1) I have a business partner, but he's not as invested (attitude wise) as I am, so I'm considering buying him out and taking the company to the next level, hence why I'm asking questions.Honestly, I'm really curious as to the percentage of money in relation to rental, depreciation, gig rate, travel distance, etc. I just want to set my pricing correctly; I feel that as I'm coming out of a hobby my pricing is fairly low/not sustainable. We have made great strides in this avenue, but are still learning.
I hire a particular freelancer to help out at about 2 to 3 shows a year. Some years he gets a 1099. Others not. Depends. He freelances for many people in the area. Is he an employee of all of them?
I remain NOT a lawyer, tax accountant, employment specialist, or HR person. Ray[edit: to indicate how the imaginary college student is paid. And FYI there's really not any little shot bottles of liquor in my desk.]
Nathan,To preface my reply, it probably includes a longer history than any ever posted on the original LAB (Live Audio Board, which morphed into Pro Sound Web) who's first poster was the recently passed Monty Lee Wilkes, one of the many excellent employees I had was privileged to work with back in the years of providing "Sound by the Pound" with Southern Thunder Sound, Inc. (STS).Early spring of 1992, during a late night drinking session at the STS warehouse with a dear Welsh friend, I developed the prototype Maltese Horn, a very narrow dispersion conical pyramid shaped horn made from cardboard, with a "Keele like" secondary expansion. Driven by a Radio Shack "Mini Amp", the horn did something like 85 dB at 25 feet in our 10,000 square foot reverberent warehouse. It is certainly possible my recollection or observation is off by an order of magnitude, but the damn thing was definitely loud and clear, using a 200ma amplifier with a 2" speaker, a cut up cardboard box and Nashua 357 duct tape. Over the later part of April through August the initial Maltese concept was developed into a three way nested horn within a horn within a horn speaker system. During this time I looked for investors, showing the concept and it's potential to a number of people, first having them sign a non-disclosure agreement. The Maltese system was based on the same virtual single source point concept later employed by EAW, CS&L, Renkus Heinz, and Tom Danley's Unity and Synergy designs. The (far) better executed DSL cabinets are currently selling quite well in the stadium installation business a few decades later. I was convinced that all who heard the pristine high fidelity of a virtual single point source, with rigging capable of hemispherical arrays to fit any venue's coverage patterns, would feel compelled either to hire STS, or purchase a Maltese system for their own inventory, and thus become part of a global network, inventory scalable for any size event or tour. Sounds familiar now, but not so much in 1992, when consoles were analog, speaker cabinets were made from wood and steel, and men were made from iron.My project obsession had made those in the know start to fear the company could not sustain additional losses through the winter, since I had already maxed out our revolving line of credit,rather than paying it down during the busy season as was the usual routine.I had used around $60,000 funding "Art Charter, Inc.", a sailboat charter company/tax write off scheme designed to be both a vacation opportunity for employees and a place to entertain potential.After much overtime work, and a 26 hour "all nighter" , as the sun rose we loaded 4 three-way Maltese cabinets, and 8 dual driver Maltese high frequency horns onto the 45' semi-trailer headed to the "We Fest", a three-day outdoor country music festival featuring major internationally known artists playing for as many as 40,000 people each day.60 Maltese units were still in various stages of the build que, but no more were finished during the 1992 festival season.For those of you without elephant memories, 1992 was the year of the introduction of the L'Acoustics V-Dosc line array, the first commercially distributed "proper" line array. Vdosc rapidly was gaining concert production market share, due to both good sound, and the more important aspect of "seeing" a show- it's narrow form factor didn't block the video screens that were starting to be a big factor in production, now everyone in the back rows could see their star's zits and nose hair blown