A Bad Salesmen Will Always Drop His Price!

[krankit]

Are your customers playing you for a fool … It’s not going to stop until you stop it!

Did you know? When Karaoke was new, the going rate was $600.00 - $750.00 for a show! Today, there are karaoke shows selling for $50.00 per night in major cities, across America.

Take a lead from the Auto-Dealers of America. They have a sticker on the window that everybody knows is way over priced. Then, they present a fictitious invoice made up from the manufacturer of the vehicle. (The price they paid for the vehicle) What they never mention are the words “Dealer Pack”, that is built into the dealer invoice by the manufacturer. It is figured by taking the total overhead cost of the dealership for the year, divided by the average amount of vehicles sold in a year. Every penny in between the “Sticker Price” and the “Invoice Price” is merely the sales departments commission. The dealership makes even further financial gains from secret incentives from the manufacturers, banks, & after market services. They rarely take a loss, regardless of how good a deal you think they gave you.

How does this concept relate to the Karaoke Industry?

1) Set your bottom line price according to what you have invested in your business. Dust off the ol’ calculator & add up what you have invested in your show? … A slamming Karaoke Show costs about $35,000 – $40,000 … One percent of that investment is $350.00 - $400.00 per show. (1% is ridiculously low compared to Wal-Mart, Home Depot, Lowe’s, Best Buy, Circuit City that work on an average 10% return margin) Now, you get to do 100 shows just to BREAK EVEN. (Forget about paying yourself a dime, or the recurrent cost of keeping up with the latest music, or the shared cost of your computer, your vehicle, insurance, gas, equipment repairs, office supplies, utilities, website, DOT, DOT, DOT!)
2) Set your “Sticker Price” as 1 % of your total running investment, plus a salary for yourself, plus a reasonable contribution to your other costs of doing business, and planning that goes into creating the perfect Karaoke Show.
3) Negotiate with your customers starting with your “Sticker Price”, emphasizing your strong selling points.
A) Your talent and ability to motivate a crowd
B) Your following
C) Your current song selection
D) Your professional grade equipment
E) Your props, lighting, effects, contests, games, etc.
4) Only when all else fails, offer a low price guarantee, (Like the big guys do), but do not back off your price until they call you back with the lowest price that they found. Now, either accept or reject their offer based on the margin between your “Sticker Price” & your “Invoice Price”. NEVER settle for less than your Invoice Price. Reinforce the concept that we all pay the same prices! “If you’re paying less, you’re getting less”. It’s that simple.

Example: Did you ever notice that the prices are virtually the same between Best Buy & Circuit City? Once this conclusion is realized by the purchaser, they are forced to make their selection based on other preferences … not price. The difference between us and them is that we are not selling a “Fixed Commodity”, and therefore, should never be expected to compete based on “Lowest Price Syndrome”. You need to explain this concept to every customer you talk to. “You don’t get the exact same product or results, regardless of how much you pay.”

The Potential Result: If a customer hears $150 - $200 for a karaoke show from several karaoke jocks, he’s going to assume that range as the norm. Once that figure registers in his or her head, it’s going to be tough to change their perception of what a karaoke show should cost. However, the same concept works if he or she hears $400.00 - $450.00 over and over. Yes, there will always be someone that will work for less, however, they won’t be there long when they find themselves all alone at the bottom. Furthermore, I realize that there are small venues that cannot afford that kind of money. Mercy missions are optional at your discretion, however, should not dictate your normal rate. (Do you know why a restaurant can charge $1.00 for an egg ala Carte? … BECAUSE THEY ALL DO! Regardless of the fact that you can buy a dozen eggs for .99 Cents at any grocery store)

MISGUIDED AGRESSION: You are sadly misguided if you treat your fellow karaoke jocks with contempt. They are not your enemy! They are simply reacting to the downward spiral that price chopping has imposed on all of us. I assure you, they are just as stressed about this situation as you are. You need to mend fences with each and every Karaoke Jock in your service area, and explain this upward concept. Set up a meeting, and agree with them not to compete by price chopping. Continuously monitor your market & encourage strays to maintain their will power for the betterment of this industry. (Throw them a lead for a night you are already booked)

My dear fellow Karaoke Jocks, I appeal to you that THIS IS A BUSINESS! Forget what you learned from all those employers that threw a few peanuts your way while they banked massive, whorish profits at your expense. Never, ever, be ashamed of making money! And for those of you that “Just do it for fun”, you are personally, single-handedly destroying a real career opportunity for someone else in your area by offering to do their legitimate job, at a fraction of the price, just to feed your personal ego. If you are truly talented and as good at what you do as you think you are, then you shouldn’t have any problem charging the “Sticker Price”. Then, you can subsidize a Karaoke Jock in your area that does care about his or her business with all that extra cash that you claim you don’t need!

Remember, “A bad salesman will always drop his price … I hate bad salesmen”
(Danny DiVito in Ruthless People, Touchstone Pictures, 1986)

Mick Larkin
Krank It Karaoke
www.krankitkaraoke.com

[MaddMatt]

Great post!

