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[Scott Holtzman]

Also, for the VAST majority of clients, they will see QSC or JBL and be perfectly satisfied. In fact, most clients won't even care what brand the speakers are as long as you show up with a relatively clean rig that works. The only people who care are the sound engineers and band members and people like you in a crowd, but they are rarely the ones paying the bills.

This is exactly my point.  While there may be a client that would choose you because of the SRX over K or KW that won't be the client that rents consistently month after month.  You can gnash over the decision until it hurts but in the end having enough depth of inventory that you can cover your demand and have a few spares and provide excellent service, that's the success formula.  You can do it with EV, QSC, JBL, et al.  In the end you pick the vendor that treats you right.

[Steve-White]

This is exactly my point.  While there may be a client that would choose you because of the SRX over K or KW that won't be the client that rents consistently month after month.  You can gnash over the decision until it hurts but in the end having enough depth of inventory that you can cover your demand and have a few spares and provide excellent service, that's the success formula.  You can do it with EV, QSC, JBL, et al.  In the end you pick the vendor that treats you right.

This!

And for a single small operator another important part of the success formula is, in addition to your suppliers, forming alliances with others in the business that will work with you.

[Scott Holtzman]

This!

And for a single small operator another important part of the success formula is, in addition to your suppliers, forming alliances with others in the business that will work with you.

Absolutely, no matter how much stuff (or how little) you have, you will rarely have all you need.  Having cross renting relationships is essential.

[Luke Geis]

My market must be different than some of yours? The question I ask you ( because I had to ask myself ), is who determines what I charge?

Why wouldn't the SRX rig go out every week? Because it is $25 more per speaker at the pricing structure I have? Or because you won't rent it out for $50 a box like you would the QSC? If the client doesn't care, then why even show up with a QSC K series at all, why not a Behringer, or a Seismic Audio speaker? Don't answer that, it was rhetorical...

Going to my statement: " At what point do you go from just enough to value-added....". Forget about ROI, forget about acceptability; we are talking tools and shop here. If you have a market at all, you will make an ROI. It might take a couple of extra weekends, but you will make your money back if you can move your equipment. We all agree the SRX is better as a tool, and I don't think it is even arguable. None of your clients care about your ROI, your metric, or your reasoning for cost structure, they care whether they can get what they want at the price they want. But they don't tell you what to charge, they only agree to YOUR fee. You can charge whatever the heck you'd like, you may find that you take fewer gigs, but make the same money. What of your ROI and hours to income ratio then?

Consider this perhaps. You go out and buy an L'acoustics rig and you still have the same clientele you had before ( will pay less for QSC because it works and is affordable ), so do you completely alienate that clientele by pricing yourself out of their range and lose all your gigs? Or, do you ramp them in? Hey, I got this new system that is multitudes better than what I used to have, I will work with you on pricing for this one gig so I can utilize it and hopefully build a new customer base with it. If you have a system like that, you WILL GET CALLS EVENTUALLY. 

IT IS AT THIS POINT WHERE YOUR TALENT MUST EQUAL THE QUALITY OF YOUR TOOLS. If you duff the gig with your expensive tools, you won't sell it. This is why the majority of companies move mid-tier equipment. The talent and the tools match the price point of the client they acquire. This is in no way meant to be a knock on anyone, it is the economics of the system. I owned a JRX system after all... Now I play with people's d&b, L'Acoustics, Martin, JBL, and RCF systems! If you have good talent, it is much easier to sell your gear no matter what market you are playing in.

So going back to what is a better buy. That is 100% up to you and what you value. I purchased the SRX system as my next step because it was one step better than everyone else in my direct market was using. I didn't intend on increasing my pricing or doing crazy microeconomics on when my ROI will occur and potential gross returns, it was simply that was making enough to afford one step better than my competition, I think I can sell it and I think it will help sell me. Low and behold, it did. I did a few gigs, got instant results, and saw that I was undervalued. I increased my day rate, and my equipment rate, and didn't get any pushback. I didn't have my old clients going " well uh, you see, uh, your estimate was $350 more than last year, and uh.... well we can't afford it... Not saying you will get the same results, but if your client values YOU, then you can ask what YOU want.