up to the size of a VW bus with no pesky point source arrays interfering with the artist's visual presentations.After literally seeing the "writing on the wall" when discussing the Maltese project with an old friend from my early tour days who had transitioned from tour manager for Dr.Hook & The Medicine Show (who opened for Sha Na Na when they were "big" after their TV show around 1977-78, on my first national tour) to "where the money is"- video, I fully realized that the Maltese system had little no chance of acceptance, a good concept released at the wrong time in history. This discussion happened during a busy Minnesota State Fair, where we were covering the Grandstand and a number of secondary stages (I hear Clair Global handles the Grandstand now, and Clair bought most of the companies that were competing for such gigs back in the day) as well as fielding a large five week long corporate theater production, and our ongoing gigs at First Avenue, a large nightclub more famous for the place Prince's (RIP) Purple Rain was shot than for Steve McLellan who made the place the legend it is today, yet was summarily dumped by corporate chumps. Don't get me wrong, not all corporations are evil entities, but I 've seen my fair share of them, many purporting to answer only to the universal god of the perpetual tax shelter.It was the end of an era.I recently moved to Florida, and have begun another "new era" here.Designing and building speakers, mixing live and recording continue to be my favorite work, I will continue them as long as possible whether well paid or not- my "work" is fun.I still have no plans of providing "sound by the pound", and will continue to only book shows that I enjoy mixing, for clients who appreciate a job well done.My thanks to the many ex-STS employees and friends, living and dead, who have kept in contact and provided moral support over the years, and to the many business associates that have also helped me through some difficult times.Life is good, and after 8 years together, Bonnie is still putting up with me, even though I still continue to hover around 20% "just plain nuts". Art
ROI: Again, the desired ROI depends on your specific situation. You want gear that pays for itself. Once it's paid for, then that's just pure profit. However, you need to make those gear purchases logically. Ideally, new gear will either expand your business into new events and clients that you were unable to previously handle, or will allow you to increase billing for your current clients. If both of those happen, AWESOME! If neither of those happen... well, you just blew a bunch of money for nothing. If I look at my QuickBooks for this year, right now it says I lost money. But, that includes a pair of motors, 2 Worker WT-150 lifts, Radial mPress Press Box system, half a dozen new cases from Rock Hard Cases, and $58K of Harman lease for new I-Tech HD amps. If I hadn't spent that money, I'd have pulled a tidy profit for the year! This new gear allowed me to do some new shows that I hadn't done before, and the new I-Tech HD amps (replacing a bunch of conventional ones) are improving the reliability of my system. So, it's worth it to me. I have a trio of shows I am looking at for next year- same A1 for all three. First show is a repeat (2nd year for us); the other two would be new to us. Between them, with one in San Jose, one in Reno, and a potential in Pittsburgh, it's $50K of work. After travel/lodging/staffing, I'll put $30K in the bank. However, I have to buy a CL5 to handle them- here's a $30K purchase with Rios, snake, and case. Now my profit is gone. But, I'll have a board, paid for, that can do *other* work for me, and make money there. And then, in 2018, presuming we do them all again, well shit, there's $30K in the bank.
Inventory Management: I don't have one. Other then an Excel spreadsheet listing everything. There's lots of threads on rental management software; I will refer you to those. However, COME UP WITH A CABLE LABELING SCHEME NOW. And stick with it. A LOT easier to be consistent from the beginning then it is to change over at some point. And remember, "Buy Once, Cry Once." Get the best quality cables you can afford- they'll last a lot longer. As for the logistics of pulling shows, etc, I work off my invoice, to make sure everything I have listed there gets on the truck. I have pre-packed AC, speakon and XLR workboxes, so I don't have to pick those every time.
