When Pete first launched his DJ business, he offered deep discounts to family, friends, referrals, and pretty much anyone who would book him. Shayna took it one step further and priced her services at $250, thinking it would allow her to gain instant entry into the marketplace.
Eager to attract clients, many new mobiles undercut their rates. And all too often, they face a similar fate: Their business grows, their clients are more than satisfied, more clients come in, and they are busier than ever. Everything looks to be a success — except the bottom line. It’s an unsustainable operation, in which entrepreneurs are working as hard as they can, yet they’re still barely bringing in enough money to stay afloat.
Welcome to the pricing trap. If you feel like your DJ service is treading water even as sales volume picks up steam, it’s time for a price check.
The Root of Underpricing
Typically, a lack of confidence is at the root of underpricing. Many new DJs charge the least amount possible, out of fear that clients won’t pay more. Then, they worry what will happen if they ask to raise their prices. Of course, this approach leaves you with long hours, not enough income and clients who don’t value your services.
At the most basic level, your business is all about earning the money you deserve for the value you bring to clients. By undercharging clients, you send the message that your services and talents are worth less than your contemporaries. You undermine the unique value you bring to the table and open the door to resentment down the road. And you end up attracting clients who are pure bargain shoppers, the ones who are looking to get a lot for a little.
Should You Raise Your Rates?
Are you afraid that charging more money will mean you’ll be working longer hours? This is a common concern among mobiles, yet the reality is actually the opposite.
When your rates are set too low, you need to take on more clients or sell more products/services to stay in business. What’s the result? You’re time-pressed, overworked and frazzled. You’re no longer able to give each client the close attention you once did; rather, it feels like a nonstop race to bring in new clients.
If you’re really good at what you do and are confident in the value you provide to clients, then you should have no problem raising your rates. You’ll end up being able to spend more time with each client — thus delivering even greater value.
There’s another advantageous offshoot from raising your rates: You end up working with people who understand the value of investing in higher priced, higher value solutions. In short, your pricing strategy can help you attract the right kind of clients.
Pricing Sets the Perceived Value
By undervaluing your offerings, you’re instantly lowering the perceived value. Consumers buy based on perceived value. You can actually empower your business and products by raising your rates…but BE WORTH IT! Do not make promises you cannot keep because you lack the talent, skills or experience to do so.
There are many opportunities to learn in the DJ industry, and some of them are even free; this website for example, or ProDJTV.com. You can read DJ books, watch DVDs about being a better MC or how to run a multi-op. You can attend workshops about creating personalized wedding party introductions such as Make It Grand! or performance training for wedding entertainers like The Entertainment Experience. There are trade publications you can subscribe to such as Mobile Beat magazine, DJ Times magazine and Pro Mobile magazine in the UK. You can join national and regional trade associations. And perhaps the most fun of all, you can attend trade shows such as the Las Vegas DJ Show, the DJ Expo, the Mobile Beat Las Vegas DJ Show, Arm DJs, to name most of those that are just in the US alone.
Communicate Your Benefits
Whether you are setting your rates for the first time or changing your pricing structure, it’s important that you communicate exactly what you offer and every single benefit you deliver. Identify where you do a superior job of meeting your client’s needs and then communicate this extra value to the client. This is where your marketing language becomes essential.
As long as you deliver something that is superior to the competition and other alternatives in a meaningful way, you’ll be able to raise your prices, avoid the pricing trap, be compensated fairly and create a robust mobile DJ business for the long haul.