We seem to keep going to what the client will pay and how busy you can keep yourself. Not taking into account the actual time spent making the $$$. If you do 1 gig for $10k, or 10 gigs for $1k, which one pays you the most? Don't answer that, another rhetorical... You don't want to work 6 gigs in a weekend if you can make the same money in 4 gigs. If you can demand in 4 gigs what you did in 6 before, you actually made more money. Scale that back up to 6 gigs again and you are now making double what you were before for the same number of gigs. I have some bands that I worked weddings for, they were good for about 1 show a month ( between my availability and their location ) When I said my new rate was going to be $250 more than my old rate, they couldn't argue when I said I will ramp them in. You get one gig at the old rate to see why I'm charging more. I still got the calls. It wasn't because I was the only game in town, it was because I was WORTH IT.

You don't ask your clients to pay you X amount, you tell them it is this much ( not in such gross terms ). The difference between I can do it for $500 if that works for you and my rate for that is $750, is actually $250 more in your pocket. If you ask, that leaves the impression that it is negotiable. If you say that it is this much... there isn't an impression that things are negotiable. Do you want to rent speakers at $50 forever and base your income off of how many of them you can move every week, or do you want speakers that are worth more and that you CAN demand more for and still move as many as you can every week? One makes more money than the other.

Again, if the QSC K series is where the knee for quality to price ratio exists, then why not use the next step down and charge the same then? Make even more money!!! If it is all about getting to your client's bottom line... why not bring yours down with it. I don't like that business model myself. I like having the best tool I can and acquiring a client that will pay for it. I make more, I work less and everyone is still happy

[Russell Ault]

{...}

There's a lot to think about here, but I think I might be able to help out with some confusion. A few posts ago you said:

{...} Your ROI plan is not of importance once the item has been paid for. If you can move it enough that it is paid for in one month, it doesn't matter if it cost $2k or $100, you move it enough to get your ROI and anything beyond that is profit margins. {...}

Strictly speaking, this is not correct. Technically, what you're describing here is not ROI, but payback period (PBP), and I think the distinction between the two explains a lot. In short, PBP looks at how long it takes for an asset to pay for its acquisition costs (which is basically what you're describing), while ROI looks at how much income an asset can generate relative to its acquisition costs.

By the sounds of what you've said, your business model is almost entirely service-oriented. This would mean the primary job of your assets is to maintain or increase the value of your services. You need to be sure that your assets aren't losing you money (which PBP will tell you), but beyond that your concern is with your entirely services, not with your assets. There's nothing inherently wrong with this approach, but (at least above a certain scale) it effectively leaves income on the table, which can be perfectly fine on a human level (but is a mortal sin from a business perspective).

The other business model in our industry (or, frankly, most industries) is a hybrid, being both service-orient and asset-oriented. When people like Scott Holtzman talk about ROI, they mean actual ROI, where the goal is wring as much income out of given capital expenditure as possible. This means everything from calculating potential revenues to predicting the capital loss upon disposition. Mathematically-speaking, decreasing the size of the outlay without decreasing the size of the generative income inherently mean greater ROI. (Strangely, from an ROI perspective, PBP is almost immaterial, except to the extent that interest and/or opportunity cost put downward pressure on ROI.) To my mind, the biggest problem with this approach is that, from an individual's perspective, an ROI calculation would suggest that this whole industry isn't a good investment and never has been (but I suppose there are people who open restaurants, too).

I'm not going to argue in favour of one approach or the other as both have their pros and cons, particularly at different scales, but I think (hope?) that the distinction between PBP and ROI may help to clear up some of the confusion.

-Russ

[Bob Stone]

My market must be different than some of yours? The question I ask you ( because I had to ask myself ), is who determines what I charge?

Why wouldn't the SRX rig go out every week? Because it is $25 more per speaker at the pricing structure I have? Or because you won't rent it out for $50 a box like you would the QSC? If the client doesn't care, then why even show up with a QSC K series at all, why not a Behringer, or a Seismic Audio speaker? Don't answer that, it was rhetorical...

