Forums: Discussions for entrepreneurs and small business.

It seems the general public is so used to getting a 99¢ burger that they forget how much it costs to make the burger. I only use “burger” as an example product.

My point is, it’s much easier to give good prices when the business can buy the materials at good prices. It’s easy to get a great price on beef when you are buying it 10K pounds at a time. The small hamburger shop must have something better than price to hook a customer, because the big hamburger shop will always get better resource prices.

So, what if you’re selling your talents? What if you are a writer? As a business owner it feels good to “have” your own personal writer. But is your writer really doing you good?

Upcoming writers compromise hourly rates in order to get a good track-able history to provide to a prospective, large company, hiring firm. Then they (the writer) can make the “big bucks” working “as a professional.” The day before the writer was hired to the big company, shouldn’t they have been getting the same value for their creative work before being hired?

Really… Our culture has grown from small cities and passed through an industrial revolution. Pretty soon everyone was chanting, “bigger is better.” Now, everything is highly produced. It’s produced so quickly and cost effectively, that even I have to think about what it takes to produce certain products. Especially products like a 99¢ picture frame that would take me at least an hour to make… If, I had the talent.

The problem is that society is more willing to pay a little more and know they are being taken care of by the “big company.” A business owner could get the same “big company” value with less financial cost, if the business owner did a little research.

If the big company charges $100 an hour for writing… maybe, with a bit of research, it is worth paying a single qualified writer $60 an hour. BUT WAIT, $60 an hour gets you one person… $100 gets you the firm.

How is it that a freelance artist (writing, music, design etc.) can go solo and make a good living? The good ones charge a good price. Someone told me something one time… you get what you paid for.

Comments?



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Vincent Wilcox (a.k.a. KRAKR)
Drummer
My band: Letters Make Words

From the writers perspective,

You offer your talents for free to create a proven track record, but then when you have it, someone else is offering their talents for free.

Before you know it, everyone is offering freebies or super low rates and there`s just no chance of making the money you once could.

You have to remember that you have a responsibility to your industry!


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I think specialization is the key to surviving here.

The large firm can always offer the lower rate because of their resources, but the independant should be able to survive with their personnal contact.  A large firm should never be able to devote the same amount of attention to a client as a devoted independant can.

asykes and WVEng have great comments... You do have a responsibility to your industry. A large firm should not be able to devote the same attention to a client as an independent.

But in real life, the large firm sells their goods or services with such great strategy (many intelligent minds creating the ads or speeches), that it is believed, buying the product or service from the long-standing, large business, rather than the new guy/girl on the block is the smarter choice.

Then the concept of “responsibility” is kicked out when you are the independent trying to reach the next level. I remember when I was much younger. I was a musician then. No one wanted what I was selling until I became involved with a recording label. Cool. I made it onto a label! That was supposed to be success. Nevertheless, other music makers started selling their music from the trunk of their car! They even started giving it away.

If two great musicians are competing the one with the cheapest product will win. If one musician is ranked a 10 and the other is a 9, they are on a competition level which is so close that one must do something to out sell, and become more popular than the other. Sometimes lowering the purchase price and selling more (quantity sales – think Costco) is the way to earn better exposure and financial profit. Therefore, “responsibility” only plays a role when ethics are involved.

I tend to think, when you are starting a business… ethics are near the bottom of your list when it comes to publicity or showing your product is better then the big business.

I am really stuck on this equation. It is mind boggling to me that a small independent can compete with a large firm, and win (take some profit from the big firm). At what point does the entire price point collapse?

For example… I buy one juggling set from an American company. Juggling sets start selling well. Someone else decides they could make a juggling set and compete for earnings. The entrepreneur goes to Thailand, and has a new juggling set created. It could be nearly the same kit as the first, American made, version. The entrepreneur makes thousands of juggling kits. Each juggling kit costs him 50% less in wages and/or materials... However it does cost 20% more to ship the items to the USA. That’s still a 30% cost savings! Sell the kit for the same price and you make the same money.

That means someone has to find, yet another way to save on cost, or lower the price. Eventually, the next juggling set I buy is half price from the original and the cost of production is so low that it reaches critical mass. You just can’t lower the costs anymore. You can’t sell the item any cheaper. Then what? Is the product no longer something worth producing? It seems there are more rules for earning money from products sold than just supply and demand.


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Vincent Wilcox (a.k.a. KRAKR)
Drummer
My band: Letters Make Words

I think a great example is that knife set offered by Ron Popeel.  I think it was maybe 80 knives for $20 or something around there.  And I know these infomercials sell at 3, 4, even 5X cost.  So they get um for about $5.  That is just crazy!  The mind has difficulty grasping that.  Maybe they jack you with S&H.  I find that practice dispicable at best, illegal at worst. 

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Travis Tschepen
Hibachi Bros. LLC

--My goal in life is to be as good of a person my dog already thinks I am.--

This is our world, a market economy. Driven by Supply and Demand. Always taking what the market will bear.

Do you guys remember when Burger King and McDonalds were going at each other`s throats with their crazy price wars. I think was Burger King who was about to implode when they raised the white flag and said enough Ronald!  Please let us raise our prices and we promise not to challenge you any more. And then things returned to "normal" for awhile. 

The fact was that the pricing structure was hurting Ronald too but he had to keep pace with a crazy kid on the block that was trying to give away his merchandise just to give people a taste.

Well now they`ve eased back into their comfort zone. They both have freakishly low prices but massive volume is able to rake in millions daily. They also are masters at giving away a little here (burgers) and taking a little there (soft drinks)

But when we answer the question, "who has the best burgers in your area? it`s usually neither Micky D`s OR Burger King, but some Mom and Pop greasy spoon diner that has been in business for 50 years and maintains a level of  pride and personable service that the big guys will never have. Sure they aren`t the richest in town but they do alright. They`re happy and people love them for what they do.

The biggest companies will continue to exist in every area of business. They`ll continue to gobble the weakest in the bunch by beating the smaller guy`s price.  

People will continue to seek the best value for their dollar which often means selecting quality over price. Manufacturing processes will advance further and as usual, allow consumers to see prices for items lower than we ever imagined they could possibly be. It`s only because they can afford to do it. 

It`s like the Wild Kingdom out there. We see the nature of the beasts and yet somehow the Lions don`t eat until there is nothing left to eat. There is a balance that cannot be denied.

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~Eric
JE Design Group, LLC
If all you do is what you`ve done, then all you`ll get is what you`ve got.
www.jedesigngroup.com

My big question is how do I get started on my label who do I talk to how do i get my own name in writing!

guttylee, you might do better to create a new topic from this post because more people will respond. But to answer your question, I would say there are many ways and they all take time.

When you say, "my label" I think you are trying to say you need to find a label. Then be signed as a musician. If this is what you mean, you could...

• Produce a demo using your own investment capital
• Become friends with a locally performing group; begin performing with them

If you are trying to start your own label, you will need capital to invest in other musician`s you feel you could earn a profit from, by selling thier recorded material.

Either way... to be a "paid" musician, you will need to invest in your sound. You cannot be a musician without music to pass around. If you can`t afford to produce your own music, performing with others will create relationships (if you`re motivating enough) which may get you recorded.

Just a quick rundown.


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Vincent Wilcox (a.k.a. KRAKR)
Drummer
My band: Letters Make Words