Double Dutch

“Those who can’t build value, have nothing left but to compete on price.” Paul Strikwerda

By the end of December, Alex Rodriguez will have earned $39,000,000. That’s 33 million in salary and winnings from the New York Yankees, and 6 million in endorsements. Not bad for a year’s work.

Do you think he’s worth it?

In 2006, entertainment tycoon David Geffen sold Jackson Pollock’s painting No. 5, 1948 for 140 million dollars. Assuming you had that kind of spare change, would you spend it on a painting described by some as “stunning drip”?

Can you tell me why 15-year old actress Abigail Breslin reportedly made $65K for 5 hours of voice-over work for the animated film “Zambezia”? Yes, that’s $13,000 per hour!

Let’s be honest: what did these people really do?

Mmm… let’s see. Rodriguez is pretty good at hitting a ball with some sort of stick; Pollock simply threw some paint on engineered wood, and all Breslin did was talk into a microphone. Why is that worth so much money?

Two words: PERCEIVED VALUE

Before I deal with the notion of perception, let’s first talk about the connection between cost, price and value.

Unless you are selling something that is basic and interchangeable (such as a commodity), there’s often no direct correlation between the cost to produce a certain article, the price the article sells for and the value people attribute to it. Art is an extreme example.

“No. 5, 1948” is currently the most expensive painting ever sold. Did you ever wonder how much Pollock spent on paints, brushes and the 8′ × 4′ sheet of fiberboard he drizzled on? Does it even matter?

What does matter is the subjective value of the painting and not the cost of the materials. In fact, to the new owner, the subjective value of Pollock’s masterpiece might very well be more than 140 million dollars.

Warren Buffet summed it up nicely:

“Price is what you pay. Value is what you get.”

That’s why people who only compete on price (those darn lowballers), are making a huge mistake. By doing so, they are devaluing what they have to offer, even before the client has had a chance to respond.

As soon as you start competing on price, you treat your valuable service or product as a dime-a-dozen commodity.

Peter Drucker was right when he said: “In a commodity market, you can only be as good as your dumbest competitor.”

Perceived value is in the eye of the beholder. It’s intangible. It’s a reaction to the assumed benefits you receive from owning and using a certain product or service. It’s an emotional response, based on a belief (and I define a belief as “a feeling of certainty”).

BELIEVING = SEEING?
A belief can be very powerful in overriding logical reasoning:

• as long as we believe that these dirty pieces of paper with the faces of dead people on it represent a certain value, we will continue to use them as money.

• people who were given two identical red wines to drink, said they got much more pleasure from the one they were told had cost more. Brain scans confirmed that their pleasure centers were activated far more by the higher-priced wine. (source)

• at least a third of the population consists of so-called placebo reactors. This means that if they feel that something is doing them good, it will indeed do them good.

Do you believe that?

Now, I’m not saying that “the market” has nothing to do with the way we put a price on goods and services. But economics is not always about numbers. It’s just as much about psychology. Let me give you two examples.

The law of scarcity states that if what you desire is in (seemingly) limited supply, its perceived value increases. This, in turn, increases the urge for people to want it and want it now. That’s why marketers love to create the perception of scarcity by saying things like “for a limited time only,” or “while supplies last.” Don’t miss out, people!

WALL STREET WISDOM
How about the stock market? What causes stock prices to change? Well, the idea is that the price movement of a stock indicates what investors feel a company is worth. For that, they look at things like earnings. Without profit, no company can survive.

However, during the dotcom bubble, some internet companies were valued at billions of dollars without ever making a profit. Their value was based on the perception of Wall Street, a strong feeling that these companies would do well in the future.

Feelings overruled facts.

Whoever said “Feelings don’t lie,” was in for a rude awakening!

For one last blast about the power of perception, let’s look at politics.

Why did republican hopeful Herman Cain suspend his bid for the White House? Did it really matter whether or not he had had extramarital affairs? If anything, his campaign was killed by allegations.

What mattered was that Cain was not able to change the perception of the public. Where there’s smoke, there must be fire, right?

BACK TO YOU
Now, let’s move away from politics, placebos, wine and the stock market, and talk about how all of this relates to your pricing strategy. Let’s summarize:

The price people are willing to pay greatly depends on how people evaluate what you have to offer. Value is a matter of perception. Perception is personal and therefore subjective. Perceptions influence a client’s expectations upfront, and the level of satisfaction after the purchase has been made.

Here’s the good news: because perceptions are subjective, they can be changed. That’s what branding, marketing and advertising are for. A successful campaign can turn simple pants made of rugged blue cloth into desirable designer denim.

True Religion’s top-selling jeans, the Super T, cost about $50 to make and sell wholesale to retailers for $152 a pair. The average price in stores is $335. (source) Gucci Low-rise flared jeans sell for $720. Talk about perceived value…

Most solopreneurs don’t have the funds to hire Saatchi & Saatchi and have them create a campaign to convince customers. Luckily, there are other -much cheaper- ways to position yourself in the market and sell your services at a higher price. This has to start with one question:

Do YOU believe you’re worth it?

Alex does. Abigail does, and so do their agents.

And guess what? The New York Yankees and Triggerfish Animation Studios agree!

They know that the added value A-rod and Abigail bring to their game, is much, much higher than their salaries.

You and I see price. They see value.

The pricing of art is an example of the art of pricing.

I can guarantee you that since 2006, the price of Pollock’s painting has gone up considerably.

Have you raised your rates lately? Are you selling yourself based on price or on value?

In the next installment, I’ll look at ways you can add value to what you have to offer, so you can stop selling yourself as a commodity, and start positioning yourself as a premium service.

Are you sold yet??

Paul Strikwerda ©2011
www.nethervoice.com

P.S. Be sweet. Please retweet!

Technorati Tags: Abigail Breslin, Alex Rodriguez, David Geffen, dot com bubble, Double Dutch Blog, Dutch voice over, Herman Cain, Jackson Pollock, law of scarcity, Nethervoice, New York Yankees, Paul Strikwerda, perceived value, Peter Drucker, placebo reactors, Saatchi & Saatchi, Triggerfish Animation Studios, value added pricing, voice-over, voiceover, voiceovers, Warren Buffet, Zambezia

“It’s not the crook we fear in modern business; rather, it’s the honest guy who doesn’t know what he is doing.” Owen Young

The lines have been drawn.The time to mince words is over. Every day, our community seems to get more polarized around the issue of low rates. Listen to the buzz. Look at the chatter. Do you think this bubble is about to burst?

Some people are past being polite. They’re frustrated and angry. I like that. If you’re pissed off at something, it means you give a damn and you want things to change.

Some of my voice-over friends are a bit more diplomatic. Recently, I asked a few Facebook buddies a loaded question:

“Is charging low rates a sign of fear and lack of confidence, or just a smart strategy to attract more business?”

Here are some of the responses:

“You left out “ignorance” – some don’t know what they’re worth …” Joe J. Thomas

“It’s not a smart strategy because sooner or later, you will be up to your eyeballs with a multitude of low-ball clients and you’ll be working 15 hours a days, just to make ends meet. If you have to do this to survive, I respect that but you’ll never reach the next level working like this.

For every low rate I have to turn down, it’s usually made up a few days later when I get a new client who gets it. I would rather work with five good paying clients a week as opposed to fifteen who have $50 for their budget.” Terry Daniel ”

I believe it’s mostly be the influx of part timers and hobbyists to VO that drive down rates. They simply don’t depend upon the income to pay their bills. Anyone who has to depend on this work to feed, house and clothe themselves (not to mention a family) could never survive charging such low rates. To them, it’s pocket money. And in some part of the country the cost of living is much lower than in others, so those fewer dollars go further.” Diane Havens

Not everyone agrees. Of course most colleagues would rather do a well-paid job than a low-budget project, but they say there’s no shame in accepting work in the first place. Peter Sandon:

“Many of us are low volume workers, for a variety of reasons, and do not see the need or value in becoming union members. denigrating comments like “bottom feeders” are not only irrelevant but wrong and rude.

For many of us a low paid job is better than no job at all, and there is the chance that someone will hear our voices and offer us a well paid job. Did the “top feeders” start up there? I doubt it, most worked their way up, leaving low paid jobs for new arrivals, and maybe they don’t like the competition coming up behind them, because they may just be better – perish the thought!”

Here’s what Phil Sayer had to say:

“Do low rates ruin it for the rest of us? No, they don’t. They really, really don’t. They mop up low-budget work that others don’t want. If they didn’t provide that service, the money would simply be spent elsewhere, such as print.”

If you’ve been following my blog for a while, or if you’ve read my last article on lowballing, you know where I stand. Today I’ll give you my take on some of the arguments that are being used to defend, excuse or justify low rates. Even though we’re talking about voice-over services, you’ll find the same type of reasoning when other freelance rates are discussed. Here we go!

1. There will always be a high end and a low end of the market. Accept it and move on. 

That’s a given and it’s not addressing the real issue. We all know that there’s a market for KIA and Roll-Royce. The point is: how low is the KIA dealer willing to go to make a sale? Is he prepared to sell his cars at a loss, just to get his business going? How long can he keep that up before he goes bankrupt? It’s not a way to get loyal customers either. Next time, they’ll just buy from someone who’s willing to go even lower.

