By Mark Ferrell
Ten things to consider when valuing your DJ service:
Cost of living
The Consumer Price Index is the averaged costs of a variety of goods and services. In 1984 it was 100. Today's index is 194.3. This is an increase in the cost of living of 94.3% since 1984. In 1984, the average rate for a Pro Mobile DJ was about $400 for a 4-hour party or around $100 per hour. It is exactly the same today. In today's economy, a Mobile DJ charging $400 is making a gross income 94.3% less than it was 19 years ago, which equates to less than $100 for a 4-hour party in today's dollars..
Hourly rate
Do your fees take into account the hours you spend on event planning, meetings, transportation, set up and tear-down, music research and acquisition, accounting, marketing, etc.? If you work a 40-hour week operating your business, do one party per week, and charge $400, you will gross $10 per hour. At two parties per week, that's $20 per hour… before paying business expenses! Wal-Mart pays better and has more benefits!
The 3x Rule
If you're leaving employment to start your own business, a common guideline states that in order to maintain your current pay rate you must multiply your current wage by a factor of three. This means that if your business is grossing $20 per hour, the adjusted rate based on the 3x Rule is $6.67 per hour. $6.67 per hour x 40 hours = $266.80 per week x 52 weeks per year = $13,873.60 gross annual income before taxes. Did somebody say McDonald's?
Retirement
To retire in 20 years with $1 million (which won't be a lot of money by then), you must invest $1,317 into a tax-free account bearing 10% every month for 20 years.
Job description
As professional Mobile DJs we are: Announcers, Masters of Ceremonies, Music Programmers, Audio Technicians, Lighting Technicians, Event Planners, Coordinators, and more. How much would these individual professionals charge for each service? An MC alone can command between $300 and $1,200 per event.
Price comparisons
Based on a wedding reception with 200 guests held at a Southern California hotel, a reception coordinator goes for $950, a cake ranges between $300 and $1,500, meal service averages $6,000, gratuity is $1,080, and sales tax is $1,550 for the day. At $400, a professional Mobile DJ is a steal.
The pie
In 1995, the estimated national average cost of a wedding day was $18,000. The average cost of music was $910. Today, the total is closer to $20,000. If your fee is only $400, not only is it less than 1995's average for music, but your "piece of the pie" is only 2%. Do you think the DJ is responsible for only 2% of the event's success?
Scarcity
There are 52 weeks each year. Most events happen on the weekends, usually on Saturday. Most are wedding receptions and are somewhat seasonal. This limits the time a DJ has to create income. Hotels plan their years around these seasonal trends and factor in an occupancy percentage ratio to fit their budgets. They don't depend on filling all the rooms to make ends meet. Anything over that ratio is considered a good year. How many events can a DJ do each year?
Talent
Not everyone can successfully DJ a party. Most people do not have the music knowledge, technical skill, sensitivity, motivational ability, music programming savvy, announcing skills, etc. to do a professional job. Most people can't read an audience. In other industries, talent and knowledge warrants a premium fee. Would you go to a cut-rate cardiologist? Would you pay $5.95 for a Perm, Pedicure, and Manicure? I didn't think so. :) Remember the old rule of thumb..."You get what you pay for."
No. 1 fear in America
The No. 1 fear in America (before September 11th) is public speaking: getting up in front of a crowd and talking on a microphone. Sound familiar? Not everyone is willing to do what we do routinely. In other industries, this fact alone dictates a high value-added fee. Would you become an underwater welder for $10 per hour?
