Charges for recording service are determined in much the same way as charges for radio servicing work. An example will best illustrate how this should be done.
Let us assume that your total initial investment in sound recording equipment exclusive of needles and discs is $400 (yes, it takes cash to break into this profitable side-line). You can expect an average life of two years from this equipment, for at that time you will either have to pay for a complete overhaul of each part of the system or invest in new and better equipment; this means that the depreciation of sound recording equipment is rather high, and a proportionate amount of the initial investment must be charged off to each recording.
Estimate the number of recordings which you can reasonably expect to sell in this two year period, basing your estimate upon the initial market survey made before you bought the equipment. Let us suppose that this estimate amounts to 400 records in two years; this means that your charge must include $1 for depreciation on each record.
The overhead of your sound recording side-line is the next thing to figure. This should include a proportionate share of your rent, heat, telephone, electric bills, all advertising expense chargeable directly to the recording business, and another expenses which are not specifically incurred on any one recording. This overhead might well figure up to be $400 also for a two-year period, making the charge per record for. overhead about $1.
You must also consider the actual expense involved in making a particular recording. This must take into account the cost of the cutting and play-back needles, the cost of the discs used (this of course varies with the type and diameter of disc), the cost of any discs used for test purposes or rehearsals on a particular job, and any transportation expenses involved where you make the recording outside of your studio. If you use your own automobile, figure a flat rate per mile for it, which includes depreciation and wear on tires and other parts as well as the actual cost of gas and oil. Naturally this actual expense incurred on a job will vary a great, deal with the number of recordings made, so let us assume a value of $1.50 for our example.
Next you must figure the charge for your time and that of any assistants whom you employ. This can well be the same hourly rate used for computing radio servicing charges; here again, the greater the number of recordings made with a particular set-up, the less time you will have to charge to each recording for preliminary work. An average charge per record for your own services could well be $1.50.
This still leaves out the profit on your original investment. I like to figure this by adding 10% to the charge as computed without considering profit; in this example then the profit would be 10% of $5, or 50 cents, and the average charge per record would be $5.50. This is not at all an unusually high price for a 12-inch disc, particularly where only one or two records are involved. Your charges may range from $1.50 for a 6-inch disc to $10 or $15 for 16-inch disc recorded at 33 1/3 rpm.
You will of course, have to offer special rates for making large quantities of recordings, such as when, recording a series of radio programs, an entire celebration or other special event, an entire class play, concert or recital. Furthermore, if there are other sound recording studios in your vicinity, you will have to give some consideration to the prices which they charge. By this I do not mean that you should match their prices, or go under them, for that might mean operation at a loss and eventual failure of your recording business. There are other ways to offset competition by advertising heavily yourself, by offering better equipment, better studios and better service, and by getting out after business instead of waiting for it to come to you.
Collecting the Money
Before closing, I'd like to emphasize the importance of arranging terms of payment before making any recordings; you can have a contract form printed or mimeographed for this purpose, giving a carbon copy to the customer. This will avoid misunderstandings as to price. If the back of your blank contains instructions for playing and storing the recording, specifying needles to be used and the number of playings which can reasonably be expected, your contract blank will prevent customers from becoming dissatisfied when the record begins to wear. Collect your money before releasing the recording whenever possible, for the recording is of no value to you if returned later when you attempt to collect. You might well consider giving a supply of the correct needles for the record and the phonograph on which it is used, as a good-will gesture.
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