I'm working at a low income school. We could sure use prizes such as the remote control cars....or the $1600.00...whichever you prefer.
Seriously, how much for the cars?
We're always needin' prizes or books or pencils for that matter....
How much do I need to charge...
- Thread starter Dude Walker
- Start date
I'm working at a low income school. We could sure use prizes such as the remote control cars....or the $1600.00...whichever you prefer.
Seriously, how much for the cars?
We're always needin' prizes or books or pencils for that matter....
I've found that I actually can actually MAKE MORE, even if I charge a little less per show. How? My favorite: The Back End Principle. Purchase wisely, limit my operating expenses, and one weird one: Knock off the upsells that don't make me any real money, but force me to raise my price, making me less competitive. Yup, I've gone the no frills route, and it's increased both my bookings and my net profits. .....AND it's easier! Gotta love it.
G
Guest
Guest
I just looking in the new Yellow Book and there was Dude...
You apparently live in my neck of the woods. I quit the yellow book cause of not one single phone call over the years... Internet is better. Hey PM me and we'll talk...
You apparently live in my neck of the woods. I quit the yellow book cause of not one single phone call over the years... Internet is better. Hey PM me and we'll talk...
Steve Miller said:
Steve,
What do you suggest when market averages are cosiderably lower that legitmate costs of production?
Overall, wedding markets are shrinking in total numbers AND especially in marriage rate vs population ratio.
Market average can become a tombstone for any business.
Dude,
Why do you presume it costs $640 to produce an $840.00 DJ performance?
Wouldn't you suggest to the person with such a plan that "business" is probably NOT their calling?
Why do you presume it costs $640 to produce an $840.00 DJ performance?
Wouldn't you suggest to the person with such a plan that "business" is probably NOT their calling?
Bob,
You're correct. However, the model is what YOU make it. Have YOU actually input YOUR OWN data?
The original RateRiteXLS file and the second RateRite2XLS files are there for the user to input data.
Hence the <<< INPUT YOUR DATA message.
If the user feels they are subpar, then the user needs to adjust their numbers to become more viable.
What's ironic and pathetic, is there are MDJs that have higher expenses than gross revenue...and they think they're successful business people.
Plug in YOUR numbers and see how YOU do.
I encourage you to input YOUR OWN NUMBERS to view YOUR results.
Curious, could you define over-produced? I do not believe that was the intent of my question to Steve and I am awaiting Steve's response.
You're correct. However, the model is what YOU make it. Have YOU actually input YOUR OWN data?
The original RateRiteXLS file and the second RateRite2XLS files are there for the user to input data.
Hence the <<< INPUT YOUR DATA message.
If the user feels they are subpar, then the user needs to adjust their numbers to become more viable.
What's ironic and pathetic, is there are MDJs that have higher expenses than gross revenue...and they think they're successful business people.
Plug in YOUR numbers and see how YOU do.
I encourage you to input YOUR OWN NUMBERS to view YOUR results.
Curious, could you define over-produced? I do not believe that was the intent of my question to Steve and I am awaiting Steve's response.
Dude,
I'd like to throw out a theory of my own, having to do with Tax code aspects.
Assuming the first TWO YEARS of operation are going to be losses, then you must show a profit for three consecutive years........
Wouldn't it be prudent for a beginning DJ to show Schedule C losses in those first 24 months, because they have 2 incomes from his & her's day jobs.
I know that I benefited from that "negative cash flow", much of it was fueled by depreciation of purchased assets.
Therefore, many new companies can AFFORD to operate at a loss, because of the TAX BENEFITS they are generating in those first years.
In my own experience (this being 18-20 years ago).....by my third or fourth year I wised up and began the long climb to respectable wages.
I'd like to throw out a theory of my own, having to do with Tax code aspects.
Assuming the first TWO YEARS of operation are going to be losses, then you must show a profit for three consecutive years........
Wouldn't it be prudent for a beginning DJ to show Schedule C losses in those first 24 months, because they have 2 incomes from his & her's day jobs.
I know that I benefited from that "negative cash flow", much of it was fueled by depreciation of purchased assets.
Therefore, many new companies can AFFORD to operate at a loss, because of the TAX BENEFITS they are generating in those first years.