Bottom line: You need to cover your costs and then factor in a profit. But once you get clients hooked on cheap prices, they will never pay full price again.

2. You may lose money on every sale, but you’ll make it up in volume!

That’s like buying melons for a dollar each, and then selling 12 for 10 bucks. Does that make any sense? No matter how many KIA’s a dealer sells, if he sells them below cost, he’s not making any money. A small business owner once said: “Sales numbers feed egos, profits feed families.”

It’s not how much you sell, but how much you keep that matters. Business is a game of margins, not volume. Bargain airlines tried making money on volume. Guess what? They’re gone! To paraphrase Terry Daniel: would you rather do less for more, or more for less?

3. Purchase decisions are primarily based on price.

If that were the case, Mr. client, I will send you your order in two years, okay? I’ll also make sure that it will fall apart in two weeks, and you won’t be getting your money back. Don’t bother calling me, because I just closed our customer service department.

Most people do not buy on price alone. They will talk about price, but what they really mean is that you haven’t offered enough value to justify paying the price you’re asking.

There’s this cartoon with a picture of a brother and sister each with their own lemonade stand side by side. The brother’s lemonade stand reads “Lemonade 25 cents”. The sister’s lemonade stand reads “Lemonade 50 cents (clean water)”.

Do you want your service to be known for being the cheapest on the market, or for high quality? Competing on price is a losing battle.

Lawrence Steinmetz and William Brooks are the authors of “How to sell at margins higher than your competitors. Winning every sale at full price, rate or fee.” They say:

“If you want to earn a solid living in sales, you need to remember that you are going to face a consistent challenge to hang on to a higher price, because you will always find yourself competing with a fool who is going broke cutting prices.”

The key is adding value. If you don’t offer exceptional value, then your product or service becomes just another commodity. People buy commodities on price. If you’re just another web designer, voice-over artist or a car dealership, you’re in trouble. Value means offering more for a higher price.

4. Price does not influence the perception of a product.

If that were the case, why are people prepared to pay thousands of dollars for a Rolex, instead of buying a $50 Seiko? Most watchmakers agree that the Seiko is the better time piece.

Let’s talk about brain surgery. Why don’t people go to the cheapest surgeon in the area? Because low prices make people think he isn’t any good.

Price makes a statement. Cheap = cheap. What does your rate tell the world about what you think you’re worth?

5. Some clients just can’t afford paying higher rates. I can’t change that.

How do you know they can’t pay you a better rate? Buyers lie in order to get you to lower your price. It’s the oldest trick in the book. If they could get it from someone else at a better price, why are they still talking to you?

Stop making excuses for those who don’t respect you enough to pay you a decent fee. Unless you’ve seen their balance sheet, you don’t know what they can or cannot afford. Know your bottom line. Add value.

Don’t compromise so easily. Negotiate. Dare to say NO to a bad deal. Study the art of making the sale. It’s part of being a pro.

6. I don’t set the rates. The market does.

So, what you’re saying is that you don’t take responsibility for your prices? They are forced upon you at gunpoint? You’re just a helpless leaf in the wind?

Let me put it bluntly: The market doesn’t determine your price. Your client doesn’t set your fee. YOU do. It’s just very convenient to tell the world that you don’t have any influence over your rate. If you can’t control it, you can’t change it. You’re a victim of circumstance. End of story. Now go feel sorry for yourself.

Price-cutting is a self-inflicted wound. Should you decide that $10 for an 8 paragraph voice-over script is fair compensation, so be it. Contract law states that parties must agree to enter into a contract freely and must be of sound mind.

I’m not saying that you should ignore the competition or forget about the rate cards that are floating in cyberspace. It’s up to you if you want to look at Odesk, freelancer.com or the $100 voices.com minimum rate, and decide that that’s what “the market” is willing to pay. After all, all the client cares about is price, right? Or you could decide to look at union rates and make those the basis of your pricing structure.

Why not talk to an agent? If you’re any good, she might want to represent you. She’ll fight for a decent rate because if you do well, she will do well.

7. I’m not a sales person. I’m an artist. I don’t know how to negotiate.

No, you’re a wimp and you need a firm kick in the pants! Nobody is forcing you to be a full-time freelancer. But if you tell the world you are doing this to make a living, it automatically means that you’re the head of the sales department, whether you like it or not. Lawrence Steinmetz has this to add:

“The first thing you have to understand is that the selling price is a function of your ability to sell and nothing else.”

Any idiot can cave in at the first sign of buyer resistance and offer a price cut. That’s not selling. That’s being lazy and fearful. It’s a sign that you don’t believe in the value of your product or service. Clients always pick up on that and it will cost you dearly.

Being extraordinary talented in what you do, doesn’t guarantee instant success. Life might have dealt you a pretty good hand, but if you don’t know how to play the game, even the best cards are useless. We all know starving geniuses.

The way I see it, you have two choices. You either learn the rules and become good at playing the game, or you stay out of it. Remember: experience is the slowest teacher.

8. Low end rates do not affect high end rates.

If that were the case, why aren’t rates going up, instead of down? Why have so many auditions turned into a bidding war? Actor, writer and producer J.S. Gilbert:

“While it’s not being broadcast, I’m seeing people I know who have made six figure+ incomes at voice-over for years now, looking at incomes that are fractions of what they were a few years ago.”

I understand that we’ll never get back to the golden days of Don LaFontaine and his limo. Thanks to the internet, the rise in home studios and online job boards, clients no longer have to book union talent at union rates through an agent. Talk has become a lot cheaper.

As Gilbert points out in response to my previous post, a job that used to cost the client $1000, is now offered at $250. But why pay $250 if some fool is willing to do it for $25?

As I said before, once clients are taught they can get it for less, why should they pay a penny more? Give me one reason why this trend does not impact today’s prices, and has never done so in the past.

9. But I’m just getting started. I can’t possibly ask full price. 

Some beginners admitted to me that they’ve offered their services for free, just to be able to build a portfolio. Mind you: they were not talking about doing stuff for charity.

I think a freebie only makes sense if you have something else to sell. That’s why a baker hands out samples, and that’s why my custom demos are free of charge. But if you’re giving 500 dollars worth of services away for free, you’re not only creating expectations, you’re in fact saying: this is what I think my work is worth. Meanwhile, you’re robbing a colleague of the chance to make five hundred bucks.

Jason Fried is the co-founder and President of software solution provider 37signals. He recommends you practice charging a reasonable rate from day one. But what he said next was a real eye-opener to me:

“It’s very safe to charge low rates, because you don’t have to prove anything. But as soon as you charge a customer a good price, it gives them the power to demand something from you, such as good quality and great service. Those are the types of pressures you want on you as a small business owner. You want to be forced to be good. Charging for something forces you to be good.”

10. I don’t need to make a full-time income. It’s only a hobby.

If it’s only a hobby, why are you advertising yourself as a voice-over professional? I play the piano, but I don’t market myself as a concert pianist.

If you enjoy reading to other people, go volunteer at your local children’s hospital or elder care facility. You will probably get more appreciation for doing this, than for anything you’ve ever done before.

Most talent I know are only freelancing part-time, because they’re still building what they hope will become a full-time business. A part-time teacher only gets paid less because she puts in fewer hours. Does a part-time cab driver fix the meter so he can drive you around at half-price? So, why should you offer your services at bottom dollar?

Oh… I see. Your partner has a steady job, and the money you make doing the occasional voice-over doesn’t have to pay the mortgage, right?

Guess what? In this economy there’s no such thing as a steady job anymore. What would happen if your partner gets laid off and you become the sole breadwinner? Can your beer money pay the bills? Do you really think you could raise your rates to make ends meet?

Price buyers are the first to look elsewhere. They don’t care about your personal situation. They care about cutting costs. But stop thinking about your own situation for a moment.

There are people who depend on doing this for a living right now, and they think your price dumping is nothing but unfair competition.I admit: you’re quite talented, and by charging these low rates, you are making it harder and harder for them to justify their fees.

I think it’s time for you to think about the bigger picture.

This is not about shameless greed or about becoming filthy rich and famous. This is about being able to provide for your family; being able to send your kids to college and save some money for a rainy day.

Your voice could help sell millions of dollars worth of product. It can introduce people to brilliant books that enrich their lives. Your voice can be the voice of a mentor, teaching valuable skills to e-learners across the globe. Your voice can inform, entertain, sell and assist. Surely, that must be worth something?

However… Those who can’t build value, have nothing left but to compete on price.

Paul Strikwerda ©2011
www.nethervoice.com
Be sweet. Please retweet!

Technorati Tags: 37signals, bottom feeder, cheap voiceover, Diane Havens, Double Dutch Blog, J.S. Gilbert, Jason Fried, Joe J. Thomas, Lawrence Steinmetz, lowballing, Nethervoice, Owen Young, Paul Strikwerda, Peter Sandon, Phil Sayer, Terry Daniel, voice-over, voice-over rate, voiceover, voiceover rate card, William Brooks

You’ve probably heard the story of the priest who preached the same sermon every Sunday.

