The State of the Industry an Unsavoury truth!

[Pete McCrea]

Hi Bill, welcome aboard :)

 

I don't see why co-operation and pursuing common goals automatically means price-fixing.... ripping off the taxpaying public or consumers at large, now is it?

 

Fully agree. If we're prepared to work together then there is a way to grow the industry sustainably. But the issues is always going to be the guy prepared to undercut simply to get the work.

 

We too try and sell on quality. We have quality equipment, backed up by good people, and good service to go alongside it. However it can be hard to sell this to clients who simply care about the bottom figure.

[Paul J Need]

Can you really see this working?

 

There will always be a supplier who is willing to make a sale, or supply hire equipment at a price which undercuts a competitor - that's human nature. Ebay culture has made it more obvious that's all; is a peice of equipment is on the shelf one would rather get it out the door at £x per week less 30,40-50% off list than not making any return at all?

 

Buyers and hirers alike will often push and push to drive the price down and at the end of the day a decision if made to how low one is willing to go.

 

Gone are the days (more of less that people pay list price for hires other than short term rentals) - it also only works for slightly better off firms who have a list price, and stick to it.

 

Audio is in a real state frankly - we get a lot of enquiries from function bands for example asking for a 5k rig, 12 ways of monitors, everything mic'd up, 'processing for days', 2-3 engineers, transport and a 14 hour day.......... they have a budget of £500......... AND THEY FIND PEOPLE TO SUPPLY at this price!!

 

My favourite story concerns a job for a major Bank party - 12 peice band. we put our price in........ was deemed too expensive so, a firm came down from Manchester in 7.5T truck, 3 crew, 2 Midas 48 ch Desks, a serious EAW 850 rig and 14 monitors....... £800+VAT was the charge....... Now call me old fashion but, the Diesel from Manchester - London and back would have been slightly over £150 leaving 3 people to share £650 and no return on the equipment whatsoever......... (oh and no sleep for 2 days) Mad eh?

 

So, back to the point - no matter how much talking we do; legal or otherwise, will not change a thing unless people publish a price list and stick to it............. pigs may fly also!

[paulears]

The supplier in my own area who does most of the amateur work has a pretty large stock, and range - and acceptable prices. He isn't cheap, but what he is is helpful and genuinely supportive. So he'll publish a price list on his web site and stick to it - but he'll maybe deliver it a day early for free, or perhaps chuck in lots of extras free - that really don't cost him much. Maybe an amateur group wants something budget end - he might give them something better if the warehouse is a bit full.

 

JDPs obviously in the position that his company major in pro shows, and do amateur as their second string - and I can see how that would wrangle. Many companies, however, and I can think of at least 3, have amateur shows as a much more important part of their business - and we're talking much more hefty budgets - some amateur show budgets now fund rigs of movers, big sound systems and umpteen channels of radios. Frankly, if I wanted to hire a couple of hundred pounds worth of kit, I'd not even bother to try the big tour hire companies - they'd not want to even bother - which is fair enough!

[MarkA74]

My favourite story concerns a job for a major Bank party - 12 peice band. we put our price in........ was deemed too expensive so, a firm came down from Manchester in 7.5T truck, 3 crew, 2 Midas 48 ch Desks, a serious EAW 850 rig and 14 monitors....... £800+VAT was the charge....... Now call me old fashion but, the Diesel from Manchester - London and back would have been slightly over £150 leaving 3 people to share £650 and no return on the equipment whatsoever......... (oh and no sleep for 2 days) Mad eh?

 

This assumes that the "three guys" got to so all of the £650!!

 

If they were full time tech's from a company then chances are that they got something above the minimum wage for their time, and the rest went to the company instead.

 

Just to add my two 'penneth into the thread......

 

We're beginning to see / hear clients using the "credit crunch" arguement as an excuse for trying to get something for nothing. Is anyone else being asked by their clients to "see what you can do on the costs"?

[Stuart91]

Maybe an amateur group wants something budget end - he might give them something better if the warehouse is a bit full.

 

That can sometimes be a pretty useful marketing tactic - the client becomes accustomed to the more expensive kit and may find a way of paying for it next time.

[dunk_1984]

We're beginning to see / hear clients using the "credit crunch" arguement as an excuse for trying to get something for nothing. Is anyone else being asked by their clients to "see what you can do on the costs"?

 

Are we not affected by the "credit crunch"? I don't see why They think they deserve to get stuff for nothing while we lose money. I mean I know exactly why, but what makes them think because they're struggling we should lower our margins to suit them? I bet they aren't lowering their prices to their clients, they just have less of them.

[Rich_dv]

Sureley the difference between our industry and the supermarket analagy is that we are a service industry ?

 

I am thinking specifically of the corporate market here, and not talking about the "Dry hire" side of the industry, which might lend itself more to the supermarket model.