I 100% judge other companies I work for based on their road cases and cable. If they have these two things together (ie. 1/2 pack cases, 1/4 pack cases, 1/3 pack cases, organized label scheme, cases packed in a logical manner, etc) they probably are pretty good to work for. It's the simple things that impress me, and say a lot about companies
I usually go by this simple cost benefit analysis.Are you asking for equipment that would cost more to rent than what you can bring in ticket sales? Here is a general idea of cost for certain types of gear.1. Speakers in general cost around $50 - $100 each.2. Amplifiers almost universally cost around $50 each regardless of type or brand.3. RF costs anywhere from $50 - $75 per channel.4. Mixers are the big who knows, but a cheap digital desk can go for around $75 while a high end as much as $300+.5. External FX and processing can go from $25 -$100 per unit.6. Mics can cost anywhere from $10 to $50 each.7. Let's not forget delivery fee's and taxes. Delivery fee's can be as little as $50 and I have seen as high as $150!8. Backline is another who knows? Guitar / bass / keyboard amps vary from $50 to as much as $200+ for the amp and cabs. Drums go between $200 and $400 for a full kit. As you can see, it adds up quick. This doesn't even factor in the venues running costs. An engineer is usually one of the more expensive persons on a venues payroll. At $150 - $400 per tech per day depending on the venue, there is a significant cost for that person to be there running around for your band to have fun. But wait there is more. Many riders have food and drink demands too. Most food demands are ala carte and will require a person to acquire it, who also probably costs money to do so. Oh and Hotels / motels as well as travel. Yeah let's leave that alone for now. The list goes on. The big question is how much is your band truly worth in sales to the venue? You have to be worth significantly more than you cost in totality to start making demands.
Hi Nathan,You've got a great list of questions here! The first thing you need to do, though, is make a firm decision as to where you want the business to go-- stick with small bar/band gigs, larger festivals, touring concerts? Or do a lot of installs and maybe some retail? Then, you're going to want to develop a business plan. This is the blueprint for the boring stuff- all of the money things you asked about-- your goals and how you're going to achieve them. Take it from someone who didn't do a business plan- without one, you'll find yourself spending money on stupid shit. I would like to do installs & small-medium sized gigs. With a good focus on Church/School (or smaller venues, subcontract larger installations & rigging.) work.The first book to start with, if you haven't already, is the Yamaha Sound Reinforcement Handbook. I found a copy at a local used book store for cheap. I'm glad that book that is becoming a standard. I read that when I was 9 I think. I should probably re-read it. I have so much reading to do!Rigging/Flying: This all depends on what exactly you're doing. I hate giving a non-answer, but every case is different, as to whether or not you'll be needing to worry about riggers. Many times, a venue has riggers familiar with their facility that you're going to have to use, so if you are flying PA, then they will handle the actual attachment of your motors to their points. But, you'll still need to have someone qualified on the ground (part of your crew) that knows how to safely attach your load to the motor(s).This keeps coming up for me, flying light bar at local church installation. Using hardware bought from Lowes. I've done enough research over the years that this shouldn't be done. But my original mentor(s) who has been doing this for far longer than I have say it isn't a big deal because there isn't much weight on the bar. I really don't know what to do in this instance. I'm going to put some all thread and bolt to the I-beam using beam clamps because I feel that is safer than 1/8" aircraft cable and non-forged eyebolts.The other thing is the front light bar is using angle iron welded to I-beams to support it. No real math was used to calculate loads or weight limits or anything.Should I highly encourage a structural engineer come look at our stuff?I also calculate weight on trussing and stands and stay under the limits when flying over people's heads. Though I'll admit I'm usually pretty close to the limit on our ST-132 stands. I can't justify beefier yet because I don't have the income yet.So let's take a sidebar: Crew and staffing is dependent on the size and scale of your shows. How large of shows are you doing now? Are you doing them by yourself, or do you have a business partner/friend/whatever that is helping you with the show? Are you paying them, and then are you billing this extra labor to the client? Do you find yourself getting worn out on shows because you exerted SO MUCH effort getting setup that now you can't do as good of a job on the show? And