After a few weeks, some of the parishioners got tired of it and demanded an explanation.

“Do you really want to know why I’m repeating myself at every service?” asked the priest. The crowd nodded.

“I will continue to tell you the same thing over and over again, until you take it to heart and do something with it.

If you don’t change your behavior, I don’t see any reason for me to change my sermon.”

Well, I may be the son of a minister, but as a blogger, I can certainly relate to this priest. When it comes to setting rates, I sometimes feel I’m talking to a sea of people with frighteningly short memories and no backbone.

Watch me as I go to my pulpit and address the crowd:

FELLOW FREELANCERS, do you know how much you’re worth?

Do you have a good sense of how much to charge when a client asks you for a quote? Do you have an idea of how much your full-time colleagues are charging… nationally and internationally?

If you don’t, you shouldn’t even think of responding to that online job offer. Don’t you dare come up with an estimate. You have no business being in business until you’ve figured out a basic fee structure.

Imagine going to a photographer to get your headshot taken. Of course you want to know ho much it is going to cost. “Well, let me get back to you on that,” is not the answer you expect to hear from a pro, is it?

How on earth are you going to determine your basic rate?

Let me get one thing out of the way first. It’s not the responsibility of your clients to offer you a good rate. It would be the decent thing to do, but it’s your job to negotiate a fair fee.

That fee is determined by how much you need to make in order to survive and by how much you want to make in order to thrive (today and 30 years from now).

In my experience, most freelancers aren’t capable of giving a clear answer to both questions. Can you? If not, you’re running your business based on guesswork and you’re setting yourself up to be taken advantage of.

Your rate should be high enough for clients to take you seriously, and reasonable enough to still attract business in your segment of the market.

As a beginner, here’s the worst thing you could do: trying to break into the business by working for stupendously low rates. If you don’t know what I mean by a low rate, it’s time you do your homework. Don’t you know that low rates flag you as an amateur?

If you want to be a pro, grow up and act like it!

It is self-evident that as a beginner you’re not yet in a position to command top-dollar, top-euro or whatever currency you prefer. But that doesn’t mean that you should sell yourself short and become a predatory pricer.

Predatory Pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market. It is a strategy for losers and I’ll tell you why.

• Bargain prices attract bargain shoppers. Low paying customers are usually high maintenance customers. Now, you can either believe me, or find it out the hard way. Your choice.

• Secondly, people tend to not value things that don’t cost them much, and they’re much more likely to be dissatisfied with it – regardless of the quality of the product.

• Third: you will attract clients that expect a gourmet meal at a fast food price (and at drive-through speed). As in mountain biking, it’s easier to go down than to go up. Once your price level is set, it is hard to justify a higher price.

• Fourth: predatory pricing is unfair competition. I work as a voice-over professional. A lot of people are complaining that there’s no money in voice-overs these days. I know I’m not the only game in town. Anyone with a mic and a computer can enter this business. While the cost of living is going up, rates are steadily going down.

Dumping your product or service will isolate you from your colleagues and it will negatively impact prevalent prices. Don’t blame the anonymous forces of demand and supply for a steady decline in rates. You are as much part of the problem as you are a part of the solution.

• Last but not least: show some self-respect! If you don’t value your own work, why should I? You have a unique talent. You have invested so much time and money in making it this far. Why would you want to put yourself up for sale in the bargain basement? Don’t you deserve better than that?

Now here’s a question for you:

Would you charge the same fee for the same type of work to a client in Europe and let’s say India?

If you don’t know the answer, that’s okay. Just stop reading and think about it for a moment. The internet has turned every business into a global business. Sooner or later, you’ll have to deal with this issue.

Have you ever heard of the Big Mac index, the Tall Latte index or the iPod index? Clever economists came up with these lists after a lot of hands-on research to illustrate the idea that identical goods have different prices in different markets.

Prices are based on a local standard of living, the price of raw materials, transportation, labor, taxes and frankly, on what companies feel they can get away with. That’s why pharmaceutical companies sell the same drugs at different prices in different countries.

Economically speaking, the product or service you provide is no different than a burger, a cup of coffee or an iPod, iPad or an eye-liner. That means that your client in India is likely to have a different budget than your client in Denmark.

Whether or not you want to work for that budget, is up to you.

You know what you’re worth.

If you’re okay with an Indian salary as a US-based freelancer, just tell me how you intend to make ends meet in the States. I don’t think your local gas station has started accepting rupees yet. But let’s make a deal. Once you’ve chosen to accept a low rate, stop contaminating social media with complaints that it’s so hard to earn a living.

By the way, I don’t blame a Chinese company for trying to hire talent at the lowest possible price. They’re probably working for a US-based firm that has outsourced certain activities because labor is cheap. After all, we all want our Black Friday bargains, so we’re driving that demand for cheap products and services.

I do blame North American or European clients that are trying to make us work for rates that would be only be acceptable in countries like India. I also blame online job boards that enable those clients to set these bargain basement rates. And lastly, I blame so-called colleagues who willingly devalue our business by accepting jobs at these rates.

So, how do you determine your fee in an international context?

Let’s recap. First you have to know what your bottom line is before you do anything else. In other words: how much would you minimally need to charge to turn a profit? You are running a for-profit business, aren’t you?

Once your bottom line is covered, find out how much this particular job would be worth in the country of the client. If you can live with that rate, that’s where you want your quote to be… minimally!

Don’t quote that German client 250 US dollars if the going rate in Germany is 250 Euro. Why should you leave any money on the table?

If you start working for less, don’t be surprised that this same client will post his next project for 180 Euro. After all: we teach people how to treat us, and this is how rates go down. Clients aren’t stupid.

And remember: just because a client needs you, doesn’t mean they can afford you, or that you can afford to work for them.

If you would charge $1000 for a project, and they’re willing to pay $800, it’s totally worthwhile to see if you can meet in the middle. But don’t spend any time trying to sell champagne to someone on a beer budget, no matter where they live.

These would-be customers don’t care that you’re using the latest equipment or that you recently completed a project for a prestigious brand.

They just want to know how low you’re willing to go.

Got it?

Thus endeth my sermon.

Go in peace, and may you lead a prolific and prosperous life!

(and don’t make me post the same story next week, okay?)

Paul Strikwerda ©2011
www.nethervoice.com

PS Be sweet. Please retweet.

Technorati Tags: big mac index, Double Dutch Blog, freelance rates, freelancer, Freelancing, Nethervoice, Paul Strikwerda, setting voice-over rates, voice-over, voiceover, voiceover rates

It all started with a short article on his company blog entitled:

“A Quick Guide To Selecting The Right Voice Talent”.

The author, Chris Johnson, is co-Founder of Simplifilm, a young company specializing in “Hollywood-style Explanation videos”. They’ll have to make a video to explain what that means, but Simplifilm says it uses animation and storytelling to demo software applications.

This does not come cheap. Back in July, the company was running a “Grand Opening Sale” offering “3 minutes of broadcast quality demo movie work for $20,000. That’s 40% off the going rate.” You do the math.

Before he became a filmmaker, Chris was Finance Director at Robert Owens for Ohio Attorney General 2008, and he worked as a loan specialist at First Ohio Home Finance.

Thanks to his financial background, Chris seems to know the value of a voiceover, and he’s not basing it on anecdotal evidence. This is how he starts his blog:

“Did you know that the right voice can make a 35% difference in conversion rate? We replaced a voice track in a video – and made no other changes, and the conversion rate went from 2.5% to 3.8% on cold traffic. (Cold traffic is people that are mostly strangers that are coming in via search engines and social media).”

I’m not sure how “2.5% to 3.8% on cold traffic” leads to a “35% percent difference,” but Johnson is definitely on to something.

VOICEOVER CONVERSION
This is not the first time a video company noticed a correlation between the choice of voice and website conversion.

The conversion rate is the percentage of website visitors taking a desired action. It often refers to the number of shoppers turning into buyers. Depending on the size of a company, even a small increase in conversion could mean a significant rise in profits.

San Diego-based Fireclick monitors conversion rates. If you want to get a better idea of industry averages, the Fireclick index will provide some insight.

For software, it averages about 2% per year, with a cart abandonment rate of 75%. That means that three quarters of online software shoppers never become buyers! Could selecting the right voice really change that?

In 2009, Ginger software asked video optimization firm EyeView to develop an introductory video for their homepage to increase the number of visitors that would actually download their software.

EyeView ran a test: 50% of the global audience saw the video with a British voice-over, and 50% saw it with an American voice. Globally, the British voice-over was 4% more effective. For US audiences, the conversion rate for the British accent was 5.5% higher than the American one.

Eyeview:

“The Brits didn’t have it all their own way. In India, the American accent was 12% more effective at converting visitors. But the most surprising statistic of all came when we looked at the comparative performance of the two accents in the UK.

For audiences watching the video in the UK, the voiceover with the American accent was 8% more effective at making visitors download Ginger’s software than the British accent, representing a significant swing away from the global trend.”

