by pdjamez » Jun 17th, '11, 11:13
Forgive me forum, it has been 2 years since my last post. Found myself lurking around again and have been following this discussion with interest.
In respect to pricing structures I wanted to add a few points of my own. Take them as you wish.
Pricing is a complex area and one that marketeers battle with everyday. To paraphrase a quote whose origin I can't recall, "there are companies whose purpose it is to raise prices and those whose purpose is to lower them". It's really important to know which business you're in or you're in danger of not being in any business at all.
Magic and entertainment are service industries, almost exclusively delivered by freelance individuals. Each individual has a limited number of days in which they can work; around 200 if you are full-time (note I didn't say professional). This means that your business is incapable of any scale once you max out your days. The fact is your not Walmart. You're in the business of maximising the value of the limited days you have available to you.
There are two main pricing models that you can use. The first is cost plus and sounds similar to what has been suggested. In essence you take all your costs and then add on a percentage (say 20%) above this to make up the price. Good model for scaleable businesses as they have the volume to allow them to manage the costs and therefore make this profitable. Not so good, I would suggest, for magicians. That isn't to say you can't make a living at it. You can. But you can do better and offer a better service as a result.
If you're a performer then I would suggest that you look at a value based pricing model as it is a fairer model for all parties concerned, including the client. Value based pricing looks at the value being delivered to the client and prices in relation to this and doesn't take into account the costs. This is far from being dishonest and is actually a fairer deal for all concerned.
From my own experience, magicians and performers have somewhat poor business skills and tend to do neither. Magicians often charge more for weddings (I've heard it being flippantly referred to as wedding tax) but I'm fairly certain that many couldn't articulate why. The reality is that clients value the same service at different levels based on the context in which it is being used. Although scarcity of resource is a factor, it is only one of many.
To continue with the example of a wedding, these are important one time only events. I do of course mean the wedding event not necessarily the marriage. It is really important to those who are participating and they are keen to make sure the day is as perfect as they can make it. This is why they are willing to pay more. It is not stupidity on the part of the client, but a desire to get the very best service from all concerned. If you are a wedding magician then you have a special responsibility to that client on that day and need to understand that is why you are being paid at a higher rate. It is also why they will be not be best pleased if you fail to deliver. From the clients perspective the stakes are much, much higher and again this is why they are willing to pay more.
There are many who will treat weddings like any other gig, do very well and have never had a complaint. That's fine, but I would argue that you're probably leaving money on the table and almost certainly not taking full advantage of the marketing possibilities available. For me, understanding the relationship with the client, understanding their expectations and delivering a service with their interests in mind is the definition of professionalism no matter what profession you happen to be in.
Before anyone jumps on their high horse: when speaking disparagingly of magicians this is from my own experience of my fellow magi and doesn't necessarily mean you. Apologies for the length of this post, I was on a roll. Congratulations for making it to the end.