Gas Price VS. DJ Rates (updated)
Have you ever noticed that when one gas company goes up so do all the others around, and when it goes down the same thing happens. The same thing happens in the DJ industry.
On one corner in many neighborhoods there are four gas stations. Each one is a different company who get their gas from different locations on different days. Three of the stations are big time corporate companies and one is a "Mom & Pop" small town style business.
When the biggest of the four companies decided to raise their prices they go out and without any warning can jack their rates up a few cents to over 30 cents per gallon at a time. Then if you stand back and watch - with in a few hours the other stations begin to do the exact same. Typically the "Mom & Pop" station will hold off the longest trying to bring in those who are so cheap that they would wait in line for ten to thirty minutes just to try and save a few pennies.
Eventually the "Mom & Pop" station will realize that they may be getting the volume of people but the low rate is eating away at their bottom line profit and they too will raise their rates but still undercut the competitors.
Because they sold in Volume, their Hugh gas tank is now empty (or close to it) when compared to the other gas stations. This means that they will need to buy another tanker truck of gas at the oil companies new higher price rate before any of the other three stations do.
So they pay up front when the tanker truck comes to refill their underground tank. Because the oil rate went up, so did the new gas they are receiving. They must now pay for the higher priced gas with the small profits (if any) from all the gas they sold at the lower rate.
Typically what then happens is the higher priced big time gas station decides to lower their rates by a few cents and everyone including the "Mom & Pop" station will follow.
Now the "Mom & Pop" station is selling gas that they paid a higher premium price for, from profits of gas they sold for less and now they are losing money on the new tank of gas because they have to meet and beat the three major competitor’s lower rates. It's all a losing game for the little "Mom & Pop" station.
No matter where you go their will always be that ONE last gas station that will under cut the others by a few pennies to try and snag the clients away from the major league players. Unfortunately many of the times when playing this "lowest price" game I have seen that many businesses go under and close the doors.
We have one location near by that changes names and owners every year or two because they try to always undercut the competition. They just can not figure out that the lowest price, no matter how good the service is always a losing game.
Let’s now compare the Gas Station "Price Wars" to the DJ industry "Price Wars".
Over the last five to ten years the DJ industry has slowly began to raise their rates to a respectable, profitable and good business sense rate. Those who were once charging under five hundred dollars are now topping the one to two thousand dollar rates for a wedding.
Much like the gas stations, when one raises their rates the others follows behind.
Slowly the "Mom & Pop" DJ's have followed behind raising their rates slightly but still undercutting the major players by a few hundred to several hundred dollars.
Then of course there are still those who think they can charge pennies on the dollar when compared to the competition and eventually they either get burnt out and/or can not afford to stay in business and end up disappearing from the industry.
Much like the Gas stations, many DJs check around and then charge a rate similar or slightly lower then the competitors.
Again, like the Gas Stations, one DJ drops their rates, the others will follow behind. It's a domino effect.
Lately because of the recession DJs are dropping their rates to a point that some are charging less for a complete wedding day then I and many others charge for just one or two hours of work.
Sure, I know the importance of supply and demand and the tight budgets of Bridal couples during a recession. I have recently lowered my rates to try and bring in work for my open dates, but even with the lower rates I still collect so much more then the "average" DJ in my area.
The unfortunate part is that DJs who are already low in their rates have decided to go even lower to “beat out” the competition like myself. They weren’t making a profit before and now they will make even less.
Right now we are in a very tight recession with everyone pinching their pennies to pay the bills but yet does the price of gas go down?
No! It just continues to go higher and higher.
Why? Because the gas industry knows that everyone needs fuel and no matter how hard they try to cut back, there's just no living without it. They also know even though they are selling less fuel because at the high rates, they are still making HUGE profits because the fuel they are selling is for up to two times the amount it was just one year ago. Selling less gas but making bigger profits!
The same could be said with the DJ industry. If someone is getting married they are going to need entertainment. If like the Gas Stations we DJs had a price that was similar in a base rate but then was increased according to talent, skills, experience and business expenses it would give the Brides & Grooms a clearer picture of who we are and the importance of what we do for them.
Instead of choosing an entertainer based on who has the LOWEST rates, they would decide on their entertainer by their qualifications, talents, personality and quality of the business.
At a higher, respectable, profitable business sense rate, you will lose some of the typical business to those who insist on working for nothing, but in the long run you will be making more money on those events that you do perform.
Work LESS - make MORE money......what a concept.
Jeff Richards: Party Time Productions
http://www.PartyTimeProductions.biz
UPDATE:5/21/08
Today the news announced that the price of a barrel of oil has risen 400% just since George W. Bush has taken office. Not bad for an OIL MAN!
Has your rates increased 400% in eight years? No.
Has it increased even 40% No.
What about 4% No.
Think about this, the average American Worker receives a 2% to 4 % raise each year for just showing up to work. Many get an even bigger raise when they are productive and do a great job.
What's you excuse for not raising your rates?