How Much to Charge?
May 16th, 2013I hear a lot of entertainers talking about prices. They complain that their customers are always asking for a discount or even a free event. They complain that someone new is doing events for free or not charging enough money. They complain that entertainers are able to be hired directly by their customers without needing an agent.
If one entertainer in the area wants to make $150 per event, does that mean that all other entertainers in that area need to start charging at least that much? Does one or two entertainers who charge significantly less than the rest drive down the rates that everyone can get? Will doing one event for free really open the door for all of your customers to ask for a free event?
I think it is perfectly acceptable for an entertainer to decide how much they want or need to charge without having to worry about what the other entertainers in the area think.
When I was first getting started, I wasn’t very good. There weren’t a lot of designs that I could make and those that I did make didn’t always look that great. I knew many entertainers in the area who were much better. I didn’t feel that it would be right to charge as much as they did. I even volunteered my services for free a few times just to get the experience and confidence. Doing the event for free took away the pressure. I knew that whatever I managed to create was more than they would have had if I wasn’t there.
It helped that I had a fulltime job that payed the bills and provided me with insurance. When I did an event, I really only had to cover the cost of my supplies. If I was doing one event every few weeks, it wasn’t a major investment of my time and I didn’t need to reorder supplies that often. Getting $10-15 in tips easily covered my costs.
But, as I got better and started getting busier with events, my time became more valuable. If I was going to work 40 hours during the week at my main job and then spend several hours on the weekend at festivals or birthday parties, I lost the time I once had to do laundry, groceries, and other chores around the house. At this point, I decided, I needed to find out what my time was really worth.
I knew the ballpark range of prices the other experienced entertainers in the area were charging. I had an idea of how much I was spending on supplies, business cards, website, and conferences. I also knew what I was making per hour at my day job. I decided that if I was going to continue working as an entertainer, I wanted to make as much, if not more, per hour as my day job.
When a client hires me to come to a birthday party for one hour, I know that I am spending more than just one hour of my time. I would estimate that I am spending 3-4 hours of my time for a one hour birthday party. It starts with the time discussing the event with the client, creating an invoice, making sure I have the directions to the party, and packing my supplies before the party. I have a goal of being in the neighborhood of the party at least 15 minutes early, which often means leaving home one hour before the party starts. I rarely manage to get out the door exactly at the end of one hour. I have to pack up, find the host, bring my supplies out to the car. I might get home one hour after the party ended. And even once I am home, I may need to restock or clean up before I can go to another party. Doing a bunch of 1 hour parties takes more time than doing one three hour event because for that event, I only need to travel to one place, setup my supplies once, and clean up once.
Let’s say that in my day job, I am paid $25/hour. To do a one hour birthday party, I am spending on average 4 hours of my time, so I want to make $100/hour. But, that is before I begin to figure out the cost of my supplies. Let’s assume that I use $10 worth of supplies at the party. So, now I need to charge a minimum of $110/hour to cover my costs and make the same amount of money per hour as my day job. If I want to attend conventions, buy better quality tools, have costumes, banners, tents, etc. I need to be able to pay for all of that as well, so that may raise my rates to $125/hour or more.
In reality, I should value my day job at more than $25/hour because it is a fixed, guaranteed income source. My employer provides benefits and insurance above my hourly rate. If I was to quit my day job, I would need to make more money too cover the loss of those benefits.
If I find out that the average entertainer in my area is only charging $80/hour, I either need to find ways to lower my costs or prove the value of hiring me over my competition. I can also decide to have a two hour minimum so I am getting paid for more hours while doing fewer events. If the after age entertainer in my area is charging $150 or more per hour, I can either raise my rates or hope to be busier because I am charging less.
The only thing that we can really control is how much we charge. People are sometimes forces out of business because their costs are too high compared with what the competition charges. With the right marketing pitch, you can get a person to pay a little more if they think it will be a better product or service. Look at the parking lot, not everyone is driving the cheapest, used car they can find.
I know how much I charge and can justify that amount based on my income goals and expenses. If someone wants to charge more or less than me, that is fine. I do sometimes wonder if they can explain how they came up with the number for the prices they charge or if it just “sounded good”.