then you also have to load your gear out of there at the end...I agree with this so much! I'm worried that I want to get there at the expense of undercharging/underpaying myself or others.One realization I came to the past couple of years: When I would spend huge amounts of energy doing the work of three people on load in, all I was REALLY doing was making MY CLIENT richer at the expense of my personal health & well-being. In other words, by not hiring in stage hands to help with the set and strike, I was saving my client money, but it was creating a lot of high paced work placed on my shoulders- and trying to get a lot done in a short amount of time is a big cause of accidents. So, take a look at a job, and here's where you have to learn this on your own- know how to accurately determine how many people it will take to get everything done. And remember, you will have people on YOUR crew (your higher-paid skilled audio technicians) and then the stage hands (lower paid, minions, "please do this," and you move on to another task type people). A typical show may have 2-3 audio company techs onsite, and then anywhere from 4-16 stage hands to move cases, pull cabling, help rig PA together, and so on.Electrical: Again, this is going to be dependent on the shows you do. Typically, venues have a house electrician that will arrange for the power. They'll have a "company switch," where you've got cams to connect there, and a switch to make it live. Allow the house electrician to throw that switch. METER YOUR SHIZZ. Trust, but verify. The first time you fail to meter power could be the last show you do, as all of your gear lets out the magic smoke. For smaller shows, you might have more responsibilities on this- make sure that your setup is safe, and following all applicable local codes to the best of your ability. Ensure that any needed permits and inspections are made, or if you're going to let the onus for this rest on your client's shoulders, make sure you inform them of what they need to know. For example, in Seattle, a permit and inspection is required for generators over 5,000w. They must be fully grounded. However, if you order from, say, Hertz or Sunbelt, they don't do this permit for you. They literally will deliver the generator to your job site and-- that's it. The permit, inspection and grounding is still up to the client. Also common is when the client picks it up from the rental company. It's not up to the rental company to check where you're going with the generator or what it's being used for. So, make sure you can knowledgeably guide your client as to the law and proper procedures. Checking with your city's Department of Planning & Development is a good start for asking about generators for Temporary Power For Special Events.Can I wire up my DIY-distro to breaker boxes without electrician on smaller shows or is this just such a huge no-no? I've been doing it for years now, but I'm trying to get all legal and whatnaught.All Money ThingsWages: That absolutely depends on your market and the skillset/experience of the people you're hiring. I could tell you how things are here in the PNW, but that might not be applicable for your area. I don't do low-end bar gigs, as they don't generally pay well enough for my business to support. I pay labor rates on the higher end of the pay scale, because I firmly believe in paying people well for a good job- I want to make sure we have a successful event AND ensure that my techs will answer the phone when I call them in the future. And perks are important. Of course, most soundcos will provide bottled water. I also have my RedBull fridge mounted in a road case- RedBull is a business expense for me, because it's a quick and easy way to perk my guys up as well as make friends with the stagehands. I think mountain dew is going to be my provided drink. My stagehands/techs love that stuff. Me, well I drink water.Incentive Fee: I really don't do them. In the business networking world, you help each other get new business because it's a collaborative effort-- I pass a friend to your business because he needs a new insurance broker, and then you meet someone who is planning a corporate party who needs sound & lighting rentals, and you give them my name and number. You don't expect a kickback for sending the insurance agent the lead. Price Per Gig: Once again, that's something that really only you can answer. Some people line item most things, some people just put "here's your package price." I like line items because then if someone wants to change a console or number of speakers, there's a visual impact to their invoice amount. They know why the price went up or down, due to the change(s). Break out Gear Rentals, Labor Charges and Other Expenses (Travel, mainly) separately. Make sure the client sees what they're paying for the gear, and what they're paying for labor. (By having a specific gear rental price, that's the same price whether we deliver and run the show or you pick up from the shop and dry hire it. The