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 "You
are underpaid, compared to the value you provide ... And I'll
tell you why!" Who among us would not be tempted to hear
more? Who among us wouldn't agree? Don't most of us
already suspect this is true? Who among us wouldn't get all
excited to hear that getting more money is simply a matter of asking
for it?
Oh, and one more
thing -- The premise on which this "all you have to do is ask
for it" economic theory is founded is that you are ALREADY worth
double, triple, or more! You simply don't know it!
Too Good To Be True?
Well, things that
sound too good to be true usually are. And, as I'll illustrate
here, this is one of those cases. However, the flaw inherent in
the methodology should not be automatically extended into turning the
goal into an unreachable or unwarranted one. You see, the
geography is a given, we have an accurate map, and our vehicle is in
top condition. We're simply on the wrong road (i.e.
"methodology") if we want to get from "Point A"
to "Point B."
Now, it would be
really nice and clean if "Point A" and "Point B"
were clearly definable locations, like they are on a topographical
map. But we're not talking about a topographical map, nor are
we talking about two physical locations. We're talking about
the wholly theoretical world of Point A and Point B being where the
mobile DJ entertainment industry is priced now and where it could be
priced in the future, respectively. And the correct road we
need to travel is far from the "direct route" that "all
you have to do is ask for it" promotes. Both are nice
roads, but one will get us there and one will simply provide us with
a nice Sunday drive in the countryside, ending up back at home.
As I said,
geography is a given. Now, the "all you have to do is ask
for it" crowd argues that perceived limitations are simply a
mirage. In fact, they usually say something very persuasive and
catchy like, "Argue for your limitations, and they are all
yours." That's a nifty admonishment. It's too bad it
isn't true. Just as one has to cross very real rivers,
mountains, and valleys in physical travelling, one has to deal with
very real obstacles, or limitations, in theoretical travelling.
To argue that aren't really there, or that they don't matter, is moronic.
Simple Vs. Complex
We are still faced
with a conundrum however. "All you have to do is ask for
it" represents an overly simplistic perspective of what is truly
a complex issue. That's a big part of its allure, I might
add. "Getting what you're worth," a quotation that
has graced many book titles over the years stands as the complex
issue. I now ask you - How often can a complex question be
solved with a simplistic answer? Well, it can't this time either.
While mobile DJ
entertainers may represent a somewhat unique commodity in terms of
characteristics, there is nothing unique about what they represent in
terms of economics. Thus, we have encountered our first very
real "obstacle" in dealing with the complex issue of
"getting what you're worth" - standard economics in a free
market based society. Unfortunately, very few of us are
accomplished economists in regard to education. But we live
economics every day of our lives, so its not like we're totally
ignorant of the subject either.
Basic Economics
I'm certain you've
at least heard the two most critical words used in association with
economics - supply and demand. Without going too far into
economic theory, we can fairly say that supply and demand are what
governs price in EVERY non-regulated free market product/service
situation. Lower supply and higher demand forces price up;
higher supply and lower demand forces price down. Additional
effects include entry into the market of additional product/service
suppliers when demand is high and departure from that market when
demand is low. Availability of capital on both the supply and
demand sides is another additional construct, but ironically is of
little consequence in this particular illustration.
We (DJ's) know for
sure that all DJ's are NOT created equal. But DJ's don't hire
DJ's - Clients hire DJ's. Here is another missing piece from
the oversimplified "all you have to do is ask for it"
methodology. It has to do with a more remote economic concept,
usually referred to as "perfect information." Perfect
information assumes that every consumer knows everything and every
product/service in the marketplace. It would be downright
preposterous to believe that the typical consumer knows everything
there is to know about mobile DJ's. The fact is that mobile DJ
entertainers may be one of the things a typical consumer knows the
least about of any product/service. Why? Because the odds
are excellent that he/she has never hired a mobile DJ entertainer before.