I am in a different business but it relates on many levels. What I have found is that my prices are fair but higher than my competition. I put together a great time either at private parties or public events and people leave excited at the end of the night.

All this can be said about Karaoke as well. When I looked into the business, I was shocked at what the average price was around my area as well as around the country. $150 per night seems like you are giving it away. That is alot of work for a 4 hour gig.

While Karaoke has been primarily in bars since it's inception, I believe there are countless other venues that could be successful. Start being creative and see where else you can get booked.

Remember, you don't have to match your competition's price if you are better at what you do. You just have to make your case for why you are better.

Madd Matt

[TKaraoke]

Mick, lots of good points. The Chicago area is like a bowl of pirahnas. You'll get your throat cut by numerous people. I left a job after over three years, because of a drunken bar customer abusing people. They went and got someone cheaper, guess what? I'm back with the "anything you want" invitation. You only get what you "ask for" or what "you'll take", whether it's money or abuse. Saying no isn't always bad, people will spend a bunch on a party, & bars will raise drink prices when we're there, but we're suppose to work for "Charlie Brown" (PEANUTS!). I won't and hope no one else will, and we'll all make what we deserve. We don't need to rip someone, just don't try to rip us.

[SteveWalker]

krankit, that's a great website you have. I noticed you have the traditional karaoke equipment. Are you planning to use the PC in the future?

Steve

[krankit]

Steve,

Thanks for the compliments. I just sent the CAVS unit back. Great concept, but it's a PROTOTYPE. It just doesn't work like they say it does. We had big problems, and eventually lost the hard drive.

Now, I've been experimenting with computer karaoke, but I'm currently involved in transfering our DJ music onto hard drive for future use.

I'm gonna stick to the good ol' fashion method for karaoke for now. I don't have another 3 months to invest in a unit like CAVS.

Mick Larkin

[danny_g]

Originally posted by krankit
Steve,

Thanks for the compliments. I just sent the CAVS unit back. Great concept, but it's a PROTOTYPE. It just doesn't work like they say it does. We had big problems, and eventually lost the hard drive.

Now, I've been experimenting with computer karaoke, but I'm currently involved in transfering our DJ music onto hard drive for future use.

I'm gonna stick to the good ol' fashion method for karaoke for now. I don't have another 3 months to invest in a unit like CAVS.

Mick Larkin

If the djing through computer works out you should try Hoster and be able to do both through the same unit.

[TKaraoke]

Mick, what problems did you have with the Cavs machine.
TK

[krankit]

Originally posted by TKaraoke
Mick, what problems did you have with the Cavs machine.
TK

AVOID, AVOID, AVOID ... CAVS

Using Windows XP, Their program would not burn the last track on the newer sound choice cd+g's (Worked ok with m windows 98 machine)

Uploading would fail on a regular basis.

Could not get the IDE Transfer to work on 4 different computers.

Hard Drive Over Heated after 4 - 5 hours of continuous play.

Had to spend 3 solid months uploading the songs 100 at a time.

The machine is very slow in response time when calling up songs and using the buttons on the front of the machine. Forget about their remote control.

3 MONTHS WARRANTY ON LABOR! 12 months on parts! (This says it all)

The Refresh Rate For Fast Songs is totally inadequate. Then they have another improvement program for you to spend another 3 months re-doing all of your fast songs?

20,000 Songs My A$$. I reached max HD capacity at 11,000 songs, and then found out that to reach 20,000 songs, you have to load the songs at the "Poor Quality" speed.

and then ... TOTAL HARD DRIVE FAILURE.

The Tech Support is the worst I've ever seen in 25 years of computer experience! I would email an issue (forget about the phone ... local number in CA, and always the machine), I would get a response in 10 - 14 days referring me to their insane "Post It Board", to read advise from other users and "Possible" Solutions.

I feel that the machine is a "PROTOTYPE", and they, themselves don't know how to fix the bugs. Therefore, it should me marketed as such, and not as a $1,600.00 Quality Machine.

Quick comparison, I paid $1,400.00 for my Pioneer V-888 7 Years ago, and never had a problem with it to date. I use it in every show. I owned this $1,600.00 piece of junk for 5 months, and NEVER got it out to a show once!

FINALLY, for all my aggravation, the best I could get CAVS to do is to take it back for a 15% Re-stocking Fee. They have the machine, I haven't been refunded to date.

AVOID, AVOID, AVOID ... CAVS

Mick Larkin
Krank It Karaoke
214 939 1661

[TKaraoke]

Mick, thanks, almost bought one a year ago, the fella I talked to said it took awhile to load, that's what turned me off. Then a few weeks ago I went to a show and the KJ was using one, he loved it, I thought, as well as a few others, that the music speed fluctuates fast and slow. Thanks for the response. I have a Pioneer V10G, the old standby, never fails, plays everything, and is still reasonable in price. Love Pioneer stuff. If you like that player, try their DJM500 or DJM600 mixers, I have the 500, it's great.
TK

[krankit]

Another Great ... I have the original about 5 years, still going strong, so I just picked up a brand new one for a backup ... just in case.

If you know anyone who needs one, I have the contact info for the dealer that still carries them.