In my own experience (this being 18-20 years ago).....by my third or fourth year I wised up and began the long climb to respectable wages.
G
Guest
Guest
Dude,
In a situation where your cost to produce is as high or higher than the local average Performance is correct you are in the wrong business.
In a given area there may be a high number of low cost DJ's but the truth is you won't find many of them doing weddings.
If a DJ goes out and replaces his gear every year with the next high cost "big thing" looking to have an edge, he is going to find himself in the situation you describe. In that situation he is going to be competing with experienced DJ's who have gear that has already recovered it's cost and is producing pure profit. The end results will be such where the "latest greatest" DJ will be unable to operate with a profit margin at or near the local average. When this happens he has three choices begin traveling to find higher paying gigs, operate at a loss or hang it up as a business.
In a situation where your cost to produce is as high or higher than the local average Performance is correct you are in the wrong business.
In a given area there may be a high number of low cost DJ's but the truth is you won't find many of them doing weddings.
If a DJ goes out and replaces his gear every year with the next high cost "big thing" looking to have an edge, he is going to find himself in the situation you describe. In that situation he is going to be competing with experienced DJ's who have gear that has already recovered it's cost and is producing pure profit. The end results will be such where the "latest greatest" DJ will be unable to operate with a profit margin at or near the local average. When this happens he has three choices begin traveling to find higher paying gigs, operate at a loss or hang it up as a business.
DJMC said:
DJMC, thanks for the input!
To begin with. Tax codes can be complex. I always suggest that any TAX strategy be handled with a qualified CPA, Tax Accountant or Tax Attorney. Each persons financial situation is unique.
Generally speaking, showing profit is a good thing. Despite a transition from being an employee of another company to being a business owner of another. It is wise to show profit a minimum of 3 out of 5 years to avoid drawing the attention of an audit.
Tax shelters are acceptable, as long as they are within the parameters of the IRS Tax Code.
Keep in mind, only bona fide businesses can deduct their losses or expenses. Not all DJ ventures pass the minimum criteria.
You are not allowed to deduct losses from your favorite activities, only from a legitimate, profit-motivated business.
http://www.irs.gov/businesses/small/article/0,,id=99239,00.html
http://www.irs.gov/businesses/corporations/article/0,,id=97384,00.html
http://smallbusiness.yahoo.com/r-article-a-2574-m-4-sc-27-hobby_business_tax_rules-i
If a person is audited and their DJ venture is deemed a tax shelter scam, you could potentially wave bye-bye to deductions in future years and pay a hefty penalty for past years.
I'm curious why anyone would want to limit their profitability. When there are so many retirement options available through SEPs, IRAs, KEOGHs, Tax Sheltered Annuities & 401Ks. There are more fiscally responsible ways of lowering taxes that are not only legal...but beneficial in the long run.
The most fundamental underlying point that you've brought up, is that you need to know where you are...to know where your going with finances.
Largely the reason for my initial post.
Steve Miller said:
Steve,
I respectfully disagree. I'll use an example of Iowa. There are many DJs within Iowa. Some higher priced...many lower priced. The intriguing thing is the perceived market value of DJs is being affected by the initial curb appeal price. The curb appeal price affects wedding DJs that are being "encouraged by allusion" to sell their services at a reduced rate to stay competitive. How low can one go? I received 17 calls (all weddings) from Iowa last week and only one was not shocked that our quote was higher than $500. From the 17 callers prices ranged from the low-end of $175 to a high-end of $495.
Why?
Is this a matter of DJs being unaware of their potential?
Is this a matter of DJs being unaware of their value?
Is this a matter of DJs supporting a hobby/business with another job?
There is no "ONE PERFECT PRICE". However, there are universal costs that can affect businesses of a similar nature.
For example:
I know of a DJ that charges $595 per show & no mileage, no matter what.
He owns a van specifically to haul gear & has another daily vehicle for personal use.
Liability only for his van costs him $895 per year. His business cell phone runs him $49.95 per month ($599.40/yr). He has a subscription to TM Century $500ish. Gear insurance and liability insurance around $500/yr. Just these 4 expenses chew up a little under 1/2 of his gross revenue. When I sat down with him we discovered that his total expenses were around $5,100. He looked SICK! He made around $900 for his hours involved, BTW, these are $595 all day events. He figured with his travel time and performing time that he made around $4/hr.
