Take a look around your project studio at all the equipment you have accumulated. Are you tired of spending money on gear and ready to make money with it? It's time to make a plan to boost your studio profits.
Almost every day for the more than 15 years I've owned my project studio, I've tried to uncover better ways to make more money from my gear investment. Ten simple methods have worked consistently for me. Perhaps they'll help you put more cash in your pocket.
RAISE YOUR RATES
Just as most employees have annual salary reviews, you should step back and look at what you're charging, too. At one point, I went 26 months without a fee increase. What was I thinking? Now I increase my rates at least 5 percent each year.
Knowing the going rate for the services you provide is essential. What are your peers and your competition charging for similar work? In the survey I conducted, rates ranged from an insulting $15 per hour to a more respectable $75 per hour. In addition, assess your experience. If you're young and green, charge about 80 percent of the average rate you discover; if you possess impressive credentials, charge on the higher end — 120 percent or more of the average.
Another gauge to use to establish your rate is whether clients complain when you increase your rates. If they do, decrease your fee a little and you've found the highest rate your market will bear. Notice I said “clients” complain, plural. One complaint from a notoriously cheap patron should be ignored. Only when protests come en masse should you yield.
CUT YOUR EXPENSES
The easiest way for you to increase your income is to put a larger gap between what you earn and what you spend. The obvious remedy is to keep your gear lust at bay. I know it's hard. The pages of EM are full of stuff that you just have to have. While I'm not against investing in new toys, it helps your bottom line when you invest wisely. Take as much care purchasing new gear as you would putting your hard-earned savings into any traditional investment.
My philosophy has always been to start with a basic equipment arsenal and put an action plan together for acquiring additional gear in the future. Set aside 5 percent of what you make from your project studio as your rainy-day gear-splurging fund. Objectively evaluate your needs, industry trends that affect your business mix, any specific demands by clients, and, most of all, the profitability of any new equipment acquisition. Will you recoup its cost through increased billings?
Also, look for ways to reduce your fixed business expenses and keep careful watch over other expenditures. Rent, utilities, telephone, and Internet charges can easily get out of hand. Thankfully, they are easy to reduce, too. If you're unsure of where your money goes, record your spending habits for a few months and find ways to cut the chaff. Don't limit this technique to business expenses, either. You can target and cut many frivolous personal expenses at the same time.
Don't forget about the tax impact of business purchases. If your project studio is a legitimate business (see the sidebar, “Mind Your Own Business”), you reduce your taxable income through prudent business expenses. Therefore, you pay fewer taxes. For example, say you are in the 27 percent tax bracket, pay the 15.3 percent self-employment tax, and work in a state with a 3 percent income tax. Buying $1,000 in gear saves you about $453 you would otherwise pay on April 15. (The actual amount is $441.30, thanks to wacky IRS math.) The $1,000 business-gear purchase reduces $1,000 of earned business income to zero.
CHARGE FOR YOUR SERVICES
The majority of project-studio owners charge for the studio itself and throw in their services for free. Consider the opposite approach. Start charging significantly more for your professional experience and, instead, give the studio time away. People will pay more for a professional producer and engineer than for a room in your basement.
My clients rarely visit my studio. I do my music and sound magic and deliver the finished work to them. My fee is considerably higher than what I would earn from my humble computer-based project studio alone. I'd be lucky to get $35 per hour for the room, whereas I have no trouble billing triple that myself.
Voice artist Harlan Hogan echoes this strategy. “Talent union scale for a nonbroadcast session is $333 for an hour plus 14 percent for the Health and Retirement fund,” he says. “I charge $550 per hour, plus H&R, and throw in my project-studio time for free. Instead of charging for the room, I add value to my voice-over work and get paid better anyway. Plus, I have no travel time, which allows me to do more sessions.” He delivers spots through ISDN, through e-mail, or by burning a CD and mailing it.
Be good to your anchor clients. Don't neglect the 20 percent of your established client base that provides 80 percent of your revenue. Treat the clients well, and they'll reward you with their continued patronage and loyalty. Simply picking up the phone and inquiring about new projects or pitching my own ideas invariably results in an assignment. Sharing case studies of other successes is another way to encourage your best spenders.
Introducing a new product, service, or piece of gear? Make sure that your best clients know about it first. Also, offer them exclusive discounts or other incentives. Anchor clients are good sources for referrals to other prospects who may need your music and sound services. Don't be shy about asking for their help finding new business.