The Typical Consumer
How does the
typical consumer deal with such a lack of information? Ideally,
they should seek to educate themselves before making a purchasing
decision. Do they? - Very seldom. What OTHER methodology
is usually seen (incorrectly) as more efficient? - Minimize
expense! Seek the cheapest alternative available! In this
manner, the conclusion (erroneous) is, "If I don't pay a lot,
and the product/service is bad, then at least it didn't cost me
much." And he/she proceeds to call, in this case, as many
DJ's as he/she can reasonably locate, wanting to know one thing and
one thing only - "How much do you charge?"
The Mobile DJ Marketplace
Now, let's return
to the more definable concept of the mobile DJ entertainment
marketplace. Nobody would deny that this is an industry that
attracts a disproportionately large share of new start-up enterprises
year in and year out. Due to the overwhelming consideration of
"imperfect information" (or really just a LACK of
information) in the consumer base of our industry, the impact of new
entries on the VOLUME of business for existing companies is
relatively minimal. This is due to the omnipresence of referral
business in this particular industry. The "all you have to
do is ask for it" crowd proudly points to referral business and
proclaims that this is proof that the sky is the limit on rates for
competent mobile DJ entertainment enterprises.
And they have a
very valid point. If a competent enterprise is operating
virtually 100% off of referral business, they have little incentive
to market AT ALL. That admirable "word of mouth
advertising" which costs nothing and still produces customers
is, without a doubt, a worthy goal. But is 100% referral
business also a worthy goal? Should every "top tier"
mobile DJ entertainment company cease advertising once they reach a
position where's its possible to rely totally on referrals?
Let's link these analyses together and see where we end up ...
First, we have
imperfect (lack of) information on the part of the majority of
consumers. Next, we have many new DJ's entering the marketplace
annually, because it's cheap and easy to do. Finally, we have
the best existing DJ's NOT marketing - instead relying substantially
on referral business. It doesn't require an Albert Einstein to
see where this leaves the mobile DJ entertainment marketplace and the
typical consumer. Essentially, the consumer is left to choose
ONLY from the companies he/she can FIND. And due to many of the
BEST companies NOT advertising the odds are tremendously increased
for that consumer to end up with a below-average (or totally
incompetent) DJ - even though they might have wanted to pay more for
higher quality. They just couldn't readily find it!
Common Sense Conclusions
Conclusion:
More "bottom feeders" find work in this industry than are
deserving of it. Result: An inordinately large number of
consumers are dissatisfied with their DJ. Extension: So
are those 100, 200, 300+ family members, friends, and guests who are
present at the dissatisfactory event. Impact: Artificial
suppression of rates on an INDUSTRY WIDE BASIS! Why?
Because many more prospective customers have had a "bad
experience" with a DJ in relation to those who have had a
"good experience."
And there you have
it. Growing one's revenues with an "all you have to do is
ask for it" approach WILL NOT WORK because it's the MARKETPLACE
that determines "what you are worth" and not YOU! YOU
may indeed think that you are worth double or triple what you
currently charge. And if you are in the right market area, at
the right time, providing the right product/service, you may be!
One of the most
basic principles of business is to MAXIMIZE REVENUE. And nobody
should ever accept LESS than they are worth, regardless of personal
"business philosophy." But to suggest that simply
hiking up one's rates to some arbitrary hyper-inflated level is, at
best nonsensical, and at worst dangerous to a company's
survival. PUSH THOSE RATES AS HIGH AS YOU CAN! But do so
with reasonability, sensibility and care, acknowledging that in an non-regulated
free market economy, it is the MARKETPLACE that ultimately
determines "what you are worth" - NOT YOU. It may
take a little longer to get from "Point A" to "Point
B" but you'll be safe in knowing that your business will be
alive to see "Point B" when you get there.
Scott &
Doreen Susor are the Owners/Operators of "Your DJ"
Professional Entertainment Services in Houston, Texas
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