Lesson One -- Raise Your Rates, and WIN

[Cujo]

Ok folks --

Here is a lightly edited (for this industry application) article that I wrote in 2006. I have personally used this strategy to increase sales in my previous endeavors over the years. I taught it to many others and have enjoyed hearing their success stories.

The lessons are no less true today.

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Sales down? Want more work?

Raise your prices!

By Aaron "Cujo" Cooley

That's right, as crazy as it sounds, by raising your prices, you can have more work than you can imagine.

Many business owners think that every time sales get slow, or when facing perceived competition, the first thing that needs to be done is to drop the prices so that the phone will ring. Bad move.

If cash is already tight, then why in the world would you want to drop your prices to make things even tighter? The costs associated with performing the job, like gas, gear, equipment insurance, labor, expendables, etc., didn't get any cheaper did they? You didn’t turn down work to get this job and your rent probably isn’t free this month. Why then would you even consider working for less, so you can spend more, when you don’t have any coming in ?

The fact is, most customers don't buy on price alone, especially for the high-end services like professional audio. They say they do, but unpacking that is another lesson.

Think about it. Do you want the cheapest guy in town working on your gig? What will he leave out? What if he messes up? What if he doesn't know what he's doing?

It boils down to perception. If the customer perceives that you are giving them an exceptional value, then the price really becomes irrelevant. So then the job becomes not selling, but educating. It is your job to educate your customer about the value of the job you are providing.

This does not mean that you can never lower your prices to offer a special deal for a special customer, or to offer a package price for a large job. What it does mean is that if your prices are already strong, it gives you room to negotiate. Also, if your prices are high enough, it allows you to take the extra time necessary to make sure that you do a spectacular job for your client. Alternatively, if your prices are too cheap, you are already losing money going into it, you are already in a bad mood or have a losing attitude, and you're never going to take the time (or have the time) to do the job right….And they will notice.

One of the best strategies I ever learned was not to discount the price, but to add more value in order to make the sale. Here's how it works.

Mrs. Jones wants a great price on an interview. You've given her your best price of $350 all-in for a basic 1/2 day and minimal gear, but she thinks it's a little bit too high. Many would just continue dropping the price until she said yes, (a terrible strategy, but that’s a different lesson) but your offer now becomes an opportunity to raise your price, while adding value to the customer.

"Well, Mrs. Jones, I can't really drop the price. It's already very fair, and I just can't afford to do it for any less. What I can do though is provide you with a full day and an extra wireless lav instead of just going direct to the camera with a table mic to give you an exceptional package deal. This would give you ample time to really get deep in the interview and uncover all the little nuggets you would normally have to give up and it would really improve the look of your video. Normally this gig with the extra gear and time would cost $650, but because I’m already there with the equipment and ready to work, I can save you a lot and only charge $450."

So now instead of losing $250 job, you have sold a $450 job. The customer perceives a tremendous value; you have held your prices, educated your client, and most importantly, put money in the bank.

Of course, there is more to this lesson and we can unpack it in great detail later on. For now, put it into practice and see how much money you have been leaving on the table.

© 2006 Aaron ‘Cujo’ Cooley. All Rights Reserved.

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Now-- you will need to look at these rates with a little understanding. These numbers may or may not be the standard in YOUR area. I have no idea what the standard rates are in LA, New York, or New Zealand, or Zimbabwe. I don't live there, I don't work there, I've got no idea.

Your homework assignment is to LEARN what the industry standard rate(s) are for YOUR corner of the world and adjust accordingly.

This does NOT mean you find out what Billy the Boom Guy is charging down the street and then cut his prices by $50.00 -- That just brings us back to where you are now -- in a downward spiral of cheaper and cheaper rates until you live in a shelter and eat at the soup kitchen.

Cheers !!!!

Cujo

[Mixalot]

Lesson one, thanks for this.

[Alexander Burstein]

I'd probably replace the example of a wireless lavalier with something else because the producers require or expect something of the sort so that would be in the rental kit. Something like throwing in a timecode slate for saving time/money in post.

I could see this same tactic for arguing that a boom op/utility would be beneficial to the production, and educating the producer on the value of those positions is most of the battle.

