Template to figure up your hourly rate

tjsmithmusic · 1st February 2011

Seems a lot of guys need to know how much to charge compared to Studio X down the street. It comes down to how much YOU need to make to cover your salary, rent, expenses, utilities, payments, insurance, taxes, advertising, marketing, etc. Since recording IS a business, treat it the same way.

Grab a #2 pencil and a Big Chief tablet and do the math.
First list how much you need to make, your rent, groceries, car payments, school tuition, etc. Make sure you consider the taxes to Uncle Sam, or the Queen. Then add how much your location is/will cost to operate on a 12 month budget. Be sure to add in rent, utilities, insurance (theft and fire) Figure in some kind of advertising (website fees, local flyers in clubs, local music rags,etc), add a line item for gear upgrade per year (just think how much you spent in 2010,2009 and use the average) Take that WHOLE number, then divide it by the total number hours you can possibly, feasible, conservatively work per year. I would think you are NOT going to be able to get 2000 hours a year if you live in a town of less than 100,000. Even then, that's a big stretch and should be reduced by half.

So let's say your total package is roughly $60,000 US dollars a year that you NEED just to meet salary and expenses. Take that number and divide it by 1000 billable hours. It doesn't sound like a lot I know, but think about it...a 1000 hours of studio time per year is basically the same as a 3 hour session EVERY night! or a 6 hour session every Friday/Sat and Sunday!

So, your $60,000 divided by 1000 billable hours= $60 an hour for EACH AND EVERY HOUR you are working for your client. If you want to give away 3 hours to the drummer to replace heads and tune his toms...make sure to call your wife first and let her know you are about to give away $180. See if that won't make her evening! If the next Bob Dylan wants to come in a record a song for his sweet mom on Mother's day...$60 an hour. You must be disciplined to charge.

"But what if I'm not getting the work and I need to offer deals to get people in?" Then realize you won't make much money this year. When you figure expenses and they add to $60K a year, and your salary is $35K a year that means every hour you sell, your expenses will cut into the first $25 of that hour. So if you reduce your fee to $30 an hour, you are now making $5 an hour.

"But my town won't pay $60 an hour for my Tascam 24 in my garage!" Guess what Paco? You won't be in business long. You need to make other arrangements. Besides, if you are in your garage your expenses shouldn't be $60K a year. You should still figure some expenses even in the garage/backyard studio. You are going to be able to deduct that S.F on taxes, so take your house payment and divide it by total number of square feet including the garage, then multiply the sf price by the size of the garage and that will give you a "rent" price to charge the studio, even if on the books. And you'll have the cash when the taxman comes in April.

"I need more/better/upgraded gear to increase my hourly rate. Where did i put that credit card?" STOP!!!!!! Do not buy gear on credit. You are spreading out your expenses on a yearly basis. The credit card bill comes monthly. The hit your bank account takes from a credit card payment hurts more than the rent. Do not buy gear on credit. At the most, only in an emergency, take the 3 month same-as-cash offer from the online music gear companies. Do not pay interest!!!! DO NOT PAY INTEREST!

I know there are a lot more guys out there who have some great advice to build on and I hope they share their experiences here as well.

drBill · 2nd February 2011

Quote:

Originally Posted by tjsmithmusic

I know there are a lot more guys out there who have some great advice to build on and I hope they share their experiences here as well.

Nice analysis. I don't think it's going to be very popular around here though. Too much common sense.

thumbsup

tjsmithmusic · 2nd February 2011

Yeah, you're probably right. I better edit it for the masses: "Go buy all the gear your credit cards will hold, go deep into debt. There are rich musicians just waiting to dump money in your lap!" How's that? lol

drBill · 2nd February 2011

Quote:

Originally Posted by tjsmithmusic

Yeah, you're probably right. I better edit it for the masses: "Go buy all the gear your credit cards will hold, go deep into debt. There are rich musicians just waiting to dump money in your lap!" How's that? lol

Perfect. You'll be like the pied piper. They will follow you anywhere...

Scott Whigham · 3rd February 2011

Great post - this is one I would would nominate for the Tips and Techniques section. Thanks for taking the time!