Going to my statement: " At what point do you go from just enough to value-added....". Forget about ROI, forget about acceptability; we are talking tools and shop here. If you have a market at all, you will make an ROI. It might take a couple of extra weekends, but you will make your money back if you can move your equipment. We all agree the SRX is better as a tool, and I don't think it is even arguable. None of your clients care about your ROI, your metric, or your reasoning for cost structure, they care whether they can get what they want at the price they want. But they don't tell you what to charge, they only agree to YOUR fee. You can charge whatever the heck you'd like, you may find that you take fewer gigs, but make the same money. What of your ROI and hours to income ratio then?

Consider this perhaps. You go out and buy an L'acoustics rig and you still have the same clientele you had before ( will pay less for QSC because it works and is affordable ), so do you completely alienate that clientele by pricing yourself out of their range and lose all your gigs? Or, do you ramp them in? Hey, I got this new system that is multitudes better than what I used to have, I will work with you on pricing for this one gig so I can utilize it and hopefully build a new customer base with it. If you have a system like that, you WILL GET CALLS EVENTUALLY. 

IT IS AT THIS POINT WHERE YOUR TALENT MUST EQUAL THE QUALITY OF YOUR TOOLS. If you duff the gig with your expensive tools, you won't sell it. This is why the majority of companies move mid-tier equipment. The talent and the tools match the price point of the client they acquire. This is in no way meant to be a knock on anyone, it is the economics of the system. I owned a JRX system after all... Now I play with people's d&b, L'Acoustics, Martin, JBL, and RCF systems! If you have good talent, it is much easier to sell your gear no matter what market you are playing in.

So going back to what is a better buy. That is 100% up to you and what you value. I purchased the SRX system as my next step because it was one step better than everyone else in my direct market was using. I didn't intend on increasing my pricing or doing crazy microeconomics on when my ROI will occur and potential gross returns, it was simply that was making enough to afford one step better than my competition, I think I can sell it and I think it will help sell me. Low and behold, it did. I did a few gigs, got instant results, and saw that I was undervalued. I increased my day rate, and my equipment rate, and didn't get any pushback. I didn't have my old clients going " well uh, you see, uh, your estimate was $350 more than last year, and uh.... well we can't afford it... Not saying you will get the same results, but if your client values YOU, then you can ask what YOU want.

We seem to keep going to what the client will pay and how busy you can keep yourself. Not taking into account the actual time spent making the $$$. If you do 1 gig for $10k, or 10 gigs for $1k, which one pays you the most? Don't answer that, another rhetorical... You don't want to work 6 gigs in a weekend if you can make the same money in 4 gigs. If you can demand in 4 gigs what you did in 6 before, you actually made more money. Scale that back up to 6 gigs again and you are now making double what you were before for the same number of gigs. I have some bands that I worked weddings for, they were good for about 1 show a month ( between my availability and their location ) When I said my new rate was going to be $250 more than my old rate, they couldn't argue when I said I will ramp them in. You get one gig at the old rate to see why I'm charging more. I still got the calls. It wasn't because I was the only game in town, it was because I was WORTH IT.

You don't ask your clients to pay you X amount, you tell them it is this much ( not in such gross terms ). The difference between I can do it for $500 if that works for you and my rate for that is $750, is actually $250 more in your pocket. If you ask, that leaves the impression that it is negotiable. If you say that it is this much... there isn't an impression that things are negotiable. Do you want to rent speakers at $50 forever and base your income off of how many of them you can move every week, or do you want speakers that are worth more and that you CAN demand more for and still move as many as you can every week? One makes more money than the other.

Again, if the QSC K series is where the knee for quality to price ratio exists, then why not use the next step down and charge the same then? Make even more money!!! If it is all about getting to your client's bottom line... why not bring yours down with it. I don't like that business model myself. I like having the best tool I can and acquiring a client that will pay for it. I make more, I work less and everyone is still happy

You mistake a few things:

1) That the SRX is THAT MUCH better than the K series. It's fractionally better but almost no one will notice and more importantly it doesn't allow you to get gigs that you otherwise couldn't get with the K series (in reference to OP's single 12's over single 18's setup).

