Cheap DJs Aren't Good, Good DJs Aren't Cheap
Why do DJ's want so much money???
By far, the question I get asked about most is pricing. Specifically, how much should you pay a DJ for an average four hour event? Most times, and to a clients chagrin, the answer to that question is "It depends." However, I've noticed that many potential clients have a predetermined number in their heads and want to pay the DJ $400 or $500 for a 4 hour event. This seems like a reasonable price point - after all, thats $125 an hour - but is it?
In this blog post, I will shed some light on why some DJ's are worth more and why good ones will demand a premium price. Keep in mind that my comments may not apply to every DJ. And many DJs have no issue working for that price. It's situation dependent. Furthermore, my comments are in no way intended to insult anyone on what they can afford, are offering a DJ, or what any particular DJ will accept. My comments are ONLY intended to inform someone looking for a DJ of the reasons why some DJs cost more than other DJs.
For example, a DJ that has a laptop, a mixer, and a couple of inexpensive speakers may be able to cover their expenses with a nominal rate. Meanwhile, premium services come with.. well, a premium. Just remember that all DJ's are not created equal and there are various levels of DJ's; beginning with those that are just going to show up when scheduled, play some songs, pack up, and leave. Then there are those who meet with the clients several times prior to the event, ensure that all their requests are accounted for, and do a lot of planning in advance of an event. There is nothing wrong with the former, thats what some people want and need. But then there are the latter who will be more expensive. It's like the difference between the Sizzler and Ruth's Chris.
It's just 4 hours...
In the example above, the event is four hours. But is it though? A DJ will likely spend some time just running down the lead and quoting the event. Then, you have some questions over email or wanted to discuss over the phone. Likely you want to meet them or them to meet you at your venue. The DJ will spend quite a bit of time getting your deposit, getting your contract signed, planning the music for the event, perhaps working up the correct lighting placements or lighting sequences. What a client sees as a 4-hour event is actually a 10+ hour effort on behalf of their DJ.
Plus, I personally adhere to the axiom that clients don't pay to watch me set up. I make it a point to arrive at your venue soon enough in advance that I'm completely set up, have done sound and lighting checks, have changed clothes, and am simply waiting on the client to make their grand entrance. If possible, and depending on how complex the particular set up is, I routinely like to arrive two to three hours in advance of the start time of a client's event. Technically, a client doesn't actually "pay" for that time. However, it is reflected in my price.
Equipment -
For most DJ's, equipment is the #1 expense. After all, without equipment, you're not really a DJ. For example, I personally have over $20,000 invested in state of the art sound, lighting, and stage equipment that other DJ's don't. While these can be capitalized and expensed over a period of time, due to the extreme wear and tear of a mobile DJ, as well as advancements in technology, DJ equipment has a useful shelf life of about 3 to 4 years before the gear has to be replaced or upgraded.
And more importantly, keep in mind that some DJs don't actually own their own equipment. Some DJs own turntables or a controller, a laptop, and that's it. The rest of the equipment they need to service an event, they rent it from local audio shops at a daily or hourly rate. True, this obviously cuts down on the capital investment they need to make. But their ability to take gigs is dependent on what's available for rent at the time. So as a client, you don't know what you're getting until that DJ shows up at your event. And also, those DJs aren't able to work on short notice. Audio shops can only rent what they have available at the time. But DJs like me who own all of their own equipment, you can call me two days before your event and I can tell you EXACTLY what equipment I'm going to bring. (Presuming I'm available.)
Legal, Taxes, and Insurance -
As with any business, DJ's must have legal council for forming their business and ensuring they are in keeping with national, state, and local regulations. Not to mention there could be any number of legal issues that arise (imagine the drunk guest that knocks a speaker over on top of himself and decides to file a law suit).
Taxes.. oh taxes... Again, like any other business, the federal, state, and local governments want a cut of every dollar you make. Taxes will continue to be an enormous expense. Typical taxes will likely be ~20%. You know that $500 you paid the DJ? $100 or more has to go to the government. This is not including the sales tax he collected or any personal taxes he may take on any profit. That is just the tax the government puts on any revenue. Of course, it depends on how your business is set up but you get the idea. A good portion of the money you paid the DJ, they don't actually get to keep it.
In addition, an accountant is needed to keep up with the quarterly and annual filings required as well as making sure your books are accurate.