Albeit, he's making a marginal profit. Many don't.
He's caught up in a market average thing. Is he in the wrong business. Yes & No. He's a GOOD DJ with poor business skills, crappy sales confidence and limited time to adequately handle customer calls. He's too proud to work for someone else and he sacrifices his price to accommodate his shortcomings. He's just ONE of THOUSANDS.
He would actually earn more if he worked for me. Yet, pride...the "I own my own company" mentality supercedes logic.
This is where I'm concerned with "market average" as a focal point.
It fails to address earning potential.
It fails to address perpetuation.
It fails to address autonomy...(the I'm all grown up, I moved out of mom & dads house & I have my own place - state of mind)
This is turning out to be a great thread.
BTW, I've always admired Dude's articles in DJN, although I see Dude as Don Quixote, in Man Of La Mancha. (Love that acronym he coined, MDJ, used several times in every article, you look forward to the "(MDJ)" and it becomes like Jack Bauer when he says "You're gonna have to trust me" 2x or 3x in most episodes of "24" Season 1)
Thanks Dude, for the insight about costs.
My insurance cost is $170 (liability only) thru a WeDJ program underwritten thru Commercial Brokerage (former NAME carrier).
My business cell phone is $9.99 per month, $120 per year.... Its the third phone in a Family Calling Plan. I've got about 450 minutes of Anytime Minutes(1/3 of 1400 min) still available for my use this month. I can use my wife's/daughter's extra minutes too if they don't use 'em.
If you're web savvy, you don't have to buy into YP or BFs (for the acronym impaired, that's Yellow Pages & Bridal Fairs). cost savings = $1k to $5k per year.
Point being......some of us have controlled costs, which make our break-even point much lower than others.
Another factor not addressed is housing: we own our property almost free-and-clear. We have 9 years left on our 15 year mortgage ($950 per month Principal, Interest, Taxes, Insurance )
We actually became "free & clear" 10 years ago, but have since tried to maintain a $90k balance for TAX purposes. Every 8 years or so, we do a major refinancing for remodeling, which allows us to jack our mortgage back up to $120k, allowing us to keep that mortgage interest tax deduction for another 7-8 years.
Housing costs being a non-factor for us.....I'm able to provide the very best quality of basic services to customers, without the high prices of the salon DJs. Market wise, I'm 3x the price of bottom feeders, but 1/2 to 1/3 the people at the top. Right in the middle range. I'm still very profitable averaging $950 per event, which is around $115 gross per hour of coverage (setup + teardown + F2F consultation + playing time).
My contention, is that MDJ's are charging "by the hour" mentality, when they should be charging for COVERAGE put into an event. Coverage should include all of your preparation, planning, face to face (F2F) meetings, extra equipment used for ceremonies, as well as setup, teardown, and playing time.
For an elaborate 6 hour wedding wedding, I charge 10 hours of coverage for the event (2 hours setup, 1 hour teardown, 6 hours of playing time, plus 1 hour consult). Client pays $115 per hour for 10 hours of coverage. ($1150 for the event). Additional consult would be billed at hourly rate, but a discount could be given for multiple hour purchases. Fortunately our online consult system is very efficient, allowing us to print the planner, the itinerary, the song lists, and DNP's & take to the consult, so we can prepare many receptions with a 30 minute Starbucks meeting because we're so organized by WeDJ Gigbuilder. (FREE with Silver or Gold WeDJ purchase, another big cost saving item).
BTW, I've always admired Dude's articles in DJN, although I see Dude as Don Quixote, in Man Of La Mancha. (Love that acronym he coined, MDJ, used several times in every article, you look forward to the "(MDJ)" and it becomes like Jack Bauer when he says "You're gonna have to trust me" 2x or 3x in most episodes of "24" Season 1)
Thanks Dude, for the insight about costs.
My insurance cost is $170 (liability only) thru a WeDJ program underwritten thru Commercial Brokerage (former NAME carrier).
