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Author Topic: low balling a weekend worriors that have ruined profits  (Read 59529 times)

David Sturzenbecher

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Re: low balling a weekend worriors that have ruined profits
« Reply #80 on: June 06, 2014, 09:00:58 PM »


I've read the thread from the beginning and I'll try and keep my reply on point.

Perhaps some of the weekend warriors are not truly bottom feeders.

Perhaps they smply have bought into the market at a lower price point than you and at a slightly lower level than you.

Perhaps that behringer X32 system routs audio input towards the outputs as effectivly as your M7CL does but his buy in was under 5k, where yours was 25k 6 years back

Perhaps his qsc kw rig is adequate enough for the jobs he underbid you on where your older KF750 system went the last many years, and the sight lines are better and he didnt need a full distro,saving the venue/promoter an electrician call nor did it and eat up 16 sq ft sidestage for racks....

Perhaps his new lights from Blizzard adequatly light the stage and the stands he bought from hercules or ADJ are safe enough and rig faster than the long cans and super towers you bring with you.

Perhaps pulling the stuff around in that dinky trailer behind his personal truck allows him to charge less than you and your 5 ton truck

Perhaps the weekend warrior is satisfied with $30-40 an hour clear after lower expenses for a 1 man job than you are having to pay help to do these marginal jobs.


perhaps perhaps perhaps

Just a few thought I had when reading the first few pages of this.

And your last line should read

"And perhaps not, in which case you will be getting a call again next year"



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Jason Raboin

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Re: low balling a weekend worriors that have ruined profits
« Reply #81 on: June 06, 2014, 11:09:48 PM »

I've read the thread from the beginning and I'll try and keep my reply on point.

Perhaps some of the weekend warriors are not truly bottom feeders.

Perhaps they smply have bought into the market at a lower price point than you and at a slightly lower level than you.

Perhaps that behringer X32 system routs audio input towards the outputs as effectivly as your M7CL does but his buy in was under 5k, where yours was 25k 6 years back

Perhaps his qsc kw rig is adequate enough for the jobs he underbid you on where your older KF750 system went the last many years, and the sight lines are better and he didnt need a full distro,saving the venue/promoter an electrician call nor did it and eat up 16 sq ft sidestage for racks....

Perhaps his new lights from Blizzard adequatly light the stage and the stands he bought from hercules or ADJ are safe enough and rig faster than the long cans and super towers you bring with you.

Perhaps pulling the stuff around in that dinky trailer behind his personal truck allows him to charge less than you and your 5 ton truck

Perhaps the weekend warrior is satisfied with $30-40 an hour clear after lower expenses for a 1 man job than you are having to pay help to do these marginal jobs.


perhaps perhaps perhaps

Just a few thought I had when reading the first few pages of this.

Ok, I see your point, but let's say the equipment investment is $20,000.  That might get you an X32, one KW top over one sub per side, 4 wedges, some entry level mics and stands.

So what % do you charge?  For top level gear that will last 10-15 years maybe you can charge 1%, but on MI level gear charging less than 2% would be hard to justify.  So then you need to charge for labor.  I know that changes a lot depending on location, but when you are paying all of your own social security, insurance, etc.,  I can't see charging less than $20/hr.  That's really a net of maybe $12/hr.  Then there's business insurance, vehicle costs, fuel, and maintenance.  So for a 10 hour production day that would be $600.  Charging much less than that is irresponsible.  You can't last without subsidizing you hobby, and worse than that you are potentially taking other sound companies with you on the way down.
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Steve M Smith

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Re: low balling a weekend worriors that have ruined profits
« Reply #82 on: June 07, 2014, 01:31:55 AM »

Charging much less than that is irresponsible.  You can't last without subsidizing you hobby, and worse than that you are potentially taking other sound companies with you on the way down.

You might not like it, but that's how business works.  Not many people complain when supermarkets compete with each other making your grocery shopping cheaper.


Steve.
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Tim McCulloch

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Re: low balling a weekend worriors that have ruined profits
« Reply #83 on: June 07, 2014, 02:44:49 AM »

You might not like it, but that's how business works.  Not many people complain when supermarkets compete with each other making your grocery shopping cheaper.


Steve.

That's probably a bad analogy, Steve.  Grocers are highly regulated by the USDA, state and local health departments and subject to all manner of commercial regulations including the costs of labor, labor relations and costs of compliance with various employment laws.

