How much should I charge?

[Howard Jones]

http://www.record-producer.com/learn.cfm?a=3495

How much should you charge for your sound engineering services?
Question from a Record-Producer.com visitor...


I am an amateur recording artist recording in my apartment for university students that want to cut demos, or just record their songs. I know I am not professional and I have very little formal training.

My question is, how much should I charge? I want to make a little money and people tell me that my recordings sound better than some of the local studio's work. Should I charge by song, or by a hourly wage, and what is a good fee to start with. I live in Canada if that makes any difference.

Thanks,

Paul

David Mellor responds...

This is a tricky question. To answer one point immediately, you should charge an hourly or a daily rate.

How much your hourly or daily rate will be depends on a number of factors...

How much the client expects, or is willing, to pay.
How desperately you want the experience of doing the work.
What is the minimum value you place upon your time?
Whether you want to make recording your main source of employment.
If you make recording your main source of employment, the proportion of your available time you expect to be working.
Whether you need an assistant.
The value of the equipment you bring to the job.
The competition!
We need to take these points in turn. I will not take into account the value of your equipment until I come to that point specifically.

How much the client expects, or is willing, to pay

A suitable benchmark for this is how much you would expect to pay a plumber to fix your kitchen sink. Many clients who would willingly pay a plumber top dollar to fix a domestic problem will recoil with horror if asked to pay the same for recording services.

But you should definitely seek a comparable rate for your services, even though you might not expect to get it.

If you quote a rate that seems too cheap, you won't get respect. People place value on expensive products and services, regardless of their intrinsic worth. So don't go too low.

How desperately you want the experience of doing the work

If you are just starting out, you may feel that you would do the work for nothing just to get the experience.

If this is what you want, then by all means get that experience. It will be useful to you in your future career.

Do make sure though that all of your expenses are covered, including transport. Don't end up paying to do the job.

What is the minimum value you place upon your time?

You could be doing some other kind of work with your time. A student for example might be doing bar or restaurant work.

You shouldn't offer a rate that is less than you could earn by doing some other job.

Whether you want to make recording your main source of employment

If you want to make recording your career, then you have to charge proper money for it.

Currently you may be working directly for musicians or music societies. In future you will seek to move into broadcast or corporate work, or even recording for CD release.

If this is what you want, you have to consider how much you would like your annual income to be when setting your hourly or daily rate.

If you make recording your main source of employment, the proportion of your available time you expect to be working

This clearly links to the point made above. If you intend to be available to work for forty-six weeks a year, on average five days a week, eight hours a day, then you have 1840 hours available.

But...

Any freelance worker can only expect to be employed for a part of their available time. It would be wise to consider a figure of 50%. Initially you will not achieve anywhere near this. Further down the line you may achieve 75%. If you find yourself working more than 75% of your available time, you need to consider putting your rates up.

So if you actually work 920 hours a year, then if you want to be paid for instance $60,000, then your hourly rate will be just over $65, plus expenses.

Whether you need an assistant

You might be able to get someone to work for you for free, for the experience. Alternatively you might have to pay.

You shouldn't have to pay more than $15 - $20 an hour for an assistant who can follow your instructions but otherwise has little or no technical expertise.

A skilled assistant will demand more.

The value of the equipment you bring to the job

Your equipment cost you a lot of money and the client has to pay for the time you spend using it on their job.

Here you have to work out the value of the equipment and its projected life span.

Let's suppose you have $30,000 worth of equipment and you expect it to last five years on average.

Working 920 hours a year, this would equate to just over $6.50 per hour. You should add this to your fee, but there is no need to break it down on the invoice.

You should consider the cost of your transport too if necessary. It is normal to include the cost of transport within a certain radius, and make an additional charge beyond that.

The competition!

All of the above falls to pieces if you have competition that is prepared to work for less!

In this case you could embark on a price war, which will see both of you involved in a never-ended downward spiral.

Or you could promote your skills as a 'premium' service in some way. Another alternative is to specialize in a niche.

Summing up

Don't charge less than you are worth!