 

IMHO, Whereas the supermarkets are just selling commodoties - generally perhaps on a "pile it high and sell it cheap" philosophy, which in turn does cut out the smaller independant shops as they do not have the buying power of the supermarkets, we are selling a service which the client expects to be personalised to their exact requirements - although aquiring the kit cheaper is one aspect of that service, if you gave most conference/corporate customers a pile of kit, even really cheaply, they would not have the first clue what to do with it without a project manager and a team of techs to design, set up and operate the event ?

 

So in a way its almost a natural progression that the smaller/medium sized companies, who by their nature are likely to offer a more personal service as there are less staff there, may become a more viable option for some clients. These companies may not have as much brand new kit, but if they hold reasonable stocks, have well trained skilled techs and relatively low overheads, and have been around long enough to have a good reputation and trading history then they may be in a better position to trade profitably right now than the "giants".

 

That is, of course, assuming that all of the larger players do not end up going into administration, shedding some staff and a lot of debts, and then re-emerging with lots of shiny new kit at a bargain price that they paid to the liquidators ......

 

Of course the other end of the spectrum is the one-man or owner-operator companies, who will always be cheaper but you would assume that they generally service a different market sector to the type of event described above as they do not have staff, therefore enjoy the significant saving in overheads that having even a couple of members of staff brings with it, but the downside to the client therefore is a high risk that if that one person is ill for example, the client has a problem ! What was the saying - "you pays your money and takes your choice". My feeling is that the smaller companies are probably in the stronger position as they have a compromise between the 2 extremes and are inherently going to offer a more personal service yet are probably large enough to handle many of the projects that some of the larger companies would also be fighting for.

[Jivemaster]

For several companies survival will depend on actually geting paid for the work done or services and equipment provided. There is going to be a third criterion for suppliers to watch -size of order, discount expected, and probability of actually getting paid.

[Tomo]

For several companies survival will depend on actually geting paid for the work done or services and equipment provided. There is going to be a third criterion for suppliers to watch -size of order, discount expected, and probability of actually getting paid.

Indeed - my grandfather's general engineering company went under because a few customers delayed payment of their invoices too long, or didn't pay them at all.

Court orders are all very well, but it takes quite a long time to get the money (if it arrives at all), and in the meantime you've still got to pay your overheads.

[Dan Gruner]

My favourite story concerns a job for a major Bank party - 12 peice band. we put our price in........ was deemed too expensive so, a firm came down from Manchester in 7.5T truck, 3 crew, 2 Midas 48 ch Desks, a serious EAW 850 rig and 14 monitors....... £800+VAT was the charge....... Now call me old fashion but, the Diesel from Manchester - London and back would have been slightly over £150 leaving 3 people to share £650 and no return on the equipment whatsoever......... (oh and no sleep for 2 days) Mad eh?

 

Only this afternoon. I learnt that I had been undercut by some idiot on a job where I was asked to supply 2 desks, FOH and monitor engineers, all outboard processing and monitors + amplification. We were to tie into the venues (reasonable) FOH speaker system. This was not a "A-list act", but never-the-less , a serious act and the rider spec'ed top end equipment.

 

We put a very favourable price in from the start, more so because shortly after the requirements increased (more kit was required for the job).

 

However, despite our excellent reputation and run of events we have carried out, someone (I have an idea who), did the job for £300 !! Apparently, I heard from someone at the venue, that they did a good job?

 

Its situations like this that really get my blood boiling and make me want to get out of this industry for good. Its a great shame the show apparently went well, since the promoter may have learned a hard lesson otherwise and the sound "company" in question been taken to the cleaners.

 

I shall shut up now and calm down, before I say something I regret!

[Guest lightnix]

...probability of actually getting paid.

...it takes quite a long time to get the money (if it arrives at all)...

So issue a pro forma invoice and get the money up front - or at least agree a payment schedule, e.g. one third with the order, one third before you go on site and one third within 30 days of completion.

 

At least that way you'll stand a chance of covering your costs.

[lightsource]

Hi Bill, welcome aboard

 

I don't see why co-operation and pursuing common goals automatically means price-fixing. Would it be price fixing, if all the hire companies agreed to raise their rates, whatever they were, by inflation +0.5% over a period of 10 years - to try to repair some of the damage done by the relentless undercutting of the last 20?

 

Well, suprisingly, how can competitors have common goals? Every job a hire company wins, is to the detrement of the others... It's a nice idea that the Blue-Room is a nice friendly community, of like minded people. Whatever you do, whatever you say, there'll always be competition to undercut you. The question you have to ask, is weather to go out on a £150 gig, or stay at home, watch The X Factor, and earn nothing. Reality.

 

Ebay culture has made it more obvious that's all; is a peice of equipment is on the shelf one would rather get it out the door at £x per week less 30,40-50% off list than not making any return at all?

 

But this is the nature of Buisiness in general.......

 

Tesc0 or A1di vs the indepentent retailer, butcher baker etc.

 

The furniture company that gives 0% finance for 4 years....how many here would wait 4 years for payment?

 

B&Q vs the local DIY store.....