FIND BETTER CLIENTS
Stop wasting your time on nickel-and-dime gigs. It's worth the extra effort to find clients with bigger budgets. Sure, you can do band demos for $35 per hour, but I can make $600 in half a day selling on-hold messages to business clients (see “Recording Musician: Money on Hold” in the February 2002 issue).
Ad agencies, video and multimedia production companies, and general business clients usually have bigger budgets for music- and sound-production work. Find these deep pockets and pitch your most persuasive argument. A few projects from better clients can keep you busy for weeks and can pay handsomely.
DRUM UP NEW BUSINESS
If you don't have any work lined up, don't wait for the phone to ring. It's time to get up, get out, and get going to win new business. Unless you have an impeccable reputation, don't expect people to contact you. You need to initiate proper promotions that bring a steady stream of new business to your room.
Call previous clients and see if they have any new projects coming up. Make some cold calls to possible prospects, too. Write a news release about your latest accomplishments and send it to the media that reaches your target market. Put together a simple postcard about your services and send it to your contact list. Have a sale and offer a discount of some kind. Look for networking opportunities. Go where the work is. Hang out with the people who need the project-studio services you offer. Keep your name and the benefits you offer in front of buyers regularly. It's the essential way to secure your success, now and for the future.
RESURRECT OLD LEADS
Did somebody inquire about your services but never buy? It's time to check in with that person again. People move around a lot. Your contact at one company may have left his or her job, and the new employee filling that position may never have heard of you. Simply reconnecting with lost leads can generate lucrative assignments. Also, don't lose track of those job jumpers. They may have moved on to brighter horizons, and they still may remember how you helped them along the way.
Products can sometimes make up 50 percent of your revenues. If you limit yourself to just selling project-studio services, you could be cutting your income potential in half. Now is the perfect time to add products to your overall business mix. Choose only those products that complement what you sell. As a composer, I sell a buy-out music-library product to supplement the income I earn from soundtrack and jingle gigs. I know one studio owner who worked out a commission deal with a local music store to sell some gear available in the room. Many musicians finished their sessions at his studio only to leave with a new toy and a lighter wallet.
Are clients or industry trends hinting at new services you should be offering? Listen to what people tell you. Follow the industry closely. Then, act accordingly. For instance, are you set up for 5.1? I now offer video-editing services alongside my usual audio-for-video services. Finding a distinct need and filling it is a sure way to keep cash flowing in.
If you work alone, you have only so much time to accomplish what you need to do. Consequently, there's only so much money you can make. If you hire other people or firms to handle ancillary services, you can get more done in the same time. You'll bill out higher invoices, too. You don't have to hire employees to make this work. You can hire independent contractors and other businesses to pick up your slack.
If you're recording and mixing a CD project for an act, don't let your involvement stop with the stereo mix. Subcontract a mastering house to finish the master. Hire a graphic designer to put the CD package together. Work with a duplication company to make the finished CDs. Mark up the charges incurred from these subcontractors and bill your clients the higher amount. You can easily make 20 percent or more of the mastering, design, and duplication fees through a couple of phone calls and a little oversight. Your clients will appreciate the one-stop service, too. You'll appreciate the extra pay.
Follow these strategies, and you'll see a significant increase in the money you make from your project-studio endeavors.
Jeffrey P. Fisheris the author of Profiting from Your Music and Sound Project Studio (Allworth Press). Visit his Web site,www.jeffreypfisher.com, for more tips on moneymaking.
MIND YOUR OWN BUSINESS
It makes sound financial sense to run your project studio as a legal business. Following are some basic steps to get you started. For more detailed information, see “Working Musician: Going Legit,” in the February 2002 EM.
- Set up your business by choosing its legal structure (sole proprietorship, partnership, corporation, and so on). Consult with a tax adviser for details about the financial aspects of each business type. Contact a legal adviser for answers to liability issues.
- Make sure you meet any regulations for running a business in your town. For example, you may have to get a business license from your local clerk's office.
- File a doing-business-as (dba) with your local government if you call your business something other than your legal name. You may need a separate tax ID for your business, and some states require a sales-tax ID number.
- Open a business checking account. Deposit your project-studio income into it and pay your business expenses using checks drawn on it. Also, use a credit card only for business purchases and pay it off on time from your business checking account.
- Use bookkeeping software to track your business income and expenses. This will facilitate preparing your taxes and monitoring your financial situation. Understand the various tax consequences of your business. You'll probably need to make quarterly tax payments in addition to your annual payment.
- Protect yourself through health and property insurance. Also, consider obtaining or adding more life, disability, and liability insurance if it makes sense for your situation.