2) That the OP doesn't already own a bunch of paid for gear that selling and buying something else will cost him far more than just adding one more box.

3) That by your math, everyone should throw away their rigs, run out and buy the L'Acoustics or Meyer or whatever other top tier box because clearly doing so and that alone will make them oodles more money with far less work. This just isn't how it works, especially if we're talking any decent 12" two way on a stick.

It would also be fun to live in your world where the client would actually care about the difference between a K12.2 and an SRX812p...I suspect someone's rejecting reality and substituting it with their own here. If I showed up to run FOH for a show or was doing a corporate talking head gig or was DJing a wedding or whatever other live sound scenario it might be and was presented with either of those boxes, I would have no issues with either one and I doubt you can find any real sound engineer that would.

[Scott Holtzman]

There's a lot to think about here, but I think I might be able to help out with some confusion. A few posts ago you said:

Strictly speaking, this is not correct. Technically, what you're describing here is not ROI, but payback period (PBP), and I think the distinction between the two explains a lot. In short, PBP looks at how long it takes for an asset to pay for its acquisition costs (which is basically what you're describing), while ROI looks at how much income an asset can generate relative to its acquisition costs.

By the sounds of what you've said, your business model is almost entirely service-oriented. This would mean the primary job of your assets is to maintain or increase the value of your services. You need to be sure that your assets aren't losing you money (which PBP will tell you), but beyond that your concern is with your entirely services, not with your assets. There's nothing inherently wrong with this approach, but (at least above a certain scale) it effectively leaves income on the table, which can be perfectly fine on a human level (but is a mortal sin from a business perspective).

The other business model in our industry (or, frankly, most industries) is a hybrid, being both service-orient and asset-oriented. When people like Scott Holtzman talk about ROI, they mean actual ROI, where the goal is wring as much income out of given capital expenditure as possible. This means everything from calculating potential revenues to predicting the capital loss upon disposition. Mathematically-speaking, decreasing the size of the outlay without decreasing the size of the generative income inherently mean greater ROI. (Strangely, from an ROI perspective, PBP is almost immaterial, except to the extent that interest and/or opportunity cost put downward pressure on ROI.) To my mind, the biggest problem with this approach is that, from an individual's perspective, an ROI calculation would suggest that this whole industry isn't a good investment and never has been (but I suppose there are people who open restaurants, too).

I'm not going to argue in favour of one approach or the other as both have their pros and cons, particularly at different scales, but I think (hope?) that the distinction between PBP and ROI may help to clear up some of the confusion.

-Russ

Russ is exactly right, QSC has great ROI I bet I have KW112 that have been our 300 times.  That's 12k return on the investment and they hold up very well.  The JBL's have had a few problems and I have so few compared to the QSC it's not a fair comparison.  The people that rent them are very happy with either speaker.  I have 8 DSR112's in that same rental category, not one had broke yet so they will do well I am sure.  If I am grabbing a 12" point and shoot I grab the DSR if that tells you anything. 

[Steve-White]

So my situation is as follows.

I currently have an all QSC system which I use for my band and occasionally for local shows for other bands as well.  I have:
 4 - K12.2 (2 for tops 2 for monitors)
 2 - K10.2 for monitors
 1 - KS118 sub..................

Me thinks the thread has taken on a life of it's own.  The OP and thread started with sound for a band and sound service as a system.  Not sure how things trailed off into over the counter equipment rentals.  Some do equipment rentals and that's ok, there's a market for it.  I don't, only contractor for sound service, turn key - no equipment rentals.  Optimal solutions would weight different aspects for each usage profile.

If I were to rent gear out over the counter, it would be in good operating condition, but would be beater grade - simple, reliable, plug in turn on and decent sound.  For my contract work, I want the good stuff.

Maybe I missed the fork in the road.