Simplifilm’s Chris Johnson confirms:

“The right voice is key to converting video watchers into new customers. When you get the right voice, it breathes life into your video productions, and you should take the time it takes to select and respect your voice talent.”

Please remember that, next time you’re tempted to low-ball yet another voiceover project!

With voice talent having such a tremendous impact on conversion, how much does Simplifilm pay per production? Bear in mind that they charge about $33,000 for a 3-minute video. Johnson:

“Generally, productions are around a couple hundred dollars. We’re not going to lord over them or dangle money like some jerk, we want to do business, be respectful and move on.”

FINDING THE PERFECT PIPES
Now, wouldn’t it be interesting to know where Chris finds the right voices? According to his article, two talents work for him on a regular basis and he tells his readers:

“If -for some reason – you need to find someone outside of your network (…) you can start with Voice123.”

Voice Coach and talent Mark Avery read the blog and responded:

“Unfortunately, many producers and end-users of voice talent have gone to the “discount superstore” mentality of hiring voices for their projects, and the results often show themselves in low conversion rates.”

Of course I had to put my two cents in. Thinking back to my interview with Bodalgo’s Armin Hierstetter, I wrote:

“Chris, most online voice casting services will accept anyone with a credit card, talent not required. It’s not unusual for voice-seekers to receive over 100 auditions for a simple project. Imagine how long it will take you to listen to all these mediocre submissions…”

These turned out to be prophetic words. That same week, Chris joined the Voice Over Professionals group on LinkedIn, and this is how he introduced himself:

“Howdy, guys, I’m new to the group. I’m a production company doing software stories. We’re looking for a stable of 4-6 males and 4-6 females for future work.”

OPEN THE FLOODGATES
You can imagine what happened next. I’ll let Chris tell the story:

“So, when I asked for submissions here – and other places – they started trickling in. Then the floodgates opened.

Last count was 400+ and I have seen no slowdown… both here, from another couple of sources.
I’m surprised because I (hopefully) didn’t represent myself as being too “giant.” I caused 400+ auditions for what will amount to $5,000 or so in fees annually – at most.

Now, how do I read through ‘em all? I put everyone in a spreadsheet, but what’s next? How do I sort people out? I need say 8 voices. If I take 5 minutes per x 500 voices, that’s 2500 minutes.

Or 42 hours JUST listening to voices. I’m not doing that.”

At this point I started to jump for joy, thanking Simplifilm’s founder for the perfect example. This is exactly why most Pay to Plays will eventually implode. Do you get my drift?

Some of my clients have worked with voice casting sites for a while, and they’re starting to realize how expensive “going cheap” can be. Think about it!

How long does it take to find a quality needle in a huge haystack made of scrap metal?

Let’s look at the numbers.

Of course it’s unusual to get 500 auditions for one job, so why not assume that Chris Johnson has to weed through (only!) 100 demos. If he spends 5 minutes on each talent (as he just wrote), this will still take him eight and a half hours!

Imagine being in Chris’s shoes. Should he hire someone to do the dirty work for him and weed through hours and hours of audio? That person needs to be paid too.

If Chris is lucky, his hired help might find the perfect voice among the first 20 contenders. However, my clients concur with Armin Hierstetter that the overall level of entries is usually way below the mark. They’re forced to listen to a deluge of demos before they finally spot the right voice at the right price. What an expensive way to find cheap talent!

Critics might say that I am exaggerating the situation just to make a point. Voice seekers don’t listen to that many demos. Or do they?

In their Client Experience Report Winter 2011, Voices.com states:

“(…) it often surprises talent that the majority of clients review all their auditions. I say majority as that includes those who reviewed “all of the auditions” (45%) plus those who reviewed “50-100 auditions” (8%).”

A while ago I noticed that so many voices.com projects were still listed as open after many, many months. Could one of the reasons be that the client simply gave up after listening to 30 mediocre auditions?

Fortunately, there is an easy solution.

Some of my clients find it much more cost-effective and less time-consuming to hand their project to an agent and let him or her select four or five voices that can all deliver the goods. Clients might end up paying union rates and agent fees, but in the end they’re saving time, trouble and money.

Bye-bye Pay to Play, and thanks for the memories!

THE BABBLE BUBBLE
Online casting services have grown exponentially in the past five years. Fast growing companies often fall victim to their own success. Quality and customer service are compromised and sacrificed in favor of rapid expansion as they’re chasing after the big bucks.

It is no secret that more and more (pseudo)voice actors are joining Pay to Plays. That means that more dogs are fighting over the same bare bones. The chances of landing a decent job at a decent rate decline rapidly.

Here’s my prediction. At some point in the near future, there is no point in joining such a service anymore. It’s not worth it.

Saturation leads to annihilation. Bubbles burst. Cheaply made balloons will pop first.

What’s left is just hot air.

Try fitting that in a 3-minute video demo!

Chris Johnson, here’s a word to the wise:

If you need new talent, call an agent.

Don’t ask for any names of agencies, though.

You might get a list of … about 500!

Paul Strikwerda ©2011
www.nethervoice.com

Technorati Tags: Armin Hierstetter, Bodalgo, Chris Johnson, conversion rate, Double Dutch, Double Dutch Blog, Dutch voice actor, explanation videos, EyeView, Fireclick, Fireclick index, Ginger Software, LinkedIn, Mark Avery, Nethervoice, Paul Strikwerda, Pay to Plays, Pay-to-Play, Simplifilm, voice over professionals, voice-over, voice123.com, voiceover, voiceover agent, voices.com, voices.com client experience report

“I’m being offered $200 to record a 120-thousand word audio book. Do you think that’s a fair rate?”

“A client wants me to voice a movie trailer for $150. Should I do it?”

Not a day goes by without someone asking these types of questions on Facebook, LinkedIn and now on Google+ (the latest way to go around in circles).

Sometimes I stick my neck out and I respond to these questions; especially when I get sentimental and remember the early days of my career.

I was young and unafraid and incredibly ignorant. Back then there was no Internet. Picking brains became my specialty.

On other days I’m not so sappy, as I remember the kind words of my business coach:

“If you’re a Pro, you know what you’re worth. If you’re not, go do you your own homework! You won’t learn a thing if I hand you everything on a silver platter.”

He was right.

These days, getting info has never been easier. Search Google for voiceover rates. You’ll get about 1,370,000 results in 0.15 seconds. How’s that for starters?

MONEY TALKS
Bringing up rates usually spells trouble. Talent likes them to go up; clients love paying less. Where to begin?

The Freemarketeers will tell you to leave everything up to the unregulated forces of supply and demand. After all, it worked well for subprime mortgages, didn’t it? The Interventionists fear a free fall for all. They want rates to be regulated.

Unfortunately, it’s not that black-and-white. Voice-Over rates reflect many variables, and -unless you belong to a union or you have an agent- it can be tough to put a price on your pipes.

Enter a parade of Pay to Plays. You pay for the privilege of being offered the opportunity to audition and bid for projects (together with thousands of other privileged colleagues). Here’s the catch.

As a member, you often have to subject yourself to an agreed price range per project deemed reasonable by that site. Whether or not you choose to accept that range depends on your personal Price Floor.

A Price Floor is a point below which a product or service should not be sold, or else you’d incur a loss. I bet you anything that most people reading these words right now, have no clue what their price floor actually is.

Be honest. Do you?

A EUROPEAN PERSPECTIVE
If you’ve visited my blog before, you know that I have written about U.S.-based voice casting sites and their perceived influence on dwindling voice-over rates.

On January 8th, 2008, a new player entered the market: Bodalgo. Based in Germany, Bodalgo is the brain child of a man who once had a very boring job as the deputy editor of Penthouse: Armin Hierstetter.

Armin’s no dummy.

He studied the existing P2P’s carefully, as he set out to take the good and improve the bad to create something beautiful. Unlike similar sites, Bodalgo is available in German, Spanish, Italian and English (American and British).

Now, if you think that you can buy your way into Bodalgo, you are wrong. No matter the credit limit on your Visa Card, if you sound like crap, you can’t join the club.

Bodalgo caters to clients from all over the world, but because it’s based in Bavaria, it’s a gateway to the European voice-over market. This brings me back to rates. How does Bodalgo compare to its American counterparts?

I (PS) decided to check in with the boss: Armin Hierstetter (AH). Here’s a transcript of the interview:

PS I just saw a project posted on your site in the 100-250 USD range. It made me think: Is Bodalgo going in the direction of its American counterparts, or did I miss something? Has $100 always been the minimum?

AH In USD the minimum range starts at 100 dollars (the Euro has a 50 to 150 minimum range as – for example – a local radio spot in Germany is usually 50 to 55 Euro).

If jobs are posted that are budgeted too low (intentionally or not), Bodalgo contacts the voice-seeker suggesting what we believe is a fair rate. Sometimes the voice-seeker sees our point and is willing to raise the budget, sometimes not. If the voice-seeker does not agree on increasing the budget, the job simply does not get posted. Period.

