Why Charge More

April 8, 2008 by Randy Bartlett

Doctors who go into medicine for the money are rarely good doctors. Lawyers who go into law for the money are rarely good lawyers. Professional athletes who play for the money are rarely the best. In fact, anyone who gets into any profession for the money will probably not be very good at it. To be great at any profession requires a passion. With passion, along with some innate talent, you can become exceptionally good at what you do. And the big bonus is that those who are the best in almost every profession are paid the most.
The world of entertainment is no different. Make no mistake, if you are a mobile DJ, you are an entertainer. To be paid the most requires being better than most others at what you do. Many DJs try to charge an “average” rate for an “average” performance, which is the most difficult kind of sale. In this article, we are going to explore why it is important to charge more than others, and in future articles, we will explore how to make that happen.The most important lesson I have ever learned in business is that there are only three ways in which you can outperform the competition. First is to offer a higher quality product. Second is to offer better service. Third is to offer a lower price. Successful businesses know that in order to thrive, a business must offer two out of these three, but cannot offer all three. Think about stores such as Macy’s or Nordstrom. These companies offer great quality products along with terrific service, but to do this, they don’t sell at the lowest price. On the other hand, take companies like Target or K-Mart. They have found success by offering a slightly lower quality of product, a lower quality of service, but at a reduced price. To take it another step, think of the large warehouse stores. They offer great quality products at very low prices, but you won’t find a customer service clerk for miles. Yet these businesses are able to exist by side. They serve different needs to different people. The DJ world is no different. You can’t be all things to all people. You must find your niche. This series of article is aimed at those DJs interested in providing the highest quality show (product) and the best customer service. This can’t (and shouldn’t) be done at the lowest price. For those DJs who are more interested in providing a more “average” product, service and price, these articles will be of less interest.

The biggest drawback to raising your rates is that it is more work. It requires becoming a better performer, a better salesman, and a better customer service agent. Frankly, it’s easier to quote a lower price and take every booking until your calendar is full. But that doesn’t make it the right thing to do. As the MC/DJ, we accept the full responsibility for the success of the event. When the caterer is running behind, and the dinner is late, guests don’t go up to the caterer and ask “When are we gonna get things going?”

The very first rule in raising your rates is “Be Worth It”. This sounds simple enough, but the DJ world is full of pitfalls to give you a false sense of your performance. Think about that event you did where you were flat. There were really no opportunities to shine, and while you did nothing bad, you didn’t dazzle ’em either. Now think about the guests who left, saying things like “Nice job!” or “Hey, really good music” or “You’re really a great DJ!” These are simply polite things to say. Nobody wants to go up the DJ and say “Hey, you were really boring tonight, and I’ll never call you for one of my events!”

Work on your performance every week. There are countless ways to do this. Want to improve your applause lines? Watch any talk show and listen to the guests deliver applause lines. They rarely have to ask people to applaud; they simply deliver an applause line. Want to work on your MC skills? Join Toastmasters, watch other MCs, tape your performances and play it back. Frequent comedy clubs, theater, concerts, and watch other performers. Attend conventions, buy tapes, read DJU, go online, take dance lessons, the list is endless. Too many DJs base their egos on the comments made at the end of the evening, instead of on the phone calls they receive to book them for another event. Find a way to make every event incredible. Be worth the price you ask.

In order to understand whether you should raise your rates, and to what extent, you must first do some real research. Ask yourself the following questions.

How many of your calls are direct referrals? Direct referrals are those which come from the caller having seen you perform. These are the best. These are the clients who will pay the most, with the least amount of selling. They are very trusting, and will give you their blessing to just “do what you do!”

How many of your calls are indirect referrals? Indirect referrals are those where the caller was referred to you by a third party, but hasn’t seen you perform. These are the next best clients. They will pay your price, but you’ll have to do a little bit more work to convince them.

How many of your calls are purchased? Purchased business is that which comes from your marketing. Bridal Fairs, Yellow Pages, direct mail, cards left on bulletin boards, the internet, associations, etc.. These are the least desirable clients. They don’t know anything about you, so they require the most amount of selling, and are the least trusting of your skills, so they tend to put more restrictions on you, limiting how good your shows can be.

