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The Pursuit Of The Right Price

 

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 The Right Price for Your Disc Jockey Services

Richard Albert

 


Determining what your customers will pay for your service is a critical marketing decision for your disc jockey business. The right price for your DJ services should be commensurate with the perceived value of the service, or you will drive customers to competitors for their DJ services. Prices, discounts, allowances, and credit terms are key considerations.

You set prices when when you develop a new service, when you market to new customers, and when you bid on new contract work. Follow these six steps when setting a price for your disc jockey businesss' service:

  1. Select the pricing objective for your service;

  2. Determine the demand for your service;
  3. Estimate the costs for your service;
  4. Analyze your competitors' prices, services;
  5. Select a pricing method for your service,
  6. Select the right price for your service.

 
Each of these steps is described below.

SELECTING THE PRICING OBJECTIVE

First decide how you want your price to position your disc jockey business. Consider pursuing one of the following four major objectives through your pricing:

  1. Survival, if your business is plagued with overcapacity, intense competition, or changing consumer wants;

  2. Maximum current profit
  3. Market-share leadership, if owning the largest market share will result in your disc jockey business enjoying the lowest costs and highest long run profit (achieved by setting prices as low as possible).
  4. Service-quality leadership (achieved by charging a high price to cover the high quality of your service).

DETERMINING DEMAND

Each price you charge for your service leads to a different level of demand. Therefore, demand largely sets a ceiling to the price you can charge for your service.

ESTIMATING COSTS

Costs set the floor for your pricing. The price must cover all costs of producing, distributing, and selling the service, including a fair return on effort and risk. Consider the following costs:
Campaign and Overhead Costs. These are fixed costs that vary little with changes in the number of gigs booked. These include:

  • Printed materials (cover letter, brochure, etc.) for a direct mail piece

  • Mail preparation to stuff envelopes, sort and mail a direct mail piece.
  • Postage to send mail pieces
  • Advertising costs for display and classified ads.
  • Other marketing costs such as telemarketing, card decks, the Internet, etc.
  • Overhead costs such as accounting and office expenses.

ANALYZING YOUR COMPETITOR'S PRICES, SERVICES

While demand sets a ceiling and costs set a floor to pricing, competitors' prices provide an in between point you must consider in setting prices. Learn the price and quality of each competitor's service by shopping them to price and compare. Acquire competitors' price lists and literature. Also ask related business professionals (caterers, photographers, etc.) how they perceive the price and quality of each competitor's service. If your services are similar to a major competitor's service, then you will have to price close to the competitor or lose sales. If your service is inferior, you will not be able to charge as much as the competitor. Be aware that competitors might even change their prices in response to your price.

Several pricing strategies are available to you to seek an advantage over the competition:

  1. Price-discount strategy: Offer customers a service comparable to the leading competitors at a lower price.

  2. Cheaper-goods strategy: Offer customers an average- or low-quality service at a much lower price.
  3. Prestige-goods strategy: Launch a higher-quality service and charge a higher price than the leading competitor.

SELECTING A PRICING METHOD

Given the demand, the costs, and competitors' prices, you are now ready to select a price. The specific price for your DJ service will be between one that is too low to produce a profit and one that is too high to produce any demand. The various types of pricing methods are listed below.
Cost-plus Pricing Method: Focus on adding a standard mark- up to the costs of providing the service.
Target-Profit Pricing Method: Determine the price that would produce the profit you are seeking.
Perceived-Value Pricing Method: Base your price on your service's perceived value. You use the customers' perception of value, not your costs, as key in this pricing.
Going-Rate Pricing Method: Base the price of your service largely on competitors' prices, with less attention on your own costs or demand.
Competitive-Oriented Pricing Method: When you bid for contract work, the competitive-oriented pricing method is appropriate. You base the price for your disc jockey services on the expectations of how competitors will price rather than on a rigid relation to your costs or demand.

 


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