Article: Increase Your Project Studio Profits Now!

By Jeffrey P. Fisher

Not just for music and sound people -- video pros can benefit from the advice in this article, too.

How many times have you looked around your room at all you've accumulated and said: "I'm tired of spending money on gear. I want to start making money with my project studio."

Almost every single day for the 15+ years I've owned my project studio, I've tried to uncover better ways to make more money from my gear investment. Here are the ten most effective ways that I've discovered to put more cash in your pocket.

Work your strengths. Concentrate on the projects that bring in the most money and let the rest go. If you are making decent cash doing certain things while wasting too much time on pet projects that bring in peanuts, it is probably time to reevaluate your priorities. Swallow hard and commit to pursuing only the real moneymakers, not the pipe dreams.

Raise your rates. When was the last time you increased your fees? Just as every employee has an annual salary review, you should step back and look at what you're charging, too. At one point I went 26 months without a fee increase. What was I thinking? Now I push up the rates at least 5% every year.

Knowing the going rate for the services you provide helps, too. Ask around. What are your peers and competition charging for similar work. You'll find rates all over the map. In the survey conducted for my Profiting from your Music and Sound Project Studio book, rates ranged from an insulting $15/hour to a more respectable $75/hour. Also, look at your experience. If you're young and green, charge about 80% of the average rate you discover. However, should you posses impressive credentials, charge on the higher end, 120% or more of the average.

The best gauge of the right rate is to keep pushing it higher until clients start to complain. When that happens, back off a little and you've found the highest rate your market will bear. Notice I said clients complain, plural. One complaint from a notoriously cheap patron should be ignored. Only when protests come en masse should you yield.

Cut your expenses. It's a simple formula that everybody in business recognizes: Income - Expenses = Profit. To make more money from your project studio you must look at both increasing your income and minimizing your expenses. Keep these fundamental concepts in mind.

The easiest way to increase your income is to put a larger gap between what you earn and what you spend. The obvious remedy is to keep your gear lust at bay. I know it's hard. Music magazine pages are full of stuff you JUST GOTTA HAVE. And while I'm not against investing in new toys, it helps your bottom line when you invest wisely. Take as much care before buying new gear as you would putting your hard-earned savings in any traditional investment.

My philosophy has always been to start with a basic equipment arsenal and put an action plan together for acquiring additional gear in the future. Set aside 5% of what you make from your project studio as your rainy day gear splurging fund. Objectively evaluate your needs, industry trends that affect your business mix, any specific demands by clients, and, most of all, the profitability of any new equipment acquisition. Will you make back its cost through increased billings?

Also, look for ways to reduce your fixed business expenses and keep careful watch over other expenditures. Rent, utilities, telephone, and Internet charges can easily get out of hand. Thankfully, they are easy to reduce, too. If you're unsure of where your money goes, record your spending habits for a few weeks and find ways to cut the chaff. Don't limit this technique to business expenses either. You can target and cut many frivolous personal expenses at the same time, thereby increasing your take home pay, too.

Don't forget about the tax impact of business purchases. If your project studio is a legitimate business (see below: A business of your own), you reduce your taxable income through prudent business expenses. Therefore, you pay less taxes! In the 27% tax bracket, pay the 15.3% self-employment tax, and work in a state with a 3% income tax? Buying $1000 in gear saves you about $453 you would otherwise pay on April 15. (Actual amount is $441.30 thanks to wacky IRS math.) The $1000 business gear purchase reduces $1000 of earned business income to zero.

A business of your own

It makes real financial sense to run your project studio as legal business. Follow these basic steps:

Set up your business by choosing its legal structure (sole-proprietorship, partnership, corporation, etc.). Consult with a tax adviser for details about the financial aspects of each form. Contact a legal adviser for answers to liability issues.

Get legal. Make sure you meet any regulations that pertain to running a business in your town. For example, you may have to get a business license from your local clerk's office.

File a doing-business-as (dba) with your local government if you call your business something other than your legal name. You may need a separate tax ID for your business and some states require a sales tax ID number.

Open a business checking account. Deposit your project studio income into it and pay your business expenses using checks drawn on it. Also, use a credit card only for business purchases and pay it off on time from your business checking account.

Use bookkeeping software to track all your business income and expenses. This makes tax preparation and monitoring your financial situation easier. Understand the various tax consequences of your business, too. You'll probably need to make quarterly tax payments in addition to yearly tax preparation.

Protect yourself through health and property insurance. Also, consider life, disability, and liability insurance if it makes sense for your situation.

Charge for your services. I've found that the majority of project studio owners charge for the studio itself and throw in their services for free. I urge you to consider the opposite approach. Start charging significantly more for your professional experience and instead give the studio time away. You will find that people will pay more for a professional producer/engineer than for a room in your basement.

My clients rarely visit my studio. I do my music and sound magic and deliver the finished work to them. My fee is considerably higher than what I'd be able to earn from my humble computer-based project studio alone. I'd be lucky to get $35/hour for the room while I have no trouble billing triple that myself.

Voice artist Harlan Hogan echoes this strategy. "Talent union scale for a non-broadcast session is $333 for an hour, plus 14% for the Health and Retirement fund. I charge $550/hour, plus H&R, and throw in my project studio time for free. Instead of charging for the room, I add value to my voice over work and get paid better anyway. Plus, I have no travel time which allows me to do more sessions." Hogan uses a Whisper room, Neuman U-47 mic, Mackie mixer, and Cool Edit Pro running on his computer to handle his voice work. He delivers spots via ISDN, e-mail, or by burning a CD and mailing it.