Any responsible DJ will have insurance, not just liability, but to protect all those assets from loss should something bad happen. This can run ~$1000 a year in many cases. Most venues, especially high-end ones, require a vendor to provide a business license, proof of insurance, and bonding before they will let you perform there. So there alone, your selection of venue has significantly limited the number of DJs that you can choose from. So when a venue hands you a list of "preferred vendors", that's not necessarily vendors they like. It's actually vendors that they can legally work with that have already been vetted.
Facilities -
This is a big factor that will contribute to what a DJ will charge and aligns quite closely with their capabilities. In that example above with the DJ that has a controller, mixer and a couple of speakers, he likely just keeps them in his house when not at a gig. I, on the other hand, can not possibly do that due to the extensive amount of options that I offer my clients. Thus, I keep just enough equipment at home to practice and stay proficient. But the majority of my equipment is kept in a commercial storage facility which incurs a monthly rental fee.
Back Office -
Moving to the "virtual" stuff. As a DJ, you are sales, marketing, accounting, customer service, and the talent all rolled up into a one-man package. As such, you must pay for accounting software, marketing materials, website hosting, email, phone service, and the list goes on and on. Additionally, in most cases, you must pay lead services. Lets take Thumbtack for example. Most people don't know that a vendor who responds to a Thumbtack quote request must pay Thumbtack for EVERY one they respond to. This typically ranges between $6 and $12 per request. So a DJ may respond to 10 requests - costing ~$80 to $100 and get one credible lead. So for every ONE response, it costs ~$100 just to get it and that doesn't mean that client will book with you. Remember that $500 you paid the DJ?
Credit Card (CC) Fees -
Everyone wants to pay with a credit card these days which is of course wonderful and convenient. But sadly, the processing companies that process payments typically charge their customers 2.7% - 3.2%. So of your $500, $13 went to the CC processing company.
Need More Weekends
As you might have guessed, most events - when it comes to weddings, anniversaries, birthdays, etc - are going to be on a Friday or Sat. So there are a limited number of days that a DJ can actually work these events. This is a reason many DJ companies have more than one DJ as they need to get as many events on a single day as possible. The flip side is that you will unlikely get the personal attention you want and deserve unless whomever is running it is extremely diligent and organized. There are a ton of logistical details to running one event, much less several on the same day. This is why many DJ's try to do bars, clubs, Karaoke, or corporate events during the week. While most of these outside corporate events don't pay that well, something is better than nothing.
Music -
Contrary to popular belief, music is NOT free for DJ's. Many DJs belong to record pools or have subscription services that cut down the cost of music procurement. Plus, there are royalty fees that must be paid to the artists that produce the music that you like to listen to. Instead of me having to pay royalties to all of the artists that I play in my set. Those fees are rolled into the annual subscription fee that I pay to my record pool. So for example, lets say your event has 50 songs that the DJ does not yet have in his catalog. It could cost him $75 to go get those songs you requested.
The Numbers -
This is a VERY simple and generic view of calculating any profit and is not meant to be comprehensive. Using our $500 example:
Revenue = $500
CC Fees = -$13
Taxes = -$100
Lead procurement = -$12
Music = -$75
Equipment Depreciation (3yr/straight line on $10k assuming 6 events a month) = -$50
Back office = -$62
Facilities = -$260
Profit? = -$72
As you can see, it gets difficult to make a $500 event work. Finding an experienced DJ with the capabilities you need and someone you trust will make your event so much better in the end. Spending thousands on an event and skimping on a DJ will most often lead to disappointment. It's risk vs. reward. And remember, "Cheap DJs aren't good. And Good DJs aren't cheap."
Personally, my price is my price. I turn down gigs all the time because in the grand scheme of things, it simply isn't worth it. I will even recommend to you guys that I know are cheaper. In most places, the DJs all know each other. I keep other DJs' business cards on file and I will gladly steer you to someone that I think will fit your budget. But remember, you get what you pay for.
And sadly, the DJ - the most important vendor at any event in my humble opinion - is usually the guy that gets contacted last. And furthermore, nobody EVER asks the cake lady, the caterer, or the wedding planner to reduce their price. But the DJ...no matter what price you tell people, they want you to do it for half of that.
My Personal Rule: I don't do gigs for less than the rental price of the equipment required to service your event. That is to say that if you call out on the economy to an audio shop and ask them how much would it cost to rent a controller, a mixer, a sub, two satellite speakers, and lights? And they tell you $800. I would be a fool to DJ your event for less. The price a DJ charges you is based on the rental price of the equipment PLUS the value of the DJ's time.
Hopefully this was helpful in the interest of providing information on why DJ's charge what they charge. Please contact me should you have any comments or questions.