Mick

[SteveWalker]

I think the best solution is whre you can use the PC of you own choice in combination with a program such as Hoster. You can upgrade your PC and peripherals as required as well as using the latest Windows operating system. A standalone system like the JB-99 makes you too dependent on CAVS. It's basically a cheap PC bundled up as a turn-key system for the non-technical user.

However, you would be better off buying a laptop PC, a small mixer with effects and two powered speakers. My recommendation for the typical karaoke guy is: a laptop with dual-display, Mackie DFX•6 with built-in effects unit, and two JBL Eon Power 15 Powered Speakers.

Steve

[Susan]

Wonderful article Mick! And welcome to Texas!

I have been watching the DFW area's karaoke growth since the early 1990's. You hit the nail on the head in pricing.

Sadly, DFW has gotten into a rut. Bar owners have a different view of entertainment. They see it as a way to avoid paying for advertisement or promotion.

The hire a karaoke company, disc jockey company, band, or solo entertainer based soley on how many people they can bring into the establishment on a regular basis. Totally loosing track of quality and do not hold any loyality if one week the body count is low. It is always the entertainment's fault. Not that they have done nothing to promot their own location.

It is so bad right now, that many owners look for karaoke as a way to save an establishment. The location will have very little regulars to build from and they will not post any andvertisements in newspapers, magazines, or even put a banner outside. If know one knows they are there, how will they find it? Is there a hidden radar out I am not aware of?

Right now a karaoke host is lucky to get $50.00 an hour for their weekly show in DFW. And sadly, with all the new companies poping up during this economic hard time, the KJs are all hungry for work and have become lowballers. Ethics are flying out the window in every direction. Especially in Tarrant County here in Texas, but also Dallas & Collin Counties. Even strongly ethical companies have had to really protect themselves as venues feel the waves of an early slow season this year.

For others reading this, my name is Susan Werth and I am the editor of The Karaoke PitStop Internet Magazine covering DFW here in Texas. I met Mick Larkin last week & visited his show on Monday evening. He has an impressive show, system, song library, and a uniguely decorative setup. I was very impressed. Since then we have been getting to know each other and I am becoming even more impressed with his ethics and business sense.

DFW is lucky to have Mick land and I look forward to watching him help set the bar a little higher in relationships between establishment owner and entertainers.

Also reading the strands, I noticed mention of the new CAV system. There are a few companies adopting the CAV here. The package as a whole makes it hard not to take a strong look for new comers to this industry. The provide a large amount of songs for new libraries.

So far, the draw backs I am hearing here include: the inability to add it with those still using laser players, the quality of the songs includes are lesser than what they already had, the need to reload when a singer needs to start over or an error happens.

Some of the positive points include: doubling their song library in one swoop, the custome set up decreased the amount of equiptment carried nightly, and the service warranty looked sweet (note: so far it is so new I have not heard anyone needing service on the system)

I personally have only sang on the CAV system once at one show.

As for using a PC at the shows, we are seeing it more often now in DFW. For some it has made their job a lot easier and they have added slideshow advertisments or messages between singers. Some have even used it to add music videos instead of just the music to the screens around. Some choose to remain computer free or limited. I guess it depends on how dependent you are on computers and how savy to the skills you have become. Either way, it has become a tool and helps to keep each show unique. From pencil & eraser to complete computer signup & play, each show has something different to offer.

So, with all that said, welcome all & hope to see you around the Karaoke PitStop as you find the time. In the meantime, sing something for me!

Susan Werth
Karaoke PitStop Internet Magazine

[SteveWalker]

Originally posted by SteveWalker
My recommendation for the typical karaoke guy is: Dell or Sony laptop with dual-display, Mackie DFX•6 with built-in effects unit, and two JBL Eon Power 15 Powered Speakers. Steve

I noticed that MTU is now offering the "Karaoke Portable PC Computer" with two hard drives each of which are bootable in case of a hard drive failure. I would agree that this approach is more cost effective than using a laptop pc which I recommended in my last post. With flat screen prices dropping to $200 I would think about using the portable PC if you're just starting up your business.

Steve

[MasterJP80]

I want to comment on the BAR OWNERS. I have great pride in my business and myself. When I meet with a bar owner to discuss the possiblity of doing Karaoke for them, I have certain understands. Such as:

I do have a following. But, you Mr bar owner can not expect them to come to every show. You are responsible for advertising and bringing people into your establishment. I WILL MAKE SURE YOU CLIENTS ARE HAVING FUN AND HOLD THEM IN YOUR ESTABLISHMENT SO YOU CAN MAKE MONEY.

When you advertise, the name of my company is not Karoke. My company name is Kolortunes Entertainment. You want people to recognize this name. Why? Because the private parties I do, I hand out cards with this name. Since they will enjoy themselves at the party, they will look for what establishments I work at. So, you will gain customers through my labor.

I know you can get someone cheaper. But, in the Karaoke business, the old saying is true: " You get what you pay for".

I live in the Washnington DC metropolitan area. The computition is awsome. Bring it on. Thanks for the opportunity to respond.