Of course, we hear many times:

“What? You want me to pay 250 USD for a job that is done in five minutes? You must be insane, you [censored]“

Well, depending on my mood, I sometimes try to explain why voiceovers cost what they cost (knowing that with these types of folks it really does not help at all in most cases), or I simply press the delete button and go on with whatever I am doing.

PS Bodalgo’s been in business for a few years now. What’s your overall take on how voice-over rates are established and where they are going?

AH There are many factors when it comes to rates. Here are few of them (this is by no means meant to be a complete list):

Your voice:

1. Experience
2. Skills
3. Uniqueness (most important if you ask me)

Your studio:

1. Equipment
2. Recording skills

Other factors:

1. Currencies
2. Inflation

I see a link between equipment becoming more powerful yet more affordable, and declining voice-over rates. Let me share three trends with you:

1. The costs for your own studio are coming down, so you can make this beneficial for your clients as well;

2. Because many talents build their own studios, there is much more competition which also leads to lower prices. That’s how the market works.

PS Sorry to interrupt, but clients are saving money due to the increase in home studios. No longer do they need to pay for studio time, an audio engineer/editor and a director.

It is my impression that these savings are simply pocketed and not passed on to the voice talent. In the end, we end up doing more for less. Shouldn’t this give us some leverage to raise our rates?

AH I fully understand that voice-seekers already save a lot of money because they’re used to getting the finished audio from the talent without paying for a studio.

I want to be honest with you. I really think that’s one of the biggest mistakes talents have made for a very long time: They did not charge properly for the studio work, only for the rate as a talent. It will be VERY difficult to change this to an approach where talent charges their normal rate plus editing costs;

3. More and more people of the type “My friends all tell me I should host a radio show,” buy a Shure SM58 microphone and think that their laptop recording is god’s gift to the audio world. Untrained amateurs seem to flood the market.

What’s worse, there are many voice-seekers out there that listen to crap demos thinking they are actually good, because they don’t have a proper recording at hand to compare.

But one thing is for sure: Bodalgo will never start to accept amateurs. Yes, there are a few talents with Bodalgo that have just slipped through the net that might not have passed if I had been pickier the day I activated their accounts. Still, the level of Bodalgo’s talent is much, much, much higher than with any other Pay2Play site that we’ve come across.

PS What’s your advice on how to best play the game? Everybody loves to win an audition, but not at any rate. Do you expect voice-over rates to go up any time soon?

AH If you ask me, the reasons why rates should go up are purely to be seen in costs of living. If those prices would be stable, I’d say it’s fair to assume that our rates would stay stable as well.

With financial markets facing the issues they face at the moment, including all the effects like higher inflation, increased costs for energy, food, rent etcetera, I think that we’ll see rates rising over the next years to cover the rising living expenses.

PS Inflation correction keeps rates at the same level. Talent won’t be making more just because the number on a check is higher. If we wish to increase the amount of money coming in, we need to compensate for the rise in the cost of living, and add e.g. 10% to whatever we’re charging.

AH Well, U.S.-based talent benefits from the weak dollar when paid in Euros by Euro-Zone clients. The opposite is true for Euro-Zone-Talent paid in USD. U.S. clients will not accept higher USD prices just because of exchange rates. It’s really just bad luck for us Euro-Talents. And – if you ask me – the U.S.-Dollar will become much weaker over the next months and years (but that’s a different topic).

So, to cut a long story short: Yes, I see higher rates over the next years. But this is only because everything else will go up in price as well.

PS So, how can we best prepare for the tough years that are ahead of us?

AH 1. If you have not done so already, invest in your own studio.

2. Buy the good stuff (like Neumann or Brauner for mics, for example) as it will serve you well many, many years. Personally, I would no longer waste money on analog equipment. I would solely buy digital stuff (like the TLM 103 D from Neumann).

PS Quality equipment is essential, but owning a state of the art camera does not make one a top-notch photographer.

AH I do appreciate that a cool mic does not make a great voice talent, but this is not where I am coming from at all. I am just a firm believer that successful talent simply needs both: A well-trained voice and great equipment to deliver high-quality audio. There are too many Samsung USB mics out there in my opinion.

I know, of course, that those top shelf brands are pricey. But when you look at what you (and your client) get for the money – it turns out to be an excellent investment.

3. LEARN HOW TO RECORD PROPERLY!!! It’s really, really, really (I mean it) horrible to hear how bad, bad, bad many of the auditions are recorded (hiss, bad miking, bad levelling, bad everything). Use proper headphones to proof-listen your recordings and be super critical about the work you deliver. [Armin insisted this should be printed in bold]

PS Can Bodalgo keep both voice-seekers and voice talent equally happy, or is that impossible?

AH That’s easy: Our main goal is to attract more and more voice-seekers that post sanely budgeted jobs. We want to provide them with the easiest solution available to find high-quality talent without paying any commission. That way, both sides will win.

PS Herzlichen Dank, Armin.

You can reach Armin at armin@bodalgo.com. He is planning to do regular screen casts/vlogs in German and in English, and pass on his take on topics relevant to voice talent.

Paul Strikwerda © 2011
www.nethervoice.com

Technorati Tags: Armin Hierstetter, Bodalgo, Brauner microphones, Double Dutch Blog, Dutch voice talent, Euro-zone, inflation correction, minimum voiceover rates, Nethervoice, Neumann, Neumann TLM 103D, Paul Strikwerda, Pay-to-Play, price floor, Shure, Shure SM 58, subprime mortgage, TLM 103 D, voice casting, voice casting site, voice-over, voice-over audition, voice-over rates, voiceover, voiceover rates

On August 1, 2007, serial entrepreneur and Boston-based tax accountant Lewis Weinstein quietly launched the beta version of ReferralKey, an on-line referral management system.

Some called it “LinkedIn on steroids.” Others feel it’s just another version of the traditional inbound marketing strategy. How does it work?

Once you create a ReferralKey online profile showcasing your amazing accomplishments, you can invite others to join your network and start exchanging leads. Does the following viral email look familiar?

Are you taking on new clients?

If you’re taking on new clients, I’d like to include you in my private referral network to send you business leads through Referral Key. Please accept my invitation below. Thanks!

Best,

Person’s Name
Name of Their Company
City, State

It seemed like a good idea at the time, but there was one problem. It didn’t take off. Weinstein told the Boston Globe that professionals using the site felt it just wasn’t helping them generate enough new business. Weinstein: “The common response was, ‘I thought you were gonna send me referrals.”’

A wait-and-see approach never works and Weinstein discovered that something essential was missing from his system; something that drives all human behavior: an incentive.

TAKING THE BAIT
You see, the average RefferalKey member wasn’t just going to refer a colleague or a friend on the basis of his or her merits or the existing relationship. Before they were willing to make a recommendation, they needed one question answered:

“What’s in it for me?”

Weinstein’s answer: Cash, Omaha Steaks, L.L.Bean or Callaway Golf gift cards.

ReferralKey was relaunched in April 2010, based on the following principle:

“Grow your business by offering rewards to other people who send you successful referrals.”

This winning idea turned boring, unresponsive professionals into bounty hunters, ready to stake their claim and claim their steak. I just received an email from a colleague offering me 10% of whatever she will make, if she lands a job based on my referral.

RefferalKey even lets you track referrals to “ensure your relationships are reciprocal”. Yes, my friend, if you rub my back, I’ll rub yours and just so you know… I do keep score!

Do you like it so far? If you’re having any doubts, you’re not alone.

Chris Reimer is Vice President of Social Media at brand developer Falk Harrison. He writes in his blog:

“The first time I got an email with the subject line “Are you taking on new clients?” Holy crap, I was excited! You bet I’m taking clients! (what a hook). Ten seconds later, I felt the shame of spam, deflated, and just a little pissed. After receiving 100 of these emails? No one likes spam.”

Kathryn Delany is a web designer and Search Engine Optimization and Marketing Specialist. She writes:

“I have been sucked into the vortex of the Referral Key saga. I usually am very cautious about these emails. However, the initial invitation generated from a long trusted colleague so I signed up. Sadly I followed the instructions on importing my LinkedIn Contacts little suspecting that this site hijacks the list before you can choose who you would like to invite to your circle. As it ‘imports’ your contacts it automatically sends out the invitation to everyone on it!”

Chris Reimer concludes:

“Stop joining services that blast out marketing messages Uzi-style as ReferralKey.com does. The bad taste you are leaving in people’s mouths is not worth it.”

A MORAL MAZE
Apart from receiving downright annoying emails, I have  a more moral objection. There is a good reason why professionals like lawyers, realtors, accountants and therapists have adopted codes of conduct, specifically prohibiting them from taking payment for referrals. It is considered to be unethical.

Look at the definition of bribery:

“an act implying money or gift given that alters the behavior of the recipient”

RefferalKey says it is based on “trusted relationships,” but if you’re meeting a need with greed, what does that really say about your definition of “trust” and “relationship”?

Do you really think you can buy my opinion and influence my behavior by offering me a bounty? Is that how you think I operate? I almost feel insulted!