[old school]

I could see this same tactic for arguing that a boom op/utility would be beneficial to the production, and educating the producer on the value of those positions is most of the battle.

Yes. This is what all mixers should try to do when warranted. I will give a gear concession/discount for a boom op/3rd if I can convince a Producer/UPM of the need.

Nice contribution Cujo.

CrewC

[TheBlimp]

Good stuff, highly appreciated!

Thanks a lot, Cujo!

[VASI]

Nice Cujo! But this only work (maybe?) in USA. In Greece is very difficult situations.

For example ENG in Greece (and it's true for Greek crew):

1. Eight hours work.

2. Camera and sound (one pack)

3. From the biggest private TV station.

Can you imagine the rate? 150Euros.

[Cujo]

Alex,

I thought about that very thing last night as I was in bed... A time code slate would have been a much better value upsell.

Crew,

Excellent application of the strategy to add value to the product. Improving the deal, adding value, putting another human to work... All HUGE benefits and the cash control people enjoy both a perceived and a real value.

Vasileos,

I am unfamiliar with the eurozone work protocols, but this strategy could work in any corner of the world. The key is to analyze and understand how the market in your area works at its core, then make adjustments to the items in the list.

For some it will be adding some time, (that they will have used anyway and been unpaid for), for others it will be adding a service (like minimal editing or file management), gear (like a timecode), or manpower (the boom-op or utility)

At the end of the day it is offering a value to the client that costs you very little, but adds dollars to the bottom line.

[Jeff Wexler]

Alex,

I thought about that very thing last night as I was in bed... A time code slate would have been a much better value upsellCrew,

Excellent application of the strategy to add value to the product. Improving the deal, adding value, putting another human to work... All HUGE benefits and the cash control people enjoy both a perceived and a real value.

Vasileos,

I am unfamiliar with the eurozone work protocols, but this strategy could work in any corner of the world. The key is to analyze and understand how the market in your area works at its core, then make adjustments to the items in the list.

For some it will be adding some time, (that they will have used anyway and been unpaid for), for others it will be adding a service (like minimal editing or file management), gear (like a timecode), or manpower (the boom-op or utility)

At the end of the day it is offering a value to the client that costs you very little, but adds dollars to the bottom line.

Thank you Cujo for taking the time to lay out an example to demonstrate the principle (that principle represented by the title of this topic: "Lesson One -- Raise Your Rates, and WIN"). I had no problem with the content of your post, using the addition of a wireless mic as part of the strategy in negotiation. It was obvious (and you even stated it) that you re-configured a previous document to make it more applicable and accessible to those in our industry. Whatever items and even procedures you mention all serve to illustrate the CONCEPT and the point that you were making --- this was quite clear to me. I think it is a little bit nit-picky when people find that what you are saying doesn't really fit their particular market. I agree with you completely that these principles can be creatively applied in ANY market. Your document, even any teaching/seminar that you may offer in the future for our industry, will never be the perfect recipe with all the appropriate ingredients for every business relationship --- that is not the point. It is the concept and the willingness to put the concept to work that is important.

[Cujo]

Thanks Jeff !

I appreciate the ability to share the basic concepts with the group. I wrote and used to teach a three day bootcamp so I have many more nuggets to pull from.

Teaching is and has been one of my passions for many many years. Witnessing the positive results is a huge reward and it is awesome that guys like you put forth the effort and resources to make it possible.

Stay tuned for more lessons !!

Cheers

[nysounds]

Great concept to work with. Can definitely use this info in my future negotiations.

[Max Hirtenstein]

Thanks for the effort Cujo, please keep 'em coming.

[ChrisN]

Recently discovered that certain professionals will give a rate for $175/day with equipment on an indie feature. That really blew me away. I'm talking sound devices, all the top gear.

[VASI]

Thank you Cujo! English is not my first language so I have some issues to explain you and analyse exactly my opinion. But in general agree with you!

[Toy Robot]

Recently discovered that certain professionals will give a rate for $175/day with equipment on an indie feature. That really blew me away. I'm talking sound devices, all the top gear.

I also know this to be true. It is why I have stopped almost all narrative work (I refuse to compete with those rates, or even be associated with them).

Now I work 95% ENG, run and gun type work and I am treated better, work less and get paid more. Go figure.