When you have decided on an hourly or daily rate, make sure that it is fully justified in the eyes of the client, in terms of the expectations set up by your marketing materials and methods, the quality of your work, and the perceived value of your service, also in the eyes of the client.

Opinions sought!

Over to Record-Producer.com readers. How much do you think a sound engineer should charge?

[chris p]

An excellent post, Howard.

I'm self-employed in my (non-music) day job and charge by the hour, and these are exactly the points we are told in our professional training about setting the rate.

That said, I'm not a fan of charging for consumables that are really part of the job. People get antsy if they are paying an hourly rate for a job and then get hit an extra $5 per blank CD or whatever, when burning that CD is really part of the job they are paying for. It can be a nice point of difference - sure my rates are a little higher, but that's what you'll pay - there's no hidden extras to make up for the cheaper headline rate.

[Howard Jones]

"It can be a nice point of difference - sure my rates are a little higher, but that's what you'll pay - there's no hidden extras to make up for the cheaper headline rate."

Do you tell potential clients this when pitching for a job? I guess I'm asking: do you feel the need to explain why your rates may appear higher than another comparable studio?

"People get antsy if they are paying an hourly rate for a job and then get hit an extra $5 per blank CD"

I guess people would get crankier when these sorts of on-costs are not spelled out to them in advance of them committing - the old questions of communication. If they didn't know they were going to be hit with these and haven't budgeted for them, then it would be understandable that they would be reluctant to part with more money.

[Kris]

Nice post. Looks like I need to re-do some of my thinking.

As for the $5 a cd..... is that all??? My last employer charged $40 per blank and $100 for the burn, I kid you not. And clients happily paid it. We bought the blanks for 50 cents each. Gotta love the advertising industry. They truly are the mules of humanity.

[Chris H]

Nice post. Looks like I need to re-do some of my thinking.

As for the $5 a cd..... is that all??? My last employer charged $40 per blank and $100 for the burn, I kid you not. And clients happily paid it. We bought the blanks for 50 cents each. Gotta love the advertising industry. They truly are the mules of humanity.

Thats like printing money! ....... or was your last job in 1987?

[Kris]

lol,

No, that was 4 weeks ago. Still happening as we speak.

[rick]

interesting set of figures in that post howard ...

my new accountant is happily chuffing through the turtlerock figures as we speak

i know he is going to tell me to raise our rates, or do more work or to just stop moaning

i will try to adopt one of the above as the best course of action
but that all sounds too hard to implement to me
maybe i will stick to the "pretend i understand how it all works daydream"
its worked so far

[chris p]

Hey there Howard

[quote]Do you tell potential clients this when pitching for a job? I guess I'm asking: do you feel the need to explain why your rates may appear higher than another comparable studio? [/quote]

[quote] I guess people would get crankier when these sorts of on-costs are not spelled out to them in advance of them committing - the old questions of communication. If they didn't know they were going to be hit with these and haven't budgeted for them, then it would be understandable that they would be reluctant to part with more money.[/quote]

Just to repeat so I'm not misconstrued, my day job is non-music - but being self-employed and charging at an hourly rate, the businesses do have commonalities.

If I'm pitching for a new client, yes, I certainly tell them the headline rate. I also make it clear I don't discount. In the same conversation, I tell them the sort of things for which I don't charge (but typically my competitors do). This is not to apologise for or seek to justify my fees, but as you say to be upfront with the client about the total costs of using my services. I don't want to do a job for someone who cannot or will not pay, or who disputes the bill at the end of the day.

Your initial post is right about the process of setting a rate, but I would never communicate that process to a client. For one, the client doesn't greatly care how many billable hours I get through in a year. In client engagement, the key is to get, as quickly as possible, beyond the price to the question of value. My hourly rate might make a surgeon blush, but if I do your job in 10 minutes, it doesn't equate to that much actual money. And even if it takes a few days, the skills I bring to the job mean you get results that represent good value for the money you spend. At least, that's the intent, and I get enough repeat business to stay fed :-) Which is my last point: setting the right rate is a business decision, but client engagement is not actually about cost, its about value and values. Deliver on the latter two, and the clients come back for more.