Be good to your anchor clients. Don't neglect the 20% of your established client base that provides 80% of your revenue. Treat them well and they'll reward you with their continued patronage and loyalty. I find that simply picking up the phone and either inquiring about new projects or pitching my own ideas invariably results in an assignment. Sharing case studies of other successes is another way to encourage your best spenders. Introducing a new product, service, or piece of gear? Make sure they know about it first! Also, offer discounts or other incentives just to your best clients. Anchor clients are also good sources for referrals to other prospects who may need your music and sound services. Don't be shy asking for their help finding new business.

Find better clients. Stop wasting your time on nickel and dime gigs. It's worth the extra effort to find those clients with bigger budgets. Sure you can do band demos for $35/hour, but I can make $600 in a half day selling on-hold messages to business clients. Ad agencies, video and multimedia production companies, and general business clients notoriously have bigger budgets for the music and sound production work they need. Find these deep pockets and pitch your most persuasive argument so they hire you. A few projects from better clients can keep you busy for weeks and paid handsomely.

Launch some new promotions. If you don't have any work lined up, please don't wait for the phone to ring. It's time to get up, get out, and get going to win new business. Promotion is the secret to making sure you always have a steady flow of new business at your project studio. The minute you stop promoting is the minute your sales plunge and it all goes away. Promote regularly to both past clients and new prospects. Put 60% of your time, money, and energy toward promoting to your current clients and the other 40% toward getting new prospects. Keep your name in front of these people and make sure they choose you first when they need help.

Unless you have an impeccable reputation, don't expect people to contact you. You need to initiate proper promotions that bring a steady stream of new business to your room. Call past clients and see if they have any new projects coming up. Make some cold calls to possible prospects, too. Write a news release about your latest accomplishments and send it to the media that reaches your target market. Put together a simple postcard about your services and send it to your contact list. Have a sale and offer a discount of some kind. Look for networking opportunities, too. Go where the work is. Hang out with the people who need the project studio services you offer.

Keep your name, and the benefits you offer, in front of buyers regularly. It's the essential way to secure your success, now and for the future.

Resurrect old leads. Did somebody inquire about your services but never buy? Time to check in with them again. People move around a lot. Your contact at one company may have left their job, and the person filling their position may never have heard of you. Simply reconnecting with lost leads can generate lucrative assignments. Also, don't lose track of those job jumpers either. They may have moved on to better horizons, and they still may remember how you helped them along the way.

Turn 10% effort into 33% more cash. When you think about making more money the usual thing that pops into your head is to get more clients. In fact, there are two other ways that can put more money in your pocket. You can get people to spend more with you when they do buy and/or you can get them to buy more often. What if I told you that you could increase your revenue 33% with only 10% more effort. Let's say you have 100 people who spend $10 with you twice each year. You'd make $2000. Now if you increase those numbers by a mere 10% (110 x $11 x 2.2), you'd clear $2662. That's a 33% increase in dollars. What can you do today to get 10% more clients to spend just a lousy 10% more, and repeat buy from you a little more often? You should launch some promotions that land a few new buyers. Increase your prices slightly or create special package deals that entice people to buy more. Also, create new products and services regularly that get people to buy again faster.

Add products. Products can sometimes be 50% of your revenues. If you limit yourself to only selling project studio services, you severally cut your income potential in half. Now is the perfect time to add products to your overall business mix. Choose only those products that complement what you sell. As a composer, I sell a buy-out music library product to supplement my income earned from soundtrack and jingle gigs. One studio owner worked out a commission deal with a local music store to sell some of the gear available in the room. Many musicians finished their sessions at his studio only to leave with a new toy and a lighter wallet.

Develop additional services. Are clients or industry trends hinting at new services you should be offering? Listen to what people tell you. Follow the industry closely. And then act accordingly. For instance, are you setup for 5.1? Personally, I now offer video editing services alongside my usual audio for video services. Finding a distinct need and filling it is a sure way to keep cash flowing in.

Outsource. If you work alone, there's only so much time to accomplish what needs doing. Consequently, there's only so much money you can make. If you hire other people or firms to handle ancillary services, you can get more done in the same time. You'll bill out higher invoices, too. You don't have to hire employees to make this work. You can hire independent contractors and other businesses to pick up your slack.

If you're recording and mixing a CD project for an act, don't let your involvement stop with the stereo mix. Subcontract a mastering house to finish the master. Hire a graphic designer to put the CD package together. Work with a duplication company to make the finished CDs. Mark up the charges incurred from these subcontractors and bill your clients the higher amount. You can easily make 20% or more of the mastering, design, and duplication fees through a couple of phone calls and a little oversight. Your clients will appreciate the one-stop-service, too. You'll appreciate the extra pay.

Have a fallback. What if your primary source of income dries up? Do you have another way to generate income in your life? Can you do something else? Teach music lessons or work at a music or pro audio store? Capitalize on some other skill until you get things back on track.

Your project studio can both feed your body through the money it lets you earn and feed your soul through the creative outlet it provides. Follow these strategies and in no time at all you'll see a significant increase in the money you make from your project studio endeavors.