RealFeel · 12th September 2011

Great post, thanks for all the help. I collect a lot of data for my studio and input into Google Spreadsheet, and this is a solid formula!

1st February 2011	#1
tjsmithmusic Gear interested Joined: Jan 2011 Posts: 3 Thread Starter	Template to figure up your hourly rate Seems a lot of guys need to know how much to charge compared to Studio X down the street. It comes down to how much YOU need to make to cover your salary, rent, expenses, utilities, payments, insurance, taxes, advertising, marketing, etc. Since recording IS a business, treat it the same way. Grab a #2 pencil and a Big Chief tablet and do the math. First list how much you need to make, your rent, groceries, car payments, school tuition, etc. Make sure you consider the taxes to Uncle Sam, or the Queen. Then add how much your location is/will cost to operate on a 12 month budget. Be sure to add in rent, utilities, insurance (theft and fire) Figure in some kind of advertising (website fees, local flyers in clubs, local music rags,etc), add a line item for gear upgrade per year (just think how much you spent in 2010,2009 and use the average) Take that WHOLE number, then divide it by the total number hours you can possibly, feasible, conservatively work per year. I would think you are NOT going to be able to get 2000 hours a year if you live in a town of less than 100,000. Even then, that's a big stretch and should be reduced by half. So let's say your total package is roughly $60,000 US dollars a year that you NEED just to meet salary and expenses. Take that number and divide it by 1000 billable hours. It doesn't sound like a lot I know, but think about it...a 1000 hours of studio time per year is basically the same as a 3 hour session EVERY night! or a 6 hour session every Friday/Sat and Sunday! So, your $60,000 divided by 1000 billable hours= $60 an hour for EACH AND EVERY HOUR you are working for your client. If you want to give away 3 hours to the drummer to replace heads and tune his toms...make sure to call your wife first and let her know you are about to give away $180. See if that won't make her evening! If the next Bob Dylan wants to come in a record a song for his sweet mom on Mother's day...$60 an hour. You must be disciplined to charge. "But what if I'm not getting the work and I need to offer deals to get people in?" Then realize you won't make much money this year. When you figure expenses and they add to $60K a year, and your salary is $35K a year that means every hour you sell, your expenses will cut into the first $25 of that hour. So if you reduce your fee to $30 an hour, you are now making $5 an hour. "But my town won't pay $60 an hour for my Tascam 24 in my garage!" Guess what Paco? You won't be in business long. You need to make other arrangements. Besides, if you are in your garage your expenses shouldn't be $60K a year. You should still figure some expenses even in the garage/backyard studio. You are going to be able to deduct that S.F on taxes, so take your house payment and divide it by total number of square feet including the garage, then multiply the sf price by the size of the garage and that will give you a "rent" price to charge the studio, even if on the books. And you'll have the cash when the taxman comes in April. "I need more/better/upgraded gear to increase my hourly rate. Where did i put that credit card?" STOP!!!!!! Do not buy gear on credit. You are spreading out your expenses on a yearly basis. The credit card bill comes monthly. The hit your bank account takes from a credit card payment hurts more than the rent. Do not buy gear on credit. At the most, only in an emergency, take the 3 month same-as-cash offer from the online music gear companies. Do not pay interest!!!! DO NOT PAY INTEREST! I know there are a lot more guys out there who have some great advice to build on and I hope they share their experiences here as well.

3rd February 2011	#5
Scott Whigham Lives for gear Joined: Feb 2010 Location: Dallas, TX Posts: 1,174	Great post - this is one I would would nominate for the Tips and Techniques section. Thanks for taking the time! __________________ Dallas/Fort Worth area musician forum: http://musicdfw.com http://www.scottwhigham.com

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2nd February 2011	#3
tjsmithmusic Gear interested Joined: Jan 2011 Posts: 3 Thread Starter	Yeah, you're probably right. I better edit it for the masses: "Go buy all the gear your credit cards will hold, go deep into debt. There are rich musicians just waiting to dump money in your lap!" How's that? lol

12th September 2011	#6
RealFeel Gear interested Joined: Sep 2011 Posts: 7	Great post, thanks for all the help. I collect a lot of data for my studio and input into Google Spreadsheet, and this is a solid formula!