 

Paul, what you refer to here, is like quoting a RRP, after all what is a RRP in any industry? It's a 'token' price, that you can base discounts on.........Most based in fantasy land, because no-one pays RRP if they have more than 2 brain cells in their skull.

 

but then, I've seen Mac 250 entours from company X at £35 per day, and £65 from other companies......The discount structure has to be based on the initial price :)

 

So in a way its almost a natural progression that the smaller/medium sized companies, who by their nature are likely to offer a more personal service as there are less staff there, may become a more viable option for some clients. These companies may not have as much brand new kit, but if they hold reasonable stocks, have well trained skilled techs and relatively low overheads, and have been around long enough to have a good reputation and trading history then they may be in a better position to trade profitably right now than the "giants".

 

Yup!

 

That is, of course, assuming that all of the larger players do not end up going into administration, shedding some staff and a lot of debts, and then re-emerging with lots of shiny new kit at a bargain price that they paid to the liquidators ......

 

Of course the other end of the spectrum is the one-man or owner-operator companies, who will always be cheaper but you would assume that they generally service a different market sector to the type of event described above as they do not have staff, therefore enjoy the significant saving in overheads that having even a couple of members of staff brings with it.

 

Not at all. That's what freelancers are for, hire the correct people, when you need them.

[Pete McCrea]

Well, suprisingly, how can competitors have common goals? Every job a hire company wins, is to the detrement of the others... It's a nice idea that the Blue-Room is a nice friendly community, of like minded people. Whatever you do, whatever you say, there'll always be competition to undercut you. The question you have to ask, is weather to go out on a £150 gig, or stay at home, watch The X Factor, and earn nothing. Reality.

 

I understand the fact that someone has to 'loose out'. That's business. However, if the job was valued by several companies at say £1000, then to 'snipe' it for £400 is what gets my goat. That simply ****s the market over. Yes you could argue that peoples costs are different, and therefore their pricing is lower, but why go so low? Why not do it for £850? That gets the work, but goes part way to keeping the margins up.

 

The furniture company that gives 0% finance for 4 years....how many here would wait 4 years for payment?

Well like the furniture company, I'd get the money as soon as the paper work goes through and the finance providers transfer it to the account, because it wouldn't be me taking the risk, I'd pass it to the finance guys.

 

Paul, what you refer to here, is like quoting a RRP, after all what is a RRP in any industry? It's a 'token' price, that you can base discounts on.........Most based in fantasy land, because no-one pays RRP if they have more than 2 brain cells in their skull.

 

but then, I've seen Mac 250 entours from company X at £35 per day, and £65 from other companies......The discount structure has to be based on the initial price :)

 

We regularly charge list price. To end users. It's not a token price. It's what we have calculated, and believe that an end client should pay, and is in line with those in the area. That way we are trying our best to build a sustainable industry.

[lightsource]

I think you're missing my point here, Pete.

 

All markets are fluid, they go with the flow, and that's a managers job, to place their products or services at the top, whatever the industry may be.

 

There are many ways to lose business, think of the way the telecomms industry has progressed in the last few years, or the cost of computer parts, or the demise of VHS to CD or DVD, then their demise to MP3 and Blue Ray......

 

Buisiness is the art of making money, Full stop. Knowing where to place you're products and services....

 

That money buys any new gear and pays the employees their wages, If you don't like it, would you be prepared to take the pay cut, or just be laid off for a few months. Because if the ###### hit the fan, that would be the option you would be given.

 

Or would you prefer money to grow on trees?

 

In this day and age what is a price?

 

Thousands of small firms have gone bust due to the likes of Tesco, Aldi, PC World. B&Q etc, all who offer poor service for the product they provide, yet they are the market leaders. It's called a Monopoly. Not in the legal sense, but basically, size matters (well at least in this sense). :D

 

I don't see Stage Electrics or AC and others, doing the same thing, They seem to live with it, and I hope profit from it, maybe the community thing others have discussed...... I'm quite happy working with any of them, but they are still classed as competitors in a lesser right.

 

The RRP I was talking about was the Recommended Retail Price, set by the manufacturers.....so

 

We regularly charge list price. To end users. It's not a token price. It's what we have calculated, and believe that an end client should pay, and is in line with those in the area. That way we are trying our best to build a sustainable industry.

 

Until someone comes along to undercut you, then you go bust and they win. You're unemployed, they're happy..

 

Get the picture. There are people out there prepared to do that.

 

Success is mostly gained from the demise of others.

 

Every job you win, someone else has lost.

 

Welcome to the real world.

 

That's business.

[Andrew C]

As an "End User" in this business, can I add that I need to get the biggest bang for my buck? If I need to by lamps, lanterns or whatever physical stuff I HAVE TO* shop around and get the best price I can. Somewhat different if I am after a service, such as an installation, where it is easier to argue that 'cheapest' does not always equal 'best'.

 

*'have to' in a legal sense.

We are a charity, and are legally obliged to maximise return on money, or some such.