Any asshat with a credit card can buy some PA and call himself a sound company.  And that is what the OP was complaining about.  Not so much that others can find a legitimate way of doing the same work for less, but because the folks who underbid him don't have the same cost basis when he's operating in a fully legal, ethical and responsible manner (presumably).  I'm not defending him, but he has a point.

Last year we *thought* we'd come to an agreement for a new holiday event.  The event started with a local business person wanting to bring a particular performer to his town and thought July 4 would be a great time.  The organization he partnered with had no idea what it would cost to rent a stage/roof or mobile stage, what sound and lights would cost, that catering and local transportation would be needed, etc.  They were absolutely aghast when they got quotes.  We worked with them on our fee, giving them a significant discount provisioned on a 3 year agreement.  Ready to take the contract out for signing, the representative wouldn't answer her phone or return our voicemails.  A competitor had gotten to them and made them an even lower price offer.  When we finally got a response, we suggested that a couple of committee members drive past the competitor's place of business and see the stage sitting out in the rain (and had been outdoors all winter) and to require proof of liability and worker's compensation insurance (we know this competitor to be uninsured and possibly uninsurable).  We had insurance binders ready and had listed the event sponsor group as an additional named insured on our liability policy.  The community group was swayed by the insurance issue, and we got the gig (but not without some nasty phone calls that resulted in us calling the police and filing a report regarding the threats made to our owner's family...).

What the OP wants is a level playing field.  The field would be more level if clients insisted on legal, ethical and professional practices, but some potential clients are willing to risk their event, organization or business, or their own family's future over a lower price.  To them I say "I hope it costs you plenty."  Not that I wish to see personal injuries or deaths, but enough property damage to scare the hell out of them for the next time, if there is one.
« Last Edit: June 07, 2014, 02:47:44 AM by Tim McCulloch »
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Richard Turner

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Re: low balling a weekend worriors that have ruined profits
« Reply #84 on: June 07, 2014, 08:50:00 AM »

I'm familiar with the tax law up here in the frozen north of Canada, Things are different up here than in the USA and Europe.

We have a combined federal and provincial consumers tax in many provinces,(this is seperate from perosnal or corporate income taxes) some are still calculated seperatly. I live in one of the combined ones. the rate is 14% where I am. Sounds steep, yes it sure is but heres the real deal. As a business owner registered under it. I see little effect to my bottom line, the end customer pays for it in the end. On an annual basis we square up our account with the feds. In reality I pay no sales tax on gear bought and inventoried, I'm credited back that amount at year end. I would collect this sales tax on  used equipment at its sale value but if it was scrapped and sent to landfill the govt sees no tax. Any promoter or band that is legit again passes it on to whoever pays their fee and its reflected in the ticket price for the event.

Also the half tax on eat in meals on work day is an allowable expense as is fuel and many other thingson top of that being a cost of business expense on its own.

Most years If I had bought any new gear or had any major repairs My input tax credits are almost even with the tax collected on sales and services sold.

Capital cost allowance for depreciation, here is where things get fun in the frozen north.

Most gear falls under a 30% per year depreciation with a half year calculation on year one (15%) But tools under $500 and computer software other than operating systems are 100% expensed in year one, vehicules are classed based on original value but are similar and pro rated business used is deductable on a personal vehicule. Also home office space use is not difficult, just requires a dedicated space and again based on square footage deductions to electricity, mortgage interest etc apply.

now lets take your $20k of PA gak annual depreciation of it for 5 years, and yes I know you folks use linear formulas down south.

jan1    deprc    dec21
20000  3000   17000
17000  5100   11900
11900  3570   8330
8330    2499   5831
5831    1750   4082
4082    1225   2857

So at the end of 6 years the 20K PA guy has had $17k of tax shelter, this comes right off the top of taxable income, that gear is likely worth 5-7.5k to sell, and that depreciation deduction can be floated , it does not need to be claimed in the year it happened so yeah his "audio hobby" has effectivly tax sheltered somw of his other working income, plus if the 20k was partly borrowed, the interest paid on that money is fully deductable as expense. Its wild work once you really delve into it.  In actual fact weekend warrior man can actually make money at dayjob and weekend warrioring yet end up dropping himself a tax bracket with writeoffs and careful use of our RRSP program (equivalent to your 401k)

Here is the kicker based on a linear model thats 85% depreciation over 84 months so in a perfect world of 100 gigs a year for the weekend warrior anyting over $28.33 a gig towards the gear is outrunning the depreciating value, $17,000/(6 yearsx 50 weeksx 2 gigs).


