Mare,
I absolutely agree with you about that "happy medium" being struck in any operation. I think there are two basic ways to go about trying to break even or make a profit in the herps business/hobby. You can either breed a bunch of lower priced animals and make it up on the volume you sell, or you can produce top quality animals and be happy selling fewer of them.
If you produce nothing but lower priced animals, you CAN make quite a bit of money without very much investment. If you say, bought 5.10 normals of various hets, you could pretty easily count on producing 100-150 sellable hatchlings every year (maybe more or less, depending on whether those females double clutched or how prolific they were at breeding). If you sell those for an average of fifteen dollars a piece, you can expect to make $1,500.00 to $2,250.00 per year. If you breed your own mice, the costs are even lower, but even with feeding frozen mice from rodentpro or bigcheese, you still are well within $300 or so for total feeding. Let's say you build your own racks for keeping the animals, and you could house them all comfortably for $600.00. So, the final tally is maybe $1,900.00 in expenses for the first year (including the purchase of your breeders), and you have a pretty good shot at making all, or nearly all, that money back in the very first spring you sell your babies. True, your time has not yet been accounted for, but if we are in this as a hobby and not a pure business venture, that shouldn't be surprising. The second year, sees much the same "income" with no more expenditures than the continued feeding of those animals ($300-$500/year). I'd say that was a hobby that made you a profit, but this way produces a lot of work for one to do.
The other way to do this is to bite the bullet in expenditures in the first year, settle for far fewer babies to sell, and ONLY buy higher end animals. I paid quite a bit of money for 1.1 hypo-bloodred hatchlings this year. Now, it will be a couple of years before I see any of this back, but when they start producing for me, I should have no problem recouping as much as 500% of my original purchase price for them from their very first clutch (and that's assuming that I have to undercut the "big breeders" a bit in order to make mine more appealing, which I don't plan on doing at all). I also have other variations of bloodreds, lavenders, motleys, and other color morphs that all will produce babies that are by far more "sellable" than are the normally colored animals mentioned above. Even if I sell the babies at say 20% less than market value just to move them (I wouldn't, by the way), I could still more than make up whatever I have spent on the adults to produce them.
My racks, feeding, and continual purchases are all supported by the sales from the babies that my current animals produce. I'm not a corn snake mogul, by any stretch of the imagination, but they (my critters) take care of themselves financially, and, because I have need of fewer animals to do the same thing that the person who breeds less expensive morphs needs to create that amount of profit, my ability to take care of each individual animal is not stretched so thin. I still hold almost every one of my animals for a few minutes almost every single day, for example.
There is no way that I could ever hope to do this professionally in the sense that my entire income would be derived from this venture as do Rich, Don, Kathy, Jim Stepflug, and many others. However, I do think that with a little forethought, some learning from others who have gone on before us, and some reasonable expectations, one can have his hobby and make his profit too.