My Father, a freelancer for the majority of his life, imparted a basic philosophy on me when I began to freelance as a Producer: “If you want more business, lower your rates. If you want less business, raise your rates.” This is a very simple version of the idea, since over the years we have discussed the many nuances to this technique. This idea comes from the most basic economic principle in existence: supply and demand. Supply and demand is the simple idea that if there is a large demand for something but very little of it to go around, you can charge more for it. As a Producer, I can only work so many hours and if I tell a band I have no time for 6 months, no matter how cheap I am, the band will usually look elsewhere if I cannot record on a reasonable schedule, no matter what my rate is. The supply is my time and the demand is all the bands booking me for 6 months in advance. Now if I raise my rate I will exclude some potential clientele, since budget is the number one factor in most decisions when hiring someone to perform a service.
How Low Can You Go?
So in practice, this philosophy goes something like this:
Let’s say your rate is $150 a day.
You are now booked 3 months in advance.
You are starting to notice that you are working on some projects with some pretty terrible bands and some good ones are calling and wanting to get in with you but you are booked too far in advance, so they have to go with your competition.
You realize you are on stable ground. You up your rate to $200, eliminating some bands that don’t have a decent budget. This also eliminates your problem of being booked too far in advance and working with terrible bands.
This idea also works in reverse:
Let’s say your rate is $500 a day.
You start to notice you are only booked 3 days a month and aren’t able to make your bills. When you work with bands they are bands you enjoy, but half the people who call you about time don’t end up booking time with you.
You lower your rate to $300 a day and now you are priced within more bands range.
How To Not Set Your Rate
- By thinking that since you have awesome gear or credits you deserve a certain amount of money. I have seen HUNDREDS of people come and go in this business thinking that this means something. If you can’t get booked your rate is not justified.
- By thinking you are so much better then the competition that it should justify your rate being higher. If the world doesn’t think so, you won’t be working with anyone except yourself.
- Thinking you work so hard that you deserve a raise. The industry determines your rate not your sweat. At my studio, we pull longer days then anyone around, we don’t take lunch or dinner breaks very often, yet we are not the most expensive studio around.
- Just because you went to school and paid 20 G’s for a degree it does not justify any rate to charge.
There Are Many More Pieces To The Puzzle
These techniques apply once you have been around the block for a while. In the next part we will discuss some techniques to use when you are starting out or you are down in the dumps. We will also be getting into some tricks you can do with your rate to earn more and give discounts without discounting your worth.