Next, you must examine your books to see what your availability is, and where your actual bookings come from. I kept a display ad in the Yellow Pages for several years, and I always secured a lot of bookings from it. Each year, I would total up the amount of money we grossed from our Yellow Pages ad, and compare it to the amount I spent on the ad. I figured that as long as the gross was higher than the cost of the ad, I was ahead. Then one year, I decided to look at it a little differently. It seemed that we were always booked solid on the busiest days of the year, so I excluded those jobs from my count, under the assumption that even if I hadn’t booked a Yellow Pages caller for that spot, I would have booked someone else. Then, instead of counting the entire gross, I counted only what I really got to keep after paying my DJ. If I performed at the event myself, I counted the entire amount. What I discovered astounded me. During that year, we had performed at over 50 events that came through the Yellow Pages, but I had kept only $600 more than my Yellow Pages ad. I also realized that my Yellow Pages customers were my most difficult sales, and took up the most amount of my time. I dropped my Yellow Pages ad, assuming I would lose some business. I did lose a few bookings, but I made a lot more money. More on that later.

I later applied the same principle to Bridal Fairs, with the same results. I wanted to increase my percentage of business that was referral, because that business was the least cost-conscious. They had seen my work, and were willing to pay for it. While everybody paid the same price, the referral business paid it with far less effort on my part. Thus began what I call the Sales/Event Cycle.

Simply put, the Sales/Event Cycle is a theory that makes selling and performing events better, easier and more profitable as the years go on. It works like this:

Every price will drive someone away. If you have a very high price, you will drive off the price conscious customer. The first events you will lose will be backyard parties, VFW dances, and very low-budget affairs, especially those with a small guest count. And which parties are the most difficult to do, and result in the fewest referrals generated? Those same parties. So you lose those parties at which you do the least amount for the client, and which do the least for you.

On the other hand, if you have a very low price, you will drive off the quality conscious customer. If you are $300, and entertainment is very important to a bride because she is having her reception at the Hyatt with 200 guests, a $300 DJ will drive her away in fear. It is more difficult to sell to that bride than if you are $300 more than everyone else, but can show her why.

To round it out, if your price is “average” you will be seen as a commodity. You are just another DJ telling her how good you are. But they all say that. How is she to decide? Aren’t you leery of products that claim to be “just as good” as the best, but at a lower price? Don’t you hate it when you go to buy a product, and there are ten of them on the shelf, all about the same price, all claiming to be the best? How do you make that decision, when you really need the very best? Do you make an assumption that the higher priced products are probably better quality?

Don’t be afraid of price. Price can be a selling point. We tell our customers “We are not your average DJ, and as you might expect, we don’t charge an average price. We are not the right DJs for every party, but if you are looking for someone exceptional for your event, instead of just average, then we may be the right one for you.” Doesn’t that sound better than “We don’t charge as much as them, because we have less overhead” or “Those guys are a lot more than us. You don’t need to pay that much.”

In fact, I believe it is a major selling point for us that we charge more than any other DJ company in our market. And not just a little more, but quite a bit. We are 2-3 times the “average” rate for DJs, and about 25% higher than our next closest competitor. Do we lose events because of price? All the time, but I still work almost every weekend, and I make a lot more money doing it.

How much should you raise your rates? We will discuss that in depth in a future article, but for now, use common sense. There is a point of diminishing returns, but that point is farther away than most of us think. As Mark Ferrell says, most DJs raise their rates to a comfortable level, when in fact, they should be raising it to an uncomfortable level. Why? Because no one ever improves anything they do by staying in their comfort zone. Think about all your performance skills. In the beginning, didn’t you do less than you do now? And didn’t you get to where you are now by continually pushing the envelope past the comfort zone? If you want to get our industry rates to where they belong, it requires an active pushing of the envelope, past the comfort zone, until you are losing many bookings because of price.

Let’s talk about losing events. I believe it is a good thing to lose some events. What is your closing ratio? If it is higher than 75%, you simply aren’t charging what you are worth. Don’t base your pricing decision on whether or not customers “complain” about your price. Customers will complain about price no matter what you charge. How many times have you had a client call you thinking that a DJ would be $150? If you were $200, they would complain. Would you then lower your prices to “ease their pain”? Of course not. But one of the most common concerns I hear from DJs about raising their rates is that “Our customers are already complaining!” I have no doubt this is true; I also answer calls every day. But I don’t ever remember a time when I didn’t get “complaints” about price, including when I charged $200. As long as they are complaining before they book you, and thanking you after the event, you are doing the right thing. If they complain about your price after the event, you aren’t delivering enough value. Go back to step one-“Be Worth It”

Interestingly enough, the DJs who get the most complaints about value are usually at the bottom of the fee schedules. I am the most expensive DJ in my area, and I never get complaints after the events. It’s all about value, not price.

Do some basic math to see how raising your rates will affect you. Let’s say you now charge $400 per event. If you were to raise your rates to $600, and you lost one third of your bookings, you would gross the same amount, but you would net more. This is because you would be working at fewer events, incurring fewer costs, not to mention how much more rested and prepared you could be. These numbers work at any level, however, I don’t think anyone would really lose one third of their business with that sort of a price increase, unless their business was mostly purchased, and they didn’t have the ability to sell a little. Again, if that is the case, improve your performance and your sales skills.