My business cell phone is $9.99 per month, $120 per year.... Its the third phone in a Family Calling Plan. I've got about 450 minutes of Anytime Minutes(1/3 of 1400 min) still available for my use this month. I can use my wife's/daughter's extra minutes too if they don't use 'em.
If you're web savvy, you don't have to buy into YP or BFs (for the acronym impaired, that's Yellow Pages & Bridal Fairs). cost savings = $1k to $5k per year.
Point being......some of us have controlled costs, which make our break-even point much lower than others.
Another factor not addressed is housing: we own our property almost free-and-clear. We have 9 years left on our 15 year mortgage ($950 per month Principal, Interest, Taxes, Insurance )
We actually became "free & clear" 10 years ago, but have since tried to maintain a $90k balance for TAX purposes. Every 8 years or so, we do a major refinancing for remodeling, which allows us to jack our mortgage back up to $120k, allowing us to keep that mortgage interest tax deduction for another 7-8 years.
Housing costs being a non-factor for us.....I'm able to provide the very best quality of basic services to customers, without the high prices of the salon DJs. Market wise, I'm 3x the price of bottom feeders, but 1/2 to 1/3 the people at the top. Right in the middle range. I'm still very profitable averaging $950 per event, which is around $115 gross per hour of coverage (setup + teardown + F2F consultation + playing time).
My contention, is that MDJ's are charging "by the hour" mentality, when they should be charging for COVERAGE put into an event. Coverage should include all of your preparation, planning, face to face (F2F) meetings, extra equipment used for ceremonies, as well as setup, teardown, and playing time.
For an elaborate 6 hour wedding wedding, I charge 10 hours of coverage for the event (2 hours setup, 1 hour teardown, 6 hours of playing time, plus 1 hour consult). Client pays $115 per hour for 10 hours of coverage. ($1150 for the event). Additional consult would be billed at hourly rate, but a discount could be given for multiple hour purchases. Fortunately our online consult system is very efficient, allowing us to print the planner, the itinerary, the song lists, and DNP's & take to the consult, so we can prepare many receptions with a 30 minute Starbucks meeting because we're so organized by WeDJ Gigbuilder. (FREE with Silver or Gold WeDJ purchase, another big cost saving item).
Kreation,
people who charge $5k per event, are putting around 45-50 man-hours into each event. Also, your time spent on marketing is going to become higher.....Think of all those meetings you need to go to!
people who charge $5k per event, are putting around 45-50 man-hours into each event. Also, your time spent on marketing is going to become higher.....Think of all those meetings you need to go to!
I don't find your table at all representative of business.
It might work for a lemonade stand, but not for a service company that operates for more than one day in real time.
The intent of the question is dwarfed by the obvious fault:
If you are spending $640 to deliver an $840 service the problem is not with the market average.
You're approach is upside down. Illustrated:
You have run out and spent $640 - and then determined that you can only resell at $840.
The $640 spent represents a package of your priorities which you have thrown on the auction block.
$840 represents the set of customer priorities which you ignored when you did your wholesale shopping.
The smart guy detrmined that $840 of service was the match point and then set about finding the most attractive and cost efficient way to deliver it.
..and the most important thing is that they didn't come up with a $5k DJ solution until they found a $5k DJ problem.
I was actually kidding guys,
I totally agree with you
(they also need a sarcasm button "on" and "off")
I totally agree with you
(they also need a sarcasm button "on" and "off")
DJMC,
You are very gracious! Thank you for your kind words. Humbly received.
Curious? Do you feel more confident to command the rate you do because:
1. you are free and clear
2. quality of services you offer
3. unique market conditions
You are correct. There are many MDJs that do not consider their involved time. In the end, if the MDJ is charging a fee that is considerably more than their productions costs they are on the right track.
Keep up the good work!
Proformance...Bob,
I'm not sure what part of the INTERACTIVE table you don't get. However, it's basis contains fundamental principles of earning profit. Last I heard, profit is not a bad thing...?
Desired Earning (+) Estimated or Actual Expenses (divided by) Estimated or Actual Sales (=)Target Price
Simplistic...absolutely!
