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