 You should see some of the DJ kids go pie eyed at the local musc store when I explain why they shouldnt own any gear beyond their dj work station unless they are solidly gigging over 26 times a year. Its far more advantageous not to own if they are actually gigging at a decent rate.

I'm sure most of you cats up here in the big LAB already know all this anyway

I would ASSume the $300 gigs discussed here would be more along the lines of throw and go PA for a single act indoors small room short haul minimal basic lighting things that would be in town , 3 hours or less program, 1 hr strike on each end or less, out the warehouse door 8pm back home in bed at 2am 6 hour evening bar job or the like. typical small PA jobs.

So $300 would work out to $50 for the gear, $50 for the truck to move the stuff across town, (uhaul would rent a van $20 for in town day rent) and $200/6 =$33.25 hr for wages.

This doesnt count the time to do any selling or maintence but hey the gear is all shiny and new and he's a happy guy with a new hobby business, Would any of you offer him a straight up moving PA and mixing gig for $25 hr? straight time

I hope some of you can see the logic in my thoughts.
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Looking at retiring. Local PA market has shrank to 2 guys with guitars and bose l1 compacts or expecting full line array and 16 movers on stage for $300... no middle left going back to event DJ stuff, half the work for twice the pay.

Steve M Smith

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Re: low balling a weekend worriors that have ruined profits
« Reply #85 on: June 07, 2014, 11:08:45 AM »

Sometimes (more likely most often) the offer of $300 to go out for the evening is better than the $0 you would get for staying at home.


Steve.
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g'bye, Dick Rees

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Re: low balling a weekend worriors that have ruined profits
« Reply #86 on: June 07, 2014, 11:30:50 AM »

Sometimes (more likely most often) the offer of $300 to go out for the evening is better than the $0 you would get for staying at home.


Steve.

Not if you have to bring more than your headphones and a couple of your favorite mics...
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Kirby Yarbrough

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Re: low balling a weekend worriors that have ruined profits
« Reply #87 on: June 07, 2014, 11:31:50 AM »

Not if you have to bring more than your headphones and a couple of your favorite mics...

+1
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Tim McCulloch

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Re: low balling a weekend worriors that have ruined profits
« Reply #88 on: June 07, 2014, 12:05:54 PM »

Sometimes (more likely most often) the offer of $300 to go out for the evening is better than the $0 you would get for staying at home.


Steve.

That depends on job costing.  If you're an individual doing all the work and don't pay yourself a wage or salary for the direct gig-related work (on top of wages you should be paying yourself as manager) you will be cash-flow positive but still losing income.  Interestingly it was Eastman Kodak and its business classes offered to photo studio owners that introduced me to this concept; that I should pay myself for ALL of the duties I perform and that I needed to understand the differences between managerial, technical, and artistic duties because the manner of determining compensation is different from skill to skill.  Simply skimming whatever is left over at the end of the month is not compensating oneself fairly and hides the fact that the revenue stream is insufficient to cover costs, so those costs go uncompensated.  Sure, if you're the only owner/employee you can do that but suffer burnout, ruin your marriage and probably be mean to rocks and trees, too.  The point is that this way of operating ignores real costs, and it's the way too many weekend warriors operate.  It's a subsidized hobby that pretends to be a business.

Now if you have employees, sending a gal or guy to a $300 gig is pretty much out of the question.  You'll need to pay them $100-$200; in the USA you match their payroll taxes (just shy of 8%) and have to have workers comp insurance (another 3%-10% of total payroll, maybe more).  Throw in transportation and its related costs.  Those are direct, gig-related costs.  Factor in your fixed costs and you may, in fact, be losing money by working cheap.

I like Dick Rees concept of pricing - how much would it cost me to replace myself/gear if I were to become unavailable after accepting a gig?  If I can't replace myself for $300, I shouldn't be accepting $300 gigs.
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James A. Griffin

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Re: low balling a weekend worriors that have ruined profits
« Reply #89 on: June 07, 2014, 12:33:13 PM »

I like Dick Rees concept of pricing - how much would it cost me to replace myself/gear if I were to become unavailable after accepting a gig?  If I can't replace myself for $300, I shouldn't be accepting $300 gigs.

Bingo.

If you break your leg the day before the event, the client expects the show to go on.  That means you have get someone with comparable gear and comparable skills to cover it at the price you agreed to.     It's still your show. If the client's quality expectations aren't met, it falls back on you.   If you have to pay more money to meet those expectations, again, it's on you.
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Re: low balling a weekend worriors that have ruined profits
« Reply #89 on: June 07, 2014, 12:33:13 PM »


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