labor charges on the invoice, therefore, is how we cover our staffing costs for a delivered/run show. And we're still making the gear rental charge.) However, many things on my invoice aren't charged for. They're listed to indicate they're included, but at no cost. That includes wired mics/stands/XLR cables, speaker cabling, fly frames, stage AC cabling and pop-up canopies. These are things that are imperative to the success of the event, but not things I charge specifically for. When a speaker system is listed, the speaker price includes amplifiers, so again, even though they are no-charged, my VerTec amp racks are listed on the invoice to show the client that they're getting those.I sometimes have "packages" which include, say, 2-over-1/side of VRX, with FOH console, processing rack, and all mics/stands/cables. I'll list the console, at no cost, to show them what I am proposing. If they want a nicer board, then there could be an upcharge there, but for the most part, you can get one of my small Mackie analog boards, or one of my LS9s, included in that package price. It's a great value for a budget-minded event. As for the percentage per item cost- well, there's no firm hard rule. You'll hear 2-3% of the retail value for a day rate. Now, that means a Mackie SRM450 would rent for $12.50-$15.00 per day, and a Yamaha CL5 would rent for over $800 per day. Neither of those prices are realistic- the CL5, way too high, and the SRM450, way too low. (In the PNW, 450s are $40-$50/each/day, with stand, and CL5s are $425-$495/day, excluding Rios and snake.)What are your thoughts to my listed items? I hope you don't mind, but I looked at your pricing on your site and used it to semi-line-item thinking about pricing. I keep coming up with something like: [1-day/weeklyish] 1500/2400 for sound. 1200/1600 for lighting, and 500/750 for video&truss.That rolls into Discounts. There's two schools of thought for client discounts: 1) NEVER DO IT! and 2) Maybe help out deserving groups that you like. Dick Rees was fond of saying "Charge everyone the same, and if you choose to donate something back to the charity, do so after the show." (Paraphrased, of course. And maybe it's Bob Leonard who has said this. I dunno.) I have Community Sponsorship Discounts I will do for organizations that I like & support. On the tax end of things (WARNING: I am neither a tax advisor nor an accountant. This information is not to be construed as tax advice. For specific information on your tax situation, please consult an accountant or tax advisor.), when you charge a client money, that's taxable income. The cash donation you make back reduces that taxable income. There is (as far as I know) NO DIFFERENCE (from a tax liability point for view) between charging money-then-donating-money and just simply not charging the money (reducing the invoice fee). In my case, by charging money then donating, I would actually be on the hook for state B&O taxes on that invoice amount, so it is cheaper and more beneficial for me to reduce the invoice fee. Caveat: Some non-profits, when determining your sponsorship level, will penalize the reduced-invoice by calling it an "In-Kind Donation," and then instead of your $1,000 donation giving you recognition at the $1,000 level, you only get recognition at the $500 level.What about transitioning 'cheap' clients on a budget into a better experience? Or a minimum gear required to pull things off? Like my situation?The other discounts you will encounter are cross rental discounts. That's where you rent gear from another company, or they rent from you, and you provide a discount to the other company. The logic being that you can then mark the rental back up to a normal rate, and the client is paying the same where they rent from you or from the other company. This works as long as you're consistently shooting business back and forth-if you're always just giving a discount to the other company and you never rent from them, it's gonna seem like a bad relationship. Here in the PNW, cross rental discounts are typically between 25% and 40%. I see some 50% discounts, when it's older gear that doesn't get used much.Thanks for the cross rental thing, really helped me understand our market when dealing with competition.ROI: Again, the desired ROI depends on your specific situation. You want gear that pays for itself. Once it's paid for, then that's just pure profit. However, you need to make those gear purchases logically. Ideally, new gear will either expand your business into new events and clients that you were unable to previously handle, or will allow you to increase billing for your current clients. If both of those happen, AWESOME! If neither of those happen... well, you just blew a bunch of money for nothing. If I look at my QuickBooks for this year, right now it says I lost money. But, that includes a pair of motors, 2 Worker WT-150 lifts, Radial mPress Press Box system, half a dozen new cases from Rock Hard Cases, and $58K of Harman lease for new I-Tech HD amps. If