Never have I seen a requirement for a warranty. Maybe requiring a dealer to provide a 30 day warranty, that is refusing to finance an As Is vehicle. Never for the customer to purchase something. They do set limits on how much extra they will finance if a customer adds these products.

@OHGuy, I'm no lawyer but I don't think an LLC would have helped you very much, for a couple of reasons. I'm assuming that you would not move your vehicle into an LLC. If you do and use it for personal use that creates a tax nightmare. So in your example you personally would have been liable as the driver and the owner of the vehicle. Even if you had moved your vehicle into the LLC you still would be liable as a negligent driver.

Where an LLC protects liability is when you are not personally negligent, which as a 1 person LLC is likely never going to happen.

bg may not be a lawyer, but he is correct. Source: a lawyer specializing in small businesses . You need a personal liability insurance policy, aka, an umbrella policy. In order to get a good one, you need to increase liability coverage in both your homeowners' and auto policies, as well. And, just a reminder that neither this, nor a business liability/errors and omissions policy will cover certain types of acts, such as nondisclosure of defects, discrimination, etc.



Edited 1 time(s). Last edit at 05/01/2019 05:11PM by walesmaven.

@OHGuy wrote:

I would like to add to this discussion, that if one truly looks at this as a business, then one should consider setting up an LLC (Limited Liability Corporation). I was advised to do this when my wife and I sat down with a financial advisor a few years ago. The most compelling argument for doing this is the protection it offers from lawsuits. So what type of lawsuit would a mystery shopper risk being involved in you ask?

There is no doubt about it that what you are saying is a very wise idea. Of course the usual cast of characters have arrived to foo foo and poo poo your suggestion into the ground. Truth be known they have no assets to protect in the first place so an asset protection device like an LLC is pointless to them. I do not have an LLC for this but I will take it into consideration.

I don't know why you insist on thinking we are all broke.