There are several profit formulas:
Revenue - Expenses = Profit
People x Process = Profit
People x Process = Profit, translated into activities looks like this:
# Existing - Lost Customers + New Customers Gained = Total Customers
x Frequency x Average $ = Gross Revenues - Cost of Goods - Overhead = Net Profit
How a person arrives at their Estimated or Actual Expenses varies by company model and market.
Let’s go back to a previous example.
10 show at $595 = $5995
His total expenses were around $5,100
$5,995 - $5,100 = $895
$895 / 10 = $89.50 per show for involved effort, ROI, however you want to look at it.
Now let’s look at a hypothetical scenario:
Let’s assume that he chooses to not insure his vehicle. ABSOLUTELY STUPID & ILLEGAL, however, he would double his pay by breaking the law. Incentive...???
Let’s assume that he cheats on the insurance thing and decided to limewire or p2p music file instead of being honest & pay for his music.
His yearly expenses would drop by $1,398 to $3,750. Incentive...???
$5,995 - $3,750 = $2,245 / 10 = $225.50 take home per show as opposed to $89.95. Incentive...???
The table allows people to play with numbers. Find one that works. Lower expenses, lower desired salary, increase shows...it's all relative. If you can't increase the quantity of shows you need to lower costs or charge more to earn more.
I AM IN NO WAY ADVOCATING CHEATING! However, when competition in markets increases and entities begin abating or freezing their prices it unfortunately entices people to cheat.
Integrity comes at a cost. That’s also why people should be willing to pay for it.
Bob...You've not yet answered my question.
Allow me to ask it again: "Have YOU actually input YOUR OWN data?"
There are several ways that a person can evaluate a price. If you have a viable suggestion, please offer it.
Cap presented a scenario and I was able to re-work the table to offer another perspective.
I would be more than happy to do the same for you.
You are very gracious! Thank you for your kind words. Humbly received.
Curious? Do you feel more confident to command the rate you do because:
1. you are free and clear
2. quality of services you offer
3. unique market conditions
You are correct. There are many MDJs that do not consider their involved time. In the end, if the MDJ is charging a fee that is considerably more than their productions costs they are on the right track.
Keep up the good work!
Proformance...Bob,
I'm not sure what part of the INTERACTIVE table you don't get. However, it's basis contains fundamental principles of earning profit. Last I heard, profit is not a bad thing...?
Desired Earning (+) Estimated or Actual Expenses (divided by) Estimated or Actual Sales (=)Target Price
Simplistic...absolutely!
There are several profit formulas:
Revenue - Expenses = Profit
People x Process = Profit
People x Process = Profit, translated into activities looks like this:
# Existing - Lost Customers + New Customers Gained = Total Customers
x Frequency x Average $ = Gross Revenues - Cost of Goods - Overhead = Net Profit
How a person arrives at their Estimated or Actual Expenses varies by company model and market.
Let’s go back to a previous example.
10 show at $595 = $5995
His total expenses were around $5,100
$5,995 - $5,100 = $895
$895 / 10 = $89.50 per show for involved effort, ROI, however you want to look at it.
Now let’s look at a hypothetical scenario:
Let’s assume that he chooses to not insure his vehicle. ABSOLUTELY STUPID & ILLEGAL, however, he would double his pay by breaking the law. Incentive...???
Let’s assume that he cheats on the insurance thing and decided to limewire or p2p music file instead of being honest & pay for his music.
His yearly expenses would drop by $1,398 to $3,750. Incentive...???
$5,995 - $3,750 = $2,245 / 10 = $225.50 take home per show as opposed to $89.95. Incentive...???
The table allows people to play with numbers. Find one that works. Lower expenses, lower desired salary, increase shows...it's all relative. If you can't increase the quantity of shows you need to lower costs or charge more to earn more.
I AM IN NO WAY ADVOCATING CHEATING! However, when competition in markets increases and entities begin abating or freezing their prices it unfortunately entices people to cheat.
Integrity comes at a cost. That’s also why people should be willing to pay for it.
Bob...You've not yet answered my question.
Allow me to ask it again: "Have YOU actually input YOUR OWN data?"
There are several ways that a person can evaluate a price. If you have a viable suggestion, please offer it.
Cap presented a scenario and I was able to re-work the table to offer another perspective.
I would be more than happy to do the same for you.
