Why do DJ's want so much money??
How much should you pay a DJ for an average four hour event?
I have noticed that there are many clients that want to pay a DJ $400 or $500 for a 4 hour event, which seems like a logical price point. After all, thats $125 an hour. Thats a great rate!! But is it?
In this article I will attempt to shed some light on why some DJ's are worth more and why good ones will demand a premium. Keep in mind that my comments may not apply to every DJ and many have no issue working for that amount, it really depends on their specific situation. My comments are in no way an attempt to insult anyone on what they can afford, are offering a DJ, or what one will accept. They are only intended to inform anyone looking for a DJ of the reasons some may cost more than others.
For example, a DJ that has a laptop, a mixer, and a couple of cheap speakers may be able to satisfy their expenses with such a rate, while premium services will come with.. well, a premium. Just remember that all DJ's are not created equal and there are various levels of DJ's; beginning with those that are just going to show up when scheduled, play some songs, and pack up and leave. Then there are those who meet with the clients several times, ensure that all their requests are accounted for, and do a lot of planning in advance of an event. There is nothing wrong with the former, thats what some people want and need. Then there are the latter who will be more expensive. It's like the difference between McDonalds and Sullivan's Steak House.
It's just 4 hours...
In the example above, the event is four hours. But is it though? The DJ will likely spend some time just running down the lead and quoting the event. Then, you have some questions over email or wanted to discuss over the phone. Likely you want to meet them or them to meet you at your venue. The DJ will spend quite a bit of time getting your deposit, getting your contract signed, planning the music for the event, perhaps working up the correct lighting placements or lighting sequences. What is a 4 hour event is actually a 10+ hour effort on behalf of your DJ.
For most DJ's, their equipment will be their #1 expense. After all, without that you cannot really be a DJ. As example, we have invested over $50k in state of the art sound, lighting, and stage equipment to offer our customers what many DJ's can't. While these can be capitalized and expensed over a period of time, due to the extreme wear and tear of a mobile DJ, as well as advancements in technology, they have a useful life of approximately 3 years before the gear has to be replaced or upgraded.
Legal, Taxes, and Insurance -
As with any business, DJ's must have legal council for forming their business and ensuring they are keeping up with national, state, and local regulations. Not to mention there could be any number of legal issue arise (imagine the drunk guest that knocks down the trussing on top of him and decided to file a law suit).
Taxes.. oh taxes... Again, like any other business, the federal, state, and local governments want a cut of every dollar you make. Taxes will continue to be an enormous expense. Typical taxes will likely be ~20%. You know that $500 you paid the DJ? $100 or more has to go to the government. This is not including the sales tax he collected or any personal taxes he may take on any profit. That is just the tax the government puts on any revenue. Of course, it depends on how your business is set up but you get the idea.. A good portion of the money you paid the DJ, they don't actually get to keep it.
In addition, an accountant is needed to keep up with the quarterly and annual filings required as well as making sure you are not messing up your books.
Any responsible DJ will have insurance, not just liability, but to protect all those assets from loss should something bad happen. This can run ~$1000 a year in many cases. Most venues require a vendor to provide proof of insurance before they will let you perform there so this is not really an option.
This is a big factor that will contribute to what a DJ will charge and aligns quite closely with their capabilities. In that example above with the DJ that has a controller, mixer and a couple of speakers, he likely just keeps them in his house when not at a gig. We, on the other hand, could not possibly do that due to the extensive amount of options we offer our clients. In addition, most people want to see what they are getting so we set up a studio for them to come visit and peruse the vast amount of coolness that is sound and lighting. Of course all this comes at a cost.. Rent, internet, electricity, water and all the other normal stuff.
Back Office -
Moving to the "virtual" stuff. As a DJ, you are sales, marketing, accounting, customer service, and the talent all rolled up into a nice little package. As such, you must pay for accounting software, marketing materials, website hosting, email, phone service, and the list goes on. Additionally in most cases you must pay lead services. Lets take Thumbtack for example. Most people don't know that a vendor who responds to a Thumbtack quote request must pay Thumbtack for EVERY one they respond to. This typically ranges between $6 and $12 per request. So a DJ may respond to 10 requests - costing ~$80 to $100 and get one response. So for every ONE response, it costs ~$100 just to get it and that doesn't mean that client will book with you. Remember that $500 you paid the DJ?
CC Fees -
Everyone wants to pay with a credit card these days which is of course wonderful and convenient. Sadly, the processing companies that process payments typically charge their customers 2.7% - 3.2%. So of your $500, $13 went to the CC processing company.
Oh if only there were more Saturdays in a year!!
As you might have guessed, most events - when it comes to weddings, anniversaries, birthdays, etc - are going to be on a Friday or Sat. So there are a limited number of days that a DJ can actually work these events. This is a reason many DJ companies have more than one DJ as they need to get as many events on a single day as possible. The flip side is that you will unlikely get the personal attention you want and deserve unless whomever is running it is extremely diligent and organized. There are a ton of logistical details to running one event, much less several on the same day.
This is why many DJ's try to do bars, clubs, Karaoke, or corporate events during the week. While most of these outside corporate events don't pay that well, something is better than nothing.
Just like you, music is not free for DJ's. Many belong to record pools or have subscription services that cut down the cost of music procurement but as an example, lets say your event has 10 songs that the DJ does not yet have. It could cost him $15 to go get those songs you requested.
We will stop there -
This is a VERY simple and generic view of calculating any profit and is not meant to be comprehensive.
Using our $500 example:
Revenue = $500
CC Fees = -$13
Taxes = -$100
Lead procurement = -$12
Music = -$15
Equipment Depreciation (3yr/straight line on $10k assuming 6 events a month) = -$50
Back office = - $62
Facilities = $260
Profit? = -$12
As you can see, it gets difficult to make a $500 event work. Finding an experienced DJ with the capabilities you need and someone you trust will make your event so much better in the end. Spending thousands on an event and skimping on a DJ will most often lead to disappointment.
Hopefully this was helpful in the interest of providing information on why DJ's charge what they charge. Please contact us should you have any comments or questions.