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Junior Varsity
Working for Cheap
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<blockquote data-quote="Marlow Wilson" data-source="post: 17831" data-attributes="member: 47"><p>Re: Working for Cheap</p><p></p><p></p><p></p><p></p><p></p><p>Exactly. You can have competition along industry pricing. Car shops compete on offering shuttle services, coffee, free car cleaning, etc. but generally won't devalue their services to gain your business. Their rates might vary from $75 to $120/hour but not from $10 to $100. The analogy breaks down though, at least in my area, because certification is required to work on cars. The entry price into the business - rent on a shop, capital investment for diagnostic equipment and tools, etc - is a barrier to entry. The capital and training threshold for entry into the auto repair business is much higher than ankle-biter SR. </p><p></p><p></p><p></p><p>I think SR is more analogous to the landscaping business. A neighborhood kid with a lawnmower may pinch you on the low end, while a huge regional company with excess machinery capacity and an efficient HR department (low labour costs) may pinch you from the high end. To compete with the bigger guys requires huge capital investments, but to NOT make those investments puts you at the mercy of the low barrier of entry to the market.</p><p></p><p></p><p></p><p>To stretch the analogy a bit, the main thing keeping the landscaping business at bay is that you can't buy a Kubota at the Home Depot with your credit card. That still hasn't prevented some people from offering the services of their Sears lawnmower tugged around by their compact pickup though.</p><p></p><p></p><p></p><p>The biggest issue is the perception of quality. If you don't have the proper equipment and knowledge, you won't be able to do a proper job regardless of the business. What, for our industry, is that threshold of quality? Which customers care and how much do they care? Every person with an ipod and a home theater feels qualified evaluate audio needs and their idea of acceptable and our idea of acceptable might be quite different. If you really care, the solution is to find clients who care too. My services would be completely over the top for some people and woefully inadequate for others. The wide variation in expectations and budget can complicate the market, but it is still a market. If there is excess capacity prices will drop until some people go out of business to restore equilibrium. Some parts of the market may not be worth pursuing after-all as well.</p><p></p><p></p><p></p><p>The fact that some things are not worth pursuing is part of the incremental decreases faced by our industry. Professional gigging musicians have a hard time getting reasonable paying gigs so they pack it in a get other jobs. A single DJ can work for a lot less than a 5 piece band with a soundguy and may yield the club better ROI.</p><p></p><p></p><p></p><p>But still, is ankle-biting SR a proper market? The market system is all about the allocation of resources. We say there is a market failure when there is something disrupting the efficient allocation of those resources. Hobbyist SR providers who supplement their SR 'addiction' with other income cause these distortions at the lower level when they work for prices that fall below what would be required if their hobby was not supplemented by other means. This is what is meant by 'established' pricing. In my market, certain items have fairly standard rates. There is variation with quantity, time of year, who you know, etc, but if you call around you'll find the retail and cross-rental prices on many items are reasonably close (usually with some astronomically high outliers).</p><p></p><p></p><p></p><p>If you charge well below those rates because you don't rely on that money you are distorting an otherwise effective market system. The pervasiveness of the distortions will vary depending on the depth and breadth of the people causing them, or whether they are being conducted in an area where there is a market to begin with. </p><p></p><p></p><p></p><p>Someone mixing an open mic night for $50 might as well be doing in for free as far as I'm concerned. There is no real opportunity for a professional market to satisfy that next-to-no-budget work. It would be cost prohibitive to pay an electrician to change a kitchen lightbulb, and they would take no offense to hiring little-neighbor-Johnny to do the job. Where shit gets scary is when Johnny starts offering to build an addition on the side of your house.</p><p></p><p><img src="http://index.php/fa/437/0/" alt="" class="fr-fic fr-dii fr-draggable " data-size="" style="" /></p></blockquote><p></p>
[QUOTE="Marlow Wilson, post: 17831, member: 47"] Re: Working for Cheap Exactly. You can have competition along industry pricing. Car shops compete on offering shuttle services, coffee, free car cleaning, etc. but generally won't devalue their services to gain your business. Their rates might vary from $75 to $120/hour but not from $10 to $100. The analogy breaks down though, at least in my area, because certification is required to work on cars. The entry price into the business - rent on a shop, capital investment for diagnostic equipment and tools, etc - is a barrier to entry. The capital and training threshold for entry into the auto repair business is much higher than ankle-biter SR. I think SR is more analogous to the landscaping business. A neighborhood kid with a lawnmower may pinch you on the low end, while a huge regional company with excess machinery capacity and an efficient HR department (low labour costs) may pinch you from the high end. To compete with the bigger guys requires huge capital investments, but to NOT make those investments puts you at the mercy of the low barrier of entry to the market. To stretch the analogy a bit, the main thing keeping the landscaping business at bay is that you can't buy a Kubota at the Home Depot with your credit card. That still hasn't prevented some people from offering the services of their Sears lawnmower tugged around by their compact pickup though. The biggest issue is the perception of quality. If you don't have the proper equipment and knowledge, you won't be able to do a proper job regardless of the business. What, for our industry, is that threshold of quality? Which customers care and how much do they care? Every person with an ipod and a home theater feels qualified evaluate audio needs and their idea of acceptable and our idea of acceptable might be quite different. If you really care, the solution is to find clients who care too. My services would be completely over the top for some people and woefully inadequate for others. The wide variation in expectations and budget can complicate the market, but it is still a market. If there is excess capacity prices will drop until some people go out of business to restore equilibrium. Some parts of the market may not be worth pursuing after-all as well. The fact that some things are not worth pursuing is part of the incremental decreases faced by our industry. Professional gigging musicians have a hard time getting reasonable paying gigs so they pack it in a get other jobs. A single DJ can work for a lot less than a 5 piece band with a soundguy and may yield the club better ROI. But still, is ankle-biting SR a proper market? The market system is all about the allocation of resources. We say there is a market failure when there is something disrupting the efficient allocation of those resources. Hobbyist SR providers who supplement their SR 'addiction' with other income cause these distortions at the lower level when they work for prices that fall below what would be required if their hobby was not supplemented by other means. This is what is meant by 'established' pricing. In my market, certain items have fairly standard rates. There is variation with quantity, time of year, who you know, etc, but if you call around you'll find the retail and cross-rental prices on many items are reasonably close (usually with some astronomically high outliers). If you charge well below those rates because you don't rely on that money you are distorting an otherwise effective market system. The pervasiveness of the distortions will vary depending on the depth and breadth of the people causing them, or whether they are being conducted in an area where there is a market to begin with. Someone mixing an open mic night for $50 might as well be doing in for free as far as I'm concerned. There is no real opportunity for a professional market to satisfy that next-to-no-budget work. It would be cost prohibitive to pay an electrician to change a kitchen lightbulb, and they would take no offense to hiring little-neighbor-Johnny to do the job. Where shit gets scary is when Johnny starts offering to build an addition on the side of your house. [img]index.php/fa/437/0/[/img] [/QUOTE]
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