YOUR TRUE MOTIVES
If I were motivated by money, I probably wouldn’t even be in the voice-over business. Take it from me: You will never do your best work for the love of money. You do your best work when you hold yourself up to standards no one else can or will match. Your best work is always a labor of love and never the result of greed.

Here’s my bottom line: a referral needs to be earned, not bought. I owe a huge part of my business success to referrals, and I am frequently asked to recommend colleagues. For those recommendations I get paid big time.

Before I tell you what I receive in return, you should know that I take my referrals very seriously. The fact that I will recommended a certain person, reveals as much about me as it does about the person in question.

One can usually judge someone by the company he or she keeps. When you pass the name of a colleague onto someone else, you put your reputation on the line. So, how do you go about it?

When you’re thinking of recommending someone, ask yourself the following question:

How do I know that someone else is good at their work?

Here are your options:

• See – I need visual evidence (e.g. I need to watch them do their work)
• Hear – I need to hear them (e.g. listen to their demo)
• Read – I need to read about them (e.g. a review, a report, a website)
• Do - I have to work with them to get a feel for how good they are

In certain circles, the answer to this question is called a “Convincer Strategy,” and most people come up with more than one answer.

The next question is:

How often does a person have to demonstrate that they’re good at what they do, before I am convinced?

• A number of times – e.g. Three or four times
• Automatic – I always give someone the benefit of the doubt
• Consistent – I’m never really convinced
• Period of time – It usually takes e.g. a week, a month… before I can tell if someone’s really good

The last thing you need to be aware of is your frame of reference:

• Internal - No matter what anyone says about her, only I can tell whether or not she’s any good
• External – A source I trust recommended her and that’s good enough for me

It’s very common for people to have an internal frame of reference with an external check, or the other way around. If your frame of reference is completely internal, no one will ever be able to convince you of anything. If it’s completely external, your opinion will be dependent on what others have to say.

Whether we realize it or not, all of us have different ways of convincing ourselves. If my frame of reference is pretty much internal and a person needs to consistently demonstrate to me that he’s any good by working one-on-one with me, systems like RefferalKey are useless.

It will only work for people with a more external frame of reference who are convinced by reading about someone, and based on that, give the person the benefit of the doubt. How big of a group is that?

QUALITY REFERRALS
Should you decide to give RefferalKey a try, ask yourself how well you know the contacts you’re about to invite and how well they know you. In other words: what is the quality and the depth of the referrals this system generates? Is it worth the risk of pissing people off with automated impersonal email messages?

Referring people can be very rewarding. It’s an essential part of being in business and staying in business… as long as you do it for the right reasons. If you landed a gig as a result of my recommendation, I demand that you pay me back by doing the best job you could possibly do. As one of my teachers used to say:

“If you look good, I look good, so you better make me look good!”

Secondly, don’t send me any money or vouchers for Omaha Steaks. You booked the job because you’re the best and you deserve it. I don’t take any credit (or cash) for that.

Take your 10% and give it to a worthy cause. Pay it forward.

That’s the key to referrals!

Paul Strikwerda ©2011
www.nethervoice.com

PS Please refer someone else to this blog by retweeting and “liking” it on facebook.

Technorati Tags: Chris Reimer, Double Dutch Blog, Dutch voice over, how does ReferralKey work, how to give business referrals, inbound marketing, Kathryn Delany, kickbacks, Lewis Weinstein, LinkedIn, Nethervoice, Paul Strikwerda, ReferralKey

Your clients demand and deserve quality audio, but even a top of the line microphone sounds miserable in an unprofessional recording space.

Are you thinking of buying or building a voice-over booth?

Before you spend thousands of dollars, find out what your options are and why building your own studio is easier and cheaper than you may think.

I spent countless hours researching the options, materials and plans to create an affordable vocal booth that keeps the noisy neighbors out of my voice-over projects.

This 46-page booklet documents my search for silence, and it describes the science and art of soundproofing in non-technical language and plenty of pictures.

Even though it is not intended to be the ultimate guide to home studio construction, it is packed with practical tips, ideas and resources.

This information is also useful if you want to create a quiet space for:

• Music
• Movies
• Multi-media
• Meditation

My goal was to build a solid, soundproof booth for no more than $2000. Did I make it?

There’s only one way to find out!

Download your copy at Scribd.com today.

Part of the proceeds will go to www.kiva.org, changing the world, one micro-loan at a time!

American readers can access the guide on Scribd. International readers can purchase a download of the booklet for only $3.49 using this PayPal-link..

Once your payment clears, you will receive the PDF-file via email.

Thanks!

Wishing you tranquil times,

Paul Strikwerda

Technorati Tags: anechoic chamber, Auralex, building booth on a budget, building sound booth, building voice over booth, decibel meter, European voice talent, Gretch-Ken Industries, guide to building a voiceover booth, Harlan Hogan, home studio construction, Nethervoice, Paul Strikwerda, Philip Newell, Recording Studio Design, sound booth construction, Sound Sucker, Sound Transmission Class, STC, VocalBooth, voice over booth for under $2000, Voice Over sign, voiceover recording sign, WhisperRoom, window plug

This is the last part of a story, dedicated to those freelancers that have taken up the competitive sport of “lowballing.”

Click here for part one and here for part two.

When Max walked into the warm conference room, he saw two files on the table. On one, he recognized the name of a competitor. The other portfolio had his name on it. He knew instantaneously what he was up against.

Only a few weeks ago, he had lost a contract to this rival because their bid had been 30 percent lower. Had he just made a big mistake by coming out here in the midst of a dangerous winter storm?

“John Jarvis,” said the CEO, as he walked in. “You must be Max. I’m afraid it’s just me today. I live a few blocks from the office and practically no else dared to come out in this terrible weather.”

Jarvis sat down and took a sip of his coffee.

“Max, when I heard that you were on your way, I only had one thought: This guy must either be totally crazy or totally committed. But looking back on how you’ve handled this opportunity so far, you don’t strike me as insane. On the contrary. You hit all the marks of someone we’d like to work with. All of them, but one.

First of all, you clearly know the value of personal connections. Not once did I receive a generic email or an automated answer to a question. It was clear from the start that you were the go-to person that would not work for us but with us.

You made an effort to get to know your client and his problems first, before coming up with a solution. You learned our language and you translated your ideas into terms we could easily understand and relate to.

Third:  you consistently showed us that you could meet all deadlines and manage a project efficiently, even though we were only in the beginning stages. As you know, delays are usually costly. Not once did we have to send you a reminder. In fact, you were the one following up with us!

Now, as you can see, we’ve narrowed our choice down to two offers. Both companies were invited to present their proposals today. Only one showed up. I shouldn’t tell you this, but we’ve had to chase the CEO of the other company down to get his final plans here on time. It was his secretary who sent a response. This morning I found out why.

I’ll be honest with you Max. Your rival made us a very tempting offer that was 35% below your estimate. It was much more in line with current market prices for your type of services. We’re not talking peanuts here, but about a significant amount of money. So, here’s my decision.

Max held his breath. He knew that he had done everything he could to win this contract, but he had been down this road before. There was a lot at stake.

The CEO picked his rival’s folder up from the table; looked at it for a few seconds and threw it in the trash can.

“Congratulations Max. Welcome aboard!”

He went on:

“In this business we don’t really care too much about resumes and infomercials, but we certainly do our homework. I know some of the other people you’ve worked with in the past and I‘ve seen what you have done for them. Every penny spent on you was a fraction of what came back as a result of your involvement. As they say:

Quality will be remembered long after price is forgotten.

And do you know what impressed me most of all, Max? Not only are you committed and conscientious, you know what you bring to the table and how valuable your services are. At the end of the day, it wasn’t just your competence that sold me Max. It was your confidence.”

His startup coach had been right. Max remembered the day his mentor took out a big black marker and wrote on the flipchart:

A fair price is a price you believe in… plus twenty percent.

“I know you, Max,” his coach said. “As an entrepreneur, your greatest strength is your greatest weakness.”

“And what might that be?” asked Max, puzzled.

“You’re not motivated by money,” answered the coach.

“Let’s face it. You’re creative. You’re an artist. You want to contribute. One of the reasons you’re so good at what you do is the fact that you’re absolutely fascinated by it. It’s a magnificent obsession. You want to be the best you can be in your field. It’s that powerful internal drive that gets you up in the morning.

You don’t do what you do just to pay the bills. You do what you do because it matters and it is meaningful. To you, the ultimate reward is in the result, not in the remuneration.”

“Isn’t that a good thing?” Max wanted to know.

“Well, it’s what made Mark Zuckerberg the youngest billionaire in the history of mankind,” said his coach. “As far as we can tell, he wasn’t motivated by money when he came up with Facebook. Sir Richard Branson didn’t open up his record store to make millions. Steve Jobs co-founded Apple because he wanted to ‘make a dent in the universe’. Jobs once said:

“The only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.”

The challenge is to channel that passion and turn it into a profitable product people want to buy.

Now, here’s another basic human need: the need for autonomy. Most people want to be able to direct their own destiny; make their own decisions and create their own future. In one word: they want to be FREE.