[Russell Ault]

You mistake a few things:

1) That the SRX is THAT MUCH better than the K series. It's fractionally better but almost no one will notice and more importantly it doesn't allow you to get gigs that you otherwise couldn't get with the K series (in reference to OP's single 12's over single 18's setup).

2) That the OP doesn't already own a bunch of paid for gear that selling and buying something else will cost him far more than just adding one more box.

3) That by your math, everyone should throw away their rigs, run out and buy the L'Acoustics or Meyer or whatever other top tier box because clearly doing so and that alone will make them oodles more money with far less work. This just isn't how it works, especially if we're talking any decent 12" two way on a stick.

It would also be fun to live in your world where the client would actually care about the difference between a K12.2 and an SRX812p...I suspect someone's rejecting reality and substituting it with their own here. If I showed up to run FOH for a show or was doing a corporate talking head gig or was DJing a wedding or whatever other live sound scenario it might be and was presented with either of those boxes, I would have no issues with either one and I doubt you can find any real sound engineer that would.

Isn't this a bit harsh? Let's face it, if all we cared about was ROI, none of us would be here: we'd have put our time and money into better valued, better paying, more stable careers/industries.

Asset-focused business models don't scale down particularly well. My freelancer sole proprietorship has never given any thought towards maximizing the ROI on my c-wrench, or my laptop, or even my Smaart license. Ideally I can manage these outlays in such a way as to ensure a reasonable PBP, but at the end of the day they are merely the tools I need to enable me to comfortably do the job I want to be doing at the level I'm capable of doing it at. I can (and sometime do) work with less, but having good tools always makes for a better day at the office.

My understanding is that Luke has done nothing more than expand on this basic approach: his PA is part of his "toolbox". He insists on bringing SRX to his gigs for the same reason that I insist on bring custom-moulded, filtered earplugs to all of mine: it makes for a better (easier, more comfortable, etc.) day at the office, and I can afford the outlay.

Asset-focused business models also tend to require a certain level of staffing. Managing ROI requires additional bookkeeping; maximizing ROI basically requires offering dry rentals, which means either doing a lot more of the "not coiling cables and pushing faders" work (which a lot of us don't particularly enjoy to begin with) or hiring someone to do it for your (which really doesn't scale down well).

Once a business grows to be a certain size I'm sure that ROI starts to become very import, but below that threshold (whatever it is) the concept is almost meaningless. Many of the things one has to do to maximize ROI aren't even possible at a small scale, at which point maximizing the personal comfort in (and, for that matter, enjoyment of) one's work—within the bounds of affordability (i.e. whether or not it is economically justifiable)—makes quite a bit more sense to me.

-Russ

ETA:

Me thinks the thread has taken on a life of it's own.  The OP and thread started with sound for a band and sound service as a system.  Not sure how things trailed off into over the counter equipment rentals.  Some do equipment rentals and that's ok, there's a market for it.  I don't, only contractor for sound service, turn key - no equipment rentals.  Optimal solutions would weight different aspects for each usage profile.

If I were to rent gear out over the counter, it would be in good operating condition, but would be beater grade - simple, reliable, plug in turn on and decent sound.  For my contract work, I want the good stuff.

Maybe I missed the fork in the road.

It's all about perspective. The more business-savvy among the forum's members (i.e. the ones trying to maximize ROI) tend to assume that every sound provider also does dry rentals because maximizing asset utilization is key to maximizing ROI (and therefore not doing dry rentals is leaving money on the table). For them, dry rentals are truly integral to the business of "doing sound", and therefore it isn't a topic swerve at all.

Whether or not that's true for the OP is likely something we'll never figure out given that he's only made the one post. (As an aside, perhaps we should add something to the forum's rules mentioning that e-mail notifications don't work?)

[Bob Stone]

Russ, that is fair to say there's some level of enjoyment/comfort/pleasure for ones self in owning nice(r) gear. Some things I would deem necessary, like ear plugs, as an investment into the length of one's career...it can extend to speakers to some degree, but having used a dozen different QSC and JBL boxes over the years, I can't say I see it (or more so hear it) in this case.

[ProSoundWeb Community]