[Alexander Burstein]

Thank you Cujo for taking the time to lay out an example to demonstrate the principle (that principle represented by the title of this topic: "Lesson One -- Raise Your Rates, and WIN"). I had no problem with the content of your post, using the addition of a wireless mic as part of the strategy in negotiation. It was obvious (and you even stated it) that you re-configured a previous document to make it more applicable and accessible to those in our industry. Whatever items and even procedures you mention all serve to illustrate the CONCEPT and the point that you were making --- this was quite clear to me. I think it is a little bit nit-picky when people find that what you are saying doesn't really fit their particular market. I agree with you completely that these principles can be creatively applied in ANY market. Your document, even any teaching/seminar that you may offer in the future for our industry, will never be the perfect recipe with all the appropriate ingredients for every business relationship --- that is not the point. It is the concept and the willingness to put the concept to work that is important.

The concept was clear and concise and I'm just a very critical person. It's attributed to being a virgo (I've been told). I meant no hard feelings- in fact I'm very grateful to Cujo for taking the time to share this sort of knowledge with everyone. I definitely need a few lessons in the art of negotiation. And perhaps now I need a lesson in being less critical. But it does have its advantages on set once in a while!

[chrisnewton]

thanks cujo, gave me lots to think about. great business approach. I think all the best salesmen think this way, i'm going to give it a try.

[Ben Wong]

That was super helpful, Cujo!

As a newbie to the industry it was very helpful to read your little lesson.

Can't wait to see what else you have!

[Marc Wielage]

I have done this a little bit, and this can work to some degree. In one recent case, they offered a low rate, I countered with a much higher rate, and when they initially balked, I said, "I'll tell you what: I'll meet you in the middle and throw in X piece of gear as part of the package." And that got me the job. If a $25 Comtek (or whatever) knocks the price up $75, then it's worth it.

[soundslikejustin]

I have done this a little bit, and this can work to some degree. In one recent case, they offered a low rate, I countered with a much higher rate, and when they initially balked, I said, "I'll tell you what: I'll meet you in the middle and throw in X piece of gear as part of the package." And that got me the job. If a $25 Comtek (or whatever) knocks the price up $75, then it's worth it.

This. Pulled this move to get almost full day rate, equipment package, travel and consumeables (off by $50) by offering gear that has paid itself off at least once for more (slightly more) money.

[Max Hirtenstein]

Worked this tip today. Got offered $350 for a half-day. Said I can't do half day rates, but you can have me for 10 hours at $650. They booked me, thanks Cujo!

[VASI]

Cujo you are right. I have the same conversation with friend (not a sound mixer but owner print / copy house) and told me "raise your rate dude. maybe you don't have much job but you have good rate".

[Alexander Burstein]

I tried this for a "low budget feature" yesterday and sadly it did not work. I think in the future though I'll be considered for work with them when they have a proper budget. This just seemed like a low budget mess. They're shooting on a 5d. I tried the argument about "A boom op for sound is like the 1st AC for camera", but I got the impression that the DP is his own department too...hard to argue with that haha.

Edit: So overall I still think I did win. I didn't have to book myself for a messy show and will likely get called in the future when that producer has a proper budget. Just so I'm clear.

[Max Futterman]

I tried this for a "low budget feature" yesterday and sadly it did not work. I think in the future though I'll be considered for work with them when they have a proper budget. This just seemed like a low budget mess. They're shooting on a 5d. I tried the argument about "A boom op for sound is like the 1st AC for camera", but I got the impression that the DP is his own department too...hard to argue with that haha.

Edit: So overall I still think I did win. I didn't have to book myself for a messy show and will likely get called in the future when that producer has a proper budget. Just so I'm clear.

Another reason to stick to your rates: to filter out the deadweed like that.

[joepfeil]

Some great advice that has been handed to me is to never chase low rates. When I'm offered a low rate, I always try to negotiate more value for a better rate. It almost always works now, because the client can tell that I care about their product.

[studiomprd]

" I'll be considered for work with them when they have a proper budget. "

er...

didn't they promise that whoever does this one cheap, would be hired for all their future more money work..??

yeah...

forget it, they won't have any more projects, anyway, and if they do0 they will be just as cheap.

Edited August 28, 2012 by studiomprd