The most dissatisfied workers are the ones that are being told what to do; they have uninteresting, low paying jobs and no hopes of ever escaping the rat race, other than winning the lottery.

In order to gain autonomy, having an interesting, purposeful job is not enough. Being able to contribute to something greater than yourself is nice but not enough. Without money -or with very little of it- we operate in survival mode, focused on taking care of our basic needs. Without money, we’re dependent, we struggle and we’re stuck.

You might be the most promising painter of your generation, but you need money to buy canvas, brushes and paint. You need money to rent a studio and promote your art. You want to be able to take trainings and hone your skills. The better you become, the more you will require: more expensive canvas, better brushes and the highest quality paint… a bigger studio. Someone’s got to pay for that!

You might think it’s mundane, but one way we express how much we value things, is by putting a price on it. Rumor has it that super model Heidi Klum‘s legs are insured for $2.2 million, but one leg is insured for $200,000 less than the other because of a scar. And that’s just her legs…

What I’m trying to say is this: money is a means to a beginning. That beginning is called “autonomy”. As long as you low ball whatever it is you’re offering, you’re telling the world that you don’t believe that you’re worth a penny more. That’s not the road to independence. It’s a road to nowhere.

In 2008, Dara Torres became the first woman in history to swim in the Olympics past the age of 40 in her fifth Olympic games. On July 5th of that year, she qualified for the finals in the 50-meter freestyle breaking the American record. In the finals she broke that record for the ninth time, winning a silver medal, only one hundredth of a second behind Britta Steffen from Germany.

The hours and hours of resistance stretching and time in the pool played a huge part in this phenomenal achievement, but it didn’t win Dara the medal. She won because she believed she could do it. As we speak, she’s already training for the 2012 Summer Olympics in London.

You might not operate this way, Max, but people tend to not value things that don’t cost them much. That alone should be reasons enough never to devalue your talent.

If you want your business to grow, you’ve got to start thinking long-term. Today you might be offered a dream deal. But what about tomorrow and the day after tomorrow?

Not only do you need money to cover costs, you need it to invest, to expand and to contribute. Passionate people have a tendency to be stuck in the now, absorbed in the moment. But even those who have reached the top will tell you that you need to think ahead if you want to stay ahead. If you want to manage your career, you have to learn how to manage your money.

“But what if a client can’t afford me?” asked Max.

“And how would you know they can’t afford you?” countered the coach.

“Well, because they’d tell me!”

“And you always believe what people tell you?” asked the coach. “Oh please… The two oldest excuses in the book are not enough time and not enough money. Time is something all of us happen to have the same amount of. It’s how we choose to use our time that matters. Not having enough money is a comparative deletion: compared to what?

If you’re stuck in the middle of a snow storm and you absolutely need to be somewhere, are you going to nickel-and-dime the only driver who’s willing to take you to your destination? It boils down to this: what’s it worth to you? Does the added value or benefit outweigh the cost?

If Heidi Klum were to lose one of her legs in a shark attack, her multi-million modeling career would be over. She might be asked to do a season of “Dancing with the Stars,” but she wouldn’t be back on the runways of Milan. Is that worth at least one million dollars? I’d bet my foot on that.

The more valuable your product or service and the greater the need for it, the more leverage you’ll have to name your price.

Listen to me Max. Never assume you know how much or how little a client can afford. You don’t. Do your homework instead. Ask questions. Make your offer as relevant as you can… not to you, but in the eyes of your client. Make it irresistible.

Think about all the objections they might throw at you. Be prepared to answer the most difficult question they could ever ask you. It may never come up, but if you have an answer to that question, you know you can handle anything else that comes your way. That’s how you prepare for negotiations!”

“Max, are you okay?” asked John Jarvis.

“For a moment it looked like you were lost in thought.”

“I guess I was processing what just happened,” said Max. “Thank you so much for choosing me. I couldn’t be happier!”

“Well, the feeling is mutual,” said Jarvis. If all of this works out -and I don’t see why it shouldn’t- we’re looking at long-term cooperation. And by the way, call me John.”

Max stood up from his chair.

“Can I ask you something, John?”

“Sure, Max. Shoot.”

“Just out of curiosity… you mentioned that my competitor didn’t hand in his plans on time, and he wasn’t here today. Any idea what happened?”

“I know what happened,” answered Jarvis.

“His secretary told me this morning that his company went under. Apparently, he had a tendency of over-promising and under-delivering. His work looked great on paper, but in reality, he couldn’t meet minimum quality standards. Because of his aggressive pricing, the money that was coming in wasn’t enough to keep the company afloat.”

Jarvis put on his winter coat and said:

“But let’s not worry about that, shall we? Let’s just say that Karma is alive and well in this country. More importantly, we need to get you home safely. I can’t afford to lose you at this stage of the game. We’re barely out of the gates. Let me call our driver. He’ll take you to a hotel near the airport. This storm is not going to last forever.”

“That won’t be necessary,” said Max. “There should be someone waiting for me outside.”

“You mean that black SUV in the parking lot?” asked Jarvis.

“Yep, that’s my driver,” replied Max. “His name is Anatoly but his friends call him Stoly.”

“That’s not your driver, Max,” said Jarvis.

“What do you mean?” asked Max.

Jarvis smiled as he opened the door. He shook Max’s hand and said:

“Don’t give that man any tips. I paid him a fortune. Stoly works for me!”

Paul Strikwerda © 2010
www.nethervoice.com

PS Be sweet. Please retweet!

Technorati Tags: Apple, Daniel Pink, Dara Torres, determining a fair price, Double Dutch Blog, Facebook, freelance, freelance rates, Freelancing, Heidi Klum, lowballing, making a dent in the universe, Mark Zuckerberg, market value, need for autonomy, Nethervoice, Paul Strikwerda, power of pricing, secret to motivation, setting freelance rates, Sir Richard Branson, Steve Jobs, underbidding, voice-over, voiceover, voiceovers, what motivates people

This is the second part of a story, delicately dedicated to those freelancers that have taken up the competitive sport of “lowballing”.

Click here for part one.

The black SUV was slowly making its way through the worst winter storm on record.

“Anatoly, at your service,” said the driver as he reached out to shake Max’s hand. “But my friends call me Stoly. You know… like the vodka.”

“Pleased to meet you, Anatoly,” said Max. Thanks for taking me to my presentation in this blizzard. I really appreciated it. One question, though: are you sure this is legal? I mean, don’t you need some sort of permit to drive people around like this?”

“What do you mean, permit?” replied Stoly. He sounded a bit agitated. “This is the Land of the Free and the Home of the Brave. Right now, I’m the only one brave enough to take you to your presentation in this snow storm. This is a free country. I can do whatever I want. Do I need a permit? Give me a break! My parents didn’t leave the Red Square in order to deal with more red tape. All those rules and regulations are in place just so some pencil pusher can stick his nose into my business.”

Max had clearly hit a nerve. Anatoly went on:

“If there’s one thing responsible for the American Dream, it’s the free market. We have a government for the people, by the people. I think it’s time for big government to start trusting those people to make the right decisions and not interfere in our lives. The entrepreneur is the backbone of the American economy. If we’d need a permit for every single thing we wanted to do, we’d never get anything done.”

Max remembered discussing the concept of a free market with his startup coach.

“Before we come to any conclusions,” said his mentor, “we really should identify what market we are talking about and what we mean by ‘free’. It’s so easy to speak in generalizations and pretend we understand one another. When we do, we usually don’t.

First of all ‘The Market’ as such does not exist.  Rather, it is made up of a great number of small markets serving different segments of the economy.

People talk about ‘the market’ all the time, as if it were some solid, static entity we could take home and put on a shelf. In reality, ‘the market’ is much more like our health. It’s the fluid result of many factors and influences, and it adepts and changes constantly. It’s like a living organism. We are all part of that organism; sometimes as buyers and sometimes as sellers. The cumulative result of millions of individual decisions is what makes these markets move.

Now, some of these places have become so complicated that humans alone can’t handle them anymore. Take the stock exchange. Most of today’s trading is no longer handled by shouting overachievers in weird blazers, but by computers. Does that make the market freer or more dependent on whiz kids, software and algorithms?

Do you know what happened on May 6^th of last year at 2:45 PM? The United States stock market crashed when the Dow Jones Industrial Average plunged about 900 points in the biggest one-day point decline in history. It was called the Flash Crash and the Securities and Exchange Commission (SEC) blamed it on a computer algorithm used by a trader to determine how to execute a trade. Within 13 minutes, some $40 stocks were selling for a penny a share, until a market circuit-breaker paused trading. Regulators later undid those bizarre trades, calling them erroneous.

On June 10^th, 2010, the SEC approved rules that require the exchanges to pause trading in certain individual stocks if the price moves 10 percent or more in a five-minute period.

Let me ask you, Max: is that still a free and independent market or are we talking about intervention here to prevent shares from becoming worthless thanks to a computer glitch?

Now, think about what fuels our economy: crude oil. An important benchmark for crude oil prices is a weighted average of prices for petroleum blends produced by the OPEC countries. OPEC constantly tries to influence that price by increasing and decreasing production. We all know what happened in 1973 when oil ministers agreed to an embargo.

