How to Make More Money In Your Recording Studio
One of the most difficult parts of running a successful studio is setting your rates. Charge too much and no one will hire you (unless you’ve got the industry credits to back it up, of course). Charge too little and you’ll end up working 16-hour days, seven days a week.
But by pricing your services appropriately, you can find the perfect work-life balance with enough money and time to enjoy them both. In this post, we’ll teach you how to make more money in your recording studio by setting (or rasing) your rates.
How to Set Your Rates
The first step to making more money in the studio is attracting the right clients. At the beginning of your audio career, you may be tempted to set your prices lower than your competition to attract more clients. I hate to break it to you, but that’s not going to work.
Most people view the least expensive option as the lowest quality option, which means professionals will likely choose someone with more “competitive pricing.”
Competitive pricing is when your prices are similar to your competition. An easy way to determine your starting rates is to see what other engineers in your area are charging. Obviously, if you’re just starting out, your rates will much less than those with platinum records lining their studio walls.
If your prices are too low, you’ll only attract clients who are looking for the cheapest services. These are typically the most difficult artists to work with, and often ask for more than you agree to.
The artists you actually want to work with aren’t looking for the cheapest engineer on the block—they’re looking for a quality product. And good work doesn’t come cheap.
You may be thinking; “But if I charge too much, I’ll lose business from those who can’t afford me!”
Yeah, you’re right—and that’s OK. You don’t want to work with those clients anyway.
By charging competitive rates, you can make more money per project, attract more talented artists, and you weed out difficult clients.
Hourly vs Per Project vs Per Day
Early on, it’s best to bill on an hourly basis to ensure you never work for free. However, it can be difficult to persuade artists to pay you an hourly rate, especially since you’re still mastering your craft.
Instead, you may want to charge on a per-project basis. With this approach, you charge a flat rate for each type of project, regardless of how long it takes you. That way, the less time you spend on a project, the more money you make per hour, which incentivizes you to work as quickly as possible.
And if you’re a seasoned pro with lots of industry credits to throw around, you can charge a day rate. With this approach, you make a flat rate for every day you work on the project no matter what you do.
Some engineers use a hybrid approach and charge hourly for recording services and charge flat rates for editing and mixing. Some people even work for a percentage of sales royalties—at the end of that day, it’s all about what makes the most sense for you.
A new trend that many audio professionals are starting to utilize is “value-based pricing.” Value-based pricing is based on the perceived value to the customer. Instead of charging a flat rate for what you think your time is worth, your prices are based on the value that they provide to the client.
Think of it this way: how much would you pay for an afternoon in the studio with your favorite musician? And how much would you pay them to mow your lawn?
Both of those things have value, but one of them is worth much more to you. So, instead of charging a flat rate for all of your services, you should vary your prices based on their relative value in the market.
In order to operate with value-based pricing, you cannot publicly publish your rates. Instead, use a quote system, where clients contact you and you provide a custom quote for their project.
Everybody values different things. Find out what each potential client values and base your quote on that. Use your base competitive rate as a starting point and vary your price based on what the client needs.
Tired of cheap engineers undercutting you on Craigslist? Provide more value to those clients. Find what it is that they value. Obviously price is pretty high up on the list, but what’s at the bottom? Maybe they’re willing to give you more time on the project, or do all the editing themselves. What other aspects of the deal can you negotiate that would save you time, therefore allowing you to lower your rate?
When you charge the same rate of every project, the clients who are the easiest to work with end up paying higher prices to make up for the needy clients who take advantage of you. With a quote bases system, you can easily experiment with different rates with different clients. You can negotiate based on the needs of each artist, which helps you land more gigs.
However, the value of your services changes as your skills increases, so over time you’ll need to raise your rates.
How to Raise Your Rates
Raising your rates can be scary. You’re probably afraid that if you raise your prices, some of your clients may not hire you anymore.
You’re probably right. And that’s OK.
Years ago, I asked my mentor for advice about an artist who had hired another engineer. The artist was avoiding me because they still owed me money for a previous project.
My mentor said: “Good. If someone owes you money and you never see them again, it was worth it.”
Losing clients is part of running a business. It can actually be a good thing. It can free up more time for you to spend on better-paying projects.
Sounds good, right? Not so fast. Raising your rates isn’t something you should approach haphazardly. You should only attempt to raise your rates if the time is right. Here are a few tell-tale signs that it’s time to change your rates:
- You’re too busy. You literally have no free-time because all you do is work.
- Even though you’re always busy, you’re barely making ends meet. You feel like you have to work all the time to pay all your bills.
- You feel like you have to say yes to every project, even if you’re not interested, just for the money.
If you find yourself in one or more of the above scenarios, it may be time to raise your rates. However, you should only raise your rates if you have steady leads coming in. If you’re not consistently bringing in work, you run the risk of pricing yourself out of business. If you’re already booked a few weeks or months in advance, you can afford to experiment with pricing.
When you’re ready to raise your rates, there are several approaches to choose from. If you publicly display your rates, you should publicly announce that you’re going to raise your rates in the near future. Tell your existing clients that starting on this date, you’ll be raising your rates to this price.
You can even use this opportunity to drum up more business and fill out your calendar, just in case you have trouble booking clients at your new rate. Let your clients know that if they book now they can lock you in at your current rate.
Alternatively, you can use big projects as an opportunity to quietly increase your rates. Say you land a gig with one of the more prominent artists in your scene at your normal rate. You know that after the project is released, it’s going to boost your industry credentials, and therefore, your market value.
However, it’s easier to raise your rates with social proof. Meaning, if someone else says you’re worth it, you’ve got a better chance of landing the gig. Simply explain to the artist that you plan on raising your rates in the near future, but you still plan to honor your original rates with them. Here’s the catch—ask them to tell their friends that they paid your new rate. That way, anyone they recommend won’t be surprised at your new price.
Finally, if you work on a quote-based system, you can easily experiment with pricing on a case-by-case basis. One of the best ways to do this is to start charging more for projects you’re not interested in work on. That way, there’s no fear of losing the gig. If they walk, no big deal. And if they agree to pay your new rate, the gig becomes all the more appealing.
And there you have it, a foolproof system for making more money at your recording studio—just charge more money! Seriously though, by accurately assessing your market value, you can quickly maximize your potential profits.