I hadn't spent that money, I'd have pulled a tidy profit for the year! This new gear allowed me to do some new shows that I hadn't done before, and the new I-Tech HD amps (replacing a bunch of conventional ones) are improving the reliability of my system. So, it's worth it to me. I have a trio of shows I am looking at for next year- same A1 for all three. First show is a repeat (2nd year for us); the other two would be new to us. Between them, with one in San Jose, one in Reno, and a potential in Pittsburgh, it's $50K of work. After travel/lodging/staffing, I'll put $30K in the bank. However, I have to buy a CL5 to handle them- here's a $30K purchase with Rios, snake, and case. Now my profit is gone. But, I'll have a board, paid for, that can do *other* work for me, and make money there. And then, in 2018, presuming we do them all again, well shit, there's $30K in the bank.That's basically where I'm at, just at a much smaller scale. Slightly disconcerting to buy on credit based upon future work. But I think I can have everything paid off and then 20k in my pocket by 2018 through just doing the exact same gigs.Advertising: Depends on your market. I know people who have no advertising budget or expenditures AT ALL and they're tripling their business year over year.I want to do mostly organic some paid. Hopefully I can get slightly more business, but not too much.Travel: As Scott mentioned, this is something that can and should be passed to the client. I'll give about the same radius from Seattle or Portland for free- 50-75 miles, but if we're going long distance, out of state, or needing to load in one day and the show's the next, there's a hotel involved. Per diems for food. I'll do mileage rate, plus either book the hotel or at least find out what the approximate charge will be, and that's what I quote the client. Don't forget a truck rental cost! And when you're renting a truck (and check into DOT number if you're going out of state. Depends on your state's rules.), you'll pay a day rate for the truck PLUS mileage PLUS the fuel you're putting in it.Inventory Management: I don't have one. Other then an Excel spreadsheet listing everything. There's lots of threads on rental management software; I will refer you to those. However, COME UP WITH A CABLE LABELING SCHEME NOW. And stick with it. A LOT easier to be consistent from the beginning then it is to change over at some point. And remember, "Buy Once, Cry Once." Get the best quality cables you can afford- they'll last a lot longer. As for the logistics of pulling shows, etc, I work off my invoice, to make sure everything I have listed there gets on the truck. I have pre-packed AC, speakon and XLR workboxes, so I don't have to pick those every time. Sorry to write a lot. Please lemme know if you have any other specific questions!-Ray
On a different note, currently I'm having some difficulties regarding quoting customers.I quoted something like $1.8k for an all day manned multiple musicians/act festival fundraiser event. Event said that was over budget as they usually pay around or less than $1k. Maybe I was a bit high, not sure. But I can't for the life of me figure out how the other provider in my area does it for so cheap when all his shows are exorbitantly over priced IMO. Perhaps it was a, 'this was one of the first things I did in my area to make money, and now I'm stuck with a cheap gig even though I've grown'.
I'll write more later. But, just looking at your pricing- around here (PNW) typical pricing for corp AV and video screens is $100 per ten inches of screen size. So, a 70" display is $700 (day rate); a 50-55" would be $500 or so. The smaller screens are starting to drop in cost, since they're so easy to purchase, but still... your video pack (pair of 55s, a 40) I would expect to see a day rate of $1,000 to $1,200.-RayIt's called "being a bottom feeder." Either never wanting to charge enough to really make money, or charging so little that no other legitimate company can touch it. If I was OK making $250 for a day including all gear and my time, well hell, I could work 7 days a week no problem. But, I'd never make a profit doing it, and I would soon die of exhaustion since I'd never be able to bring any labor with me.Some companies will say, "Hey, hire our mobile stage and we'll include the sound for free!" Others will undercut by $5 or $10 your quote, just to get the show. Sometimes, you'll find politics in play. I bid one show where I was told the city's new attorney wanted them to bid out the event to "make sure they were getting the best deal." I proposed to bring a significantly better sound system than the previous vendor did, but ended up bidding $16 more. They got the gig, "the lowest price." The next year, I sharpened the pencil, cut some things, and came in about $10 under the other quote. Still lost the show because "the other vendor has more experience." So which is it? Price? Or experience? You can't have it both ways.-Ray
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