What if you now charge $600 and are booked 80 times per year? That is $48,000. If you raised your rates to $800, and only did 60 events, that is still $48,000 per year, and you work much less. Now, if you do this, which events would you lose? You would lose the small backyard parties, the VFW dances, etc. Those events are killing your business anyway. You are now left with the best 60 events, and you have gotten rid of the worst 20 events, and made more money? But wait, it gets better. What if you only lost 15 bookings, instead of 20? Now you would have grossed $52,000, a $4,000 increase, but still worked 15 fewer events. And by scaring off some of those lower priced bookings, you may have saved yourself for better, higher paying events, which generate more referrals, allowing you to raise your rates again.

For the doubters, let’s take it a step further. Let’s say your bookings dropped by 25. Frankly, if you lost that many bookings with this small of a price increase, I would suggest working on your sales and performance skills. But let’s look at it anyway. If your bookings went from 80 per year all the way down to 55, you would be grossing $44,000, a loss of $4,000 gross per year. For this loss, you would have worked 25 fewer events. Put another way, those 25 bookings have a value of $160 each. Are you really willing to work for $160 per event? If you are, please contact me right away. I’ll give you all the business you want. And what business would you likely lose because of this price difference? You would lose the Yellow Pages price shoppers, and the low budget small events with little potential for generating new referrals. How many times have you given a prime Saturday event to some small birthday party client, only to later turn down a great wedding client for the same time slot? Which one of those clients would likely generate more referrals? So now maybe you can get ride of your Yellow Pages ad, saving that $3,000 or more per year you’ve been spending. And maybe that $4,000 loss is only a $1,000, which is $40 per booking!

Going back to the Sales/Event Cycle, here’s what happens. First, you book only the best 60 events, which typically have the bigger guest lists, which makes for better parties. Better parties make for more referrals. Who attends the parties held at the Hyatt? Other people who are in that same economic stratum. When you work at Mel’s Trailer Park and Recreation Center, who are the guests? Other trailer park residents, who can’t afford you. So you do better events, for more people, generating more referrals from people who have seen you perform, and who are willing to pay your price and let you have some freedom to perform.

The more you raise your rates, the more you eliminate the bottom feeder customers. The more you do that, the better your parties become. The better your parties become, the more referrals you generate. The more referrals you generate, the more you can raise your rates. And the circle begins again.

There are also other side benefits of charging more. When you are a high priced entertainer, instead of “just a DJ”, you will command more respect from your clients and other vendors. Everyone in my market knows that we charge more than every other DJ company. When we receive a referral from another vendor, the client usually starts off by saying that they know we are more expensive, but that they heard we were really worth it. That makes for a much easier sale. Because the other vendors respect us more, we usually get our way in the little disputes that take place between vendors, such as where we set up or the sequence of events. There are some vendors who don’t refer us, and who don’t see our value. For example, some caterers who think the day is just about the food, don’t like referring us because we might cut into their budget. Again, this is not a bad thing. These are always the facilities where we would rather not work. Like you, we only get to book 52 Saturdays per year. We want to spend those days with the best possible clients and vendors.

The biggest obstacles to overcome in establishing yourself as the price leader in your market are the belief in yourself as an entertainer and the willingness to lose an occasional booking. Selling is nothing more than a transfer of enthusiasm and the last four letters of enthusiasm stand for “I Am Sold Myself”. Are you? Do you really believe that the client will have a lesser event if they don’t choose you as their DJ? If you believe that, then you have an obligation to transfer that enthusiasm to the client. This is the biggest day of their life. Don’t let your poor communication skills affect the outcome of their reception! Transfer the enthusiasm to them.

Understanding that losing some events to other DJs is a necessary part of the business is crucial to your success. I only feel bad when someone tells me they want the best DJ, and I am unable to convince them to book my company. I don’t feel bad when someone tells me that they booked another DJ because they wanted to save some money. That is a decision only they can make, and for which they will pay the ultimate price. The client, their friends and family will remember this day for years. How they will remember it will be decided by the quality of the performance of the entertainer they choose. When I lose a sale to another company, I know that I will, in all likelihood, book another client in their spot. So I don’t despair over the loss of any individual booking. I look at the end of the year, and see that once again this year, I have performed at fewer events than last year, and yet made more money once again. And I know that is a good thing.

Next time, we’ll discuss the misconception that some geographical markets simply won’t pay as much as others.

Randy Bartlett Randy Bartlett (6 Posts)

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