Guest Author - Dennis Regling
Everything that is watched gets better.
I have learned that anything watched always improves.
John D. Rockefeller had a secret that took him to the top of the business world. He knew the importance of business intelligence.
Rockefeller was one of the few people in his industry (perhaps the only one) who knew exactly how much it cost to extract, refine and deliver a barrel of oil.
In fact, he was entirely aware of all his costs. Having this information (and acting upon it) gave him a huge competitive advantage.
He knew how much he could price a barrel of oil for and still turn a profit. He was always aware of each area of revenue, cost and market share, and he worked on improving in every part of his business.
As a result, he did cost saving things like manufacture his own oil barrels, have his own cartage company, and on and on.
He eventually managed his way to where he could sell a barrel of oil, with superior customer service, and turn a profit at a price less than what it cost his competitors to deliver the very same product. By paying close attention to the things that mattered, Mr. Rockefeller made his Standard Oil Company so successful that he became the wealthiest man in the world!
Now, what does that have to do with you, the performer? Well, everything if you are in this as a career and not a hobby. Do you know what it costs you to book and perform a show? Do you base your prices on what the market will bear or on actual costs? Are you aware of the real profit you are making at each show? Do you twist balloons? How much does each balloon cost you? How much does the slush powder you use cost per performance? It is important to know.
When I managed restaurants, I had to break each menu item down to its exact cost. How much for the fish, the fries, the hushpuppies, the plate, the fork, and the take-out bag. Fractions of a penny were important. They added up.
As a performer, you need to know the cost of generating a lead, your lead conversion rate and cost of booking a show. Stamps, envelopes, phone calls, and other business expenses add up and need to be figured in to your cost of doing business. You need to know your travel costs. Cost per mile to drive including gasoline, maintenance and repairs is an important part of your overhead. Motels and meals need to be accounted for. How much more does it cost to eat while travelling as opposed to eating at home? That difference is a real expense of doing your show.
Once you know how much it costs to promote and perform your show, you need to know how much you need to maintain your lifestyle. If you are averaging 5 shows/week and need $750/week to maintain your household, then you need to charge $150 above your costs.
By knowing your costs, you can learn where to cut back, what advertising is not profitable, and more. Watch the pennies and the dollars will take care of themselves.