I received an email from a reader asking me to write an article about giving a bid for festivals and club gigs. Other than the few glowing comments he used to flatter me into doing this piece, his letter included other points such as: “How much detail is required on the gear we’re supplying? Sometimes it feels like I’m giving too much information, and in other cases, too little. What format should the quote be in? What should my profit margin be? How should I account for and cost-in the ‘suck fee’ — contingencies for covering things that inevitably change after arriving at the venue, like having the generator moved at the last moment and needing to pull 300 feet of 4/0 feeder cable!”
» Giving a Quote
Giving a job proposal requires a few things that one should take into consideration and — since we are speaking about sales — it should be noted that not everyone’s a salesperson. While giving a proper bid is something that can be learned, it is my experience that most audio and lighting technicians lack the patience to deal with a client and their many needs and demands. Many clients are somewhat less than well-informed regarding what they need for their events, and they usually require someone to guide and direct them through the straits of “big show/small budget.” If you’re the owner of an AV company, there is a good possibility that you’re a bit of a gearhead who would prefer communicating with the latest piece of technology that provides a well-defined function and purpose than deal with a client whose function and purpose might be amorphous at best.
Another issue that may arise? As the owner of the company, you are fully aware of the cost you have incurred to open and run your business, and with the monthly expenses coming due each month, there may be an inclination to undersell or give away your services just to land a gig. While this strategy may be a short-term fix to keep the company books in the black, it lacks the necessary vision to truly participate and succeed in a competitive market. Therefore, before the first proposal goes out, it would be wise to define the market in which you want to contend, have enough of the essential equipment you’ll need and can afford (you can always sub-rent if you need more) and have someone who can actually sell your services to a prospective client.
In regard to the actual bid, it is well-advised to keep in mind that you are providing a service that — on the surface — is gear, labor and trucking. However, for all intents and purposes, your services have more to do with the comfort and security offered to clients who need to be assured that their event or show will be a success. Pricing for gear and labor should be based upon market value and, if you are competing in the festival and club market, you should be aware that pricing differs from the corporate events market. Considering that labor and equipment rates vary from city to city and state to state, it might be judicious on your behalf to contact other like-minded companies in your area to see how they charge for their events. Know your competition, and avoid large fluctuations in your pricing compared to theirs. If a major touring company is in your area, it doesn’t mean both of you are necessarily competing for the same jobs, so be realistic in ascertaining the scope of your competition.
Concerning the listing of equipment on any given proposal, I personally do not think it is imperative for each shackle and cable to have its own line item, nor should a quote contain a manufacturer’s spec sheet for every amplifier or speaker cabinet. A quote should be easy to read and understood by the client. For example; listing the name, model and quantity of speakers and amplifiers that are to be provided for the event should suffice. If the client is in need of any more specifics regarding the system, then you can either direct them to the manufacturer’s website or give out the information in a brief conversation with them when discussing the event.
» The Proposal Format
There are plenty of free business forms available on line, or you can create a form with any number of business programs available for PCs and Macs. It doesn’t have to be an elaborate form, but it should have a header with your company name, address and phone number and should state whether it is a quote, proposal or a final invoice. Date your quote and give it a number for easy reference. To avoid any confusion as to your role in the event, you can also have a “scope of work” section that describes just what it is your company intends to do for the particular job you are quoting.
The item you intend to bring should be listed in the body of the proposal, along with a brief description, quantity, price and extended price. Each company is different in regard to how they manage their inventory and, while some companies are very specific in terms of what they put on a quote, you can also get by with an overall description such as: “(1) VerTec 4889 sound system with 16 boxes per side, all amplifiers, cables and processing…$X,XXX.” You can then do the same thing with the motor and steel package, monitor system, consoles, microphones, power distribution, feeder cable, snakes, lighting, generator and anything else you intend to bring. Keep it straightforward, as few clients have the time, inclination, patience or the knowledge to do any heavy technical reading. In the long run, they just want to know that you are capable of providing the proper gear for an affordable price.
Once again, the quote may be a list of gear and labor calls, but what you are really selling the client is comfort and security, so be prepared to explain your proposal in simple terms if and when your customer should call on you to do so.
» Determining the Profit Margin
Regarding the profit margin, it is probably best to set a price on each piece of gear and stick to it, so that each client is getting the same rate before any allowed discount. Pricing for your equipment is generally based upon a charge of two percent of the purchase price for each item, but can vary from one percent to 10 percent as well. For example: while most items might fall in the two-to-five percent margin, there may be a small powered speaker that costs you $500, and in your particular market you can rent that same speaker for $50 per day, which means you’re charging a client 10 percent of the purchase price. Unfortunately, this percentage cannot be applied across the board for all equipment, and it’s more than likely that you will only be able to rent out the $8,000 line array speaker for one to two percent of the purchase price. Again, find out and know what your particular market can bear in regard to cost, and stay consistent and competitive with your pricing.
» “The Suck Fee”
The “suck fee” is something that should already be built into the quote and is easily billed under its own header, otherwise known as “Labor.” That’s right, labor is your suck fee, and since it will always be the labor that drives up the price of any proposal, you should be very clear as to how you are billing for your techs and the unexpected foolishness they may have to endure. Unfortunately, we cannot charge a client for every inconvenience that occurs on any given gig, but the labor rate is not necessarily calculated in regard to how easy or how difficult the work might be, but rather around a day rate or an hourly fee. A good way to charge for labor is to find out what the local union charges per hour for a tech fee and incorporate their pricing into your proposals. Base this hourly wage on a ten-hour minimum; therefore, if the hourly rate were $40, you would bill $400 for up to a ten-hour day. After ten hours, charge 1.5 times the rate for the eleventh and twelfth hour, and double time after 12 hours. Factor in a meal and charge 1.5 times the going hourly rate for each missed meal hour, so that if the techs are pulling cable when they should be eating, they are, at least, getting paid for the effort.