Again I ask you: is this the famous free market people are referring to, or are prices kept artificially high and used as weapons in an effort to influence political decisions and punish certain regimes?

The yearly maintenance of refineries influences prices at the pump. A blast caused by a few individuals at a pipeline in Nigeria can cause the price of petrol to explode at your local gas station. We might long for energy independence, but for now we’re as interdependent as never before.

Yet, many Americans still live in the age of splendid isolation. They see their nation as the center of the universe because that’s all they know or seem to care about. We ask God to Bless the United States of America and that’s about it. Only thirty percent has a passport (compared to Canada’s 60% and the United Kingdom’s 75%) and trips outside of the States are down.

Only one in five U.S. residents speaks a foreign language. Those are not stereotypes, Max. Those are facts. Americans watch American TV on flat screens made in China and strongly object to so many American jobs being outsourced to low-wage countries such as…. China. See if you can get around for even one day without using anything that is not entirely Made in the USA. It’s impossible. Even if we were to control our internal market to keep it free from foreign influences, we’re still connected to the rest of the world.

“I understand all of that,” said Max. But when people talk about the free market, don’t they typically refer to a market free from government intervention?

“Here’s my take on government intervention,  Max. Too much of it is called dictatorship and not enough of it leads to anarchy. You pick.” He continued:

“I can’t tell you how many times the argument it’s a free market has been used to defend or excuse the most appalling working conditions and low wages anywhere on this planet. Just because humans were born with free will and have the power to exploit one another, doesn’t mean they should. Sometimes the administration has to step in to prevent the greedy from taking advantage of the needy. Is that BIG government overstepping its boundaries, or a matter of upholding basic human rights?

One could argue that the institution of federal minimum wage is a form of intervention in the labor market. It started when government tried to control the explosion of sweat shops in manufacturing industries. The sweatshop owners were thought to have unfair bargaining power over their workers, and a minimum wage was proposed as a means to make them pay fairly.

Some might say that sweatshops are a thing of the past. Well, on a different but related note, tell me: What’s one of America’s favorite non-alcoholic drinks? A few nutritionists told me it was sugar, but that’s not what I mean.”

“It must be coffee,” answered Max.

“Correct,” said his coach. “A while ago, Starbucks finally started selling Fair Trade coffee. We don’t always realize that agriculture workers in the coffee industry often toil in what has been described as ‘sweatshops in the fields.’ Many small coffee farmers in Africa and South America receive prices for their coffee that are less than the costs of production, forcing them into poverty and debt. To become Fair Trade certified, an importer must pay a minimum price per pound, providing credit to farmers and their families.

Laissez-faire economists might frown upon fair trade, but here’s the underlying question: whom is this market supposed to serve? Is it some amoral, illusive, impersonal entity that cannot be influenced, or could the players in that market actually have an effect on how business should be and will be conducted? Are people to serve the market (at any rate and at any cost), or do we want to have a market that serves the people? Should we intervene in that market by setting certain levels that are considered to be fair, humane and reasonable, or should we leave the market alone?

Our economy is still recovering from the subprime mortgage crisis that was -in part- the result of an unregulated, greed driven market that has left so many homeless. Just because people were able to get a mortgage with no money down, doesn’t mean they should have.

Cars used to have no seat belts and smoking was allowed everywhere. Then the government stepped in to prevent intelligent people from doing stupid things, precisely because we value certain things more than others.

My belief is that the ideal market -if we can even speak of such a thing- should serve the people. If it leads to desperation exploitation, it becomes an issue of ethics and adjustments need to be made.

I realize that I’m painting a picture with broad strokes, Max, and you’re absolutely free to disagree. So, let’s bring this discussion back to rates. Here’s my question: would you rather be paid a fair rate or a market price?

*          *          *          *           *

As Stoly skillfully maneuvered his car, Max noticed something disturbing. In some boroughs, the streets were much more accessible than in others. How could that be?

Suddenly, bright headlights appeared out of nowhere, and they were moving straight toward their SUV.

“What the heck is that?” screamed Stoly as he quickly turned the wheel.

“That, my friend,” said Max, “is government intervention,” as the snow plow drove past them. “Why aren’t they out in full force in every neighborhood?”

“It’s been a long winter,” replied Stoly. Some municipalities started running out of funds, especially those that paid the drivers by the hour. They found out that if they paid the snow crews per amount of snow removed, a lot more got done in less time. The folks that got paid per hour took their time. It’s human nature. Plus, some of the lowest bidders turned out to have the worst equipment and it took them forever to get the streets plowed. You get what you pay for.”

“When I was young, the whole neighborhood came together to clear the streets and sidewalks,” said Max. It was actually fun and we got to know one another. Senior citizens and others, who were too weak to plow, didn’t have to worry about a thing.”

“How about now?” Stoly asked.

“I’m afraid it’s every man for himself,” said Max. “People clear their own little bit of sidewalk and make sure others don’t park in their spot. There’s an eighty year old woman on our block who can hardly leave her house, let alone clear her walkway of snow and ice. One day, two teenagers knocked on her door, offering to take care of the snow for her.

She was so happy that these young gentlemen were ready to do a good deed. That was before they told her that it would cost her ten bucks. She said to me that she could barely afford her medication, let alone ten dollars every time there was snow on the ground. But hey, it’s a free market!

Meanwhile, her next door neighbor has one of those hand held snow plows. He was clearing the sidewalk when she asked him if he’d be willing to lend a hand. He said that he’d get to it once he had taken his wife to her nail appointment. He never did and I took care of it.”

The SUV stopped in front of an office building.

“This should be it,” said Max as he gathered his stuff.

“Is it okay if I pay you on the way back?”

“What do you think?” asked Stoly with a big grin on his face. “ You pay me now, my friend . This is the US of A…

… There are no free rides.”

Click here for the last part.

Paul Strikwerda © 2011
www.nethervoice.com

Technorati Tags: crude oil prices, Double Dutch Blog, Dow Jones Industrial Average, fair rate, fair trade coffee, federal minimum wage, Flash Crash, Flash Crash explained, free trade, freelance rate, government intervention, how to determine freelance rate, Laissez-faire, made in the USA, market rate, minimum wage, Nethervoice, NYSE, oil embargo, OPEC, Paul Strikwerda, SEC, Securities and Exchange Commission, spelendid isolation, Starbucks, subprime mortgage crisis, sweatshops

VOICES.COM has released new numbers testifying to the success of the company. There’s every reason to congratulate the owners, David and Stephanie Ciccarelli. They proudly announced “$39,290,580 in Total Earnings by Voice Talent at Voices.com.”

Some commentators concluded that the data in the report are a summary of this company’s past year in business. Stephanie Ciccarelli states:

“These numbers are based upon the last several years of data we’ve collected at the site.”

Voices.com has been in business since 2003, starting as “Interactive Voices”. In September 2006, Interactive Voices became Voices.com.

The new report speaks of: “155,915 All-time number of jobs awarded to voice talent.”

Voices.com says on their About-page that they are “creating 6911 job opportunities on average, each and every month.” My calculator tells me that this adds up to an average of 82,932 jobs per year.

How did voices.com arrive at 155,915? The verbiage “All-time number of jobs” suggests that they started counting from the very first day of business. Was that in 2003 or as of September 2006? Let’s do the numbers:

155,915 : 7 years = an average of 22,273 jobs per year (2003-2010)

155,915 : 3 years = an average of 51,971 jobs per year (2007-2010)

And what about $39,290,580 in total earnings? Is that also “based upon the last several years of data”?

PERSPECTIVE
It’s impossible to put these numbers into proper perspective if we don’t know what time period we’re talking about. That’s exactly the problem I have with most of the numbers coming from voices.com. I’m not saying that they are pulled out of a hat, but they lack clarity and context and they don’t always stand up to simple scrutiny.

The same can be said about their “Annual Report on the Voice Over Industry”. It is not compiled by an established market research firm, but by the CEO of voices.com, David Ciccarelli.

As long as we cannot independently verify the numbers or get a clear sense of the time period during which these data were collected, I choose to look at these reports as marketing tools, more than anything else.

AVERAGE FEE
Stephanie Ciccarell broke down the $39,290,580 in Total Earnings by Voice Talent at Voices.com. “On average” -she writes- “a voice talent made $252.97 per job” using their service.

I haven’t been keeping track of the voices.com numbers over time, but it would be interesting to see whether or not the average payment per job went up or down since 2003, and if so, by how much.

Stephanie Ciccarelli concludes:

“10,000+ people have earned a respectable income from doing voice overs with Voices.com serving as a key part of their marketing strategy.”

Once again, the numbers are vague and note that the term “respectable income” is not defined.

Let’s assume a talent lands one job per week on voices.com at $252.97. That would bring in $13,154.44 per year.

The talent decides to use the voices.com SurePay escrow system, at a 10% fee per job, costing him $1315.44. This brings the gross income down to $11.839.00. Subtract 10% for expenses and we’re left with: $10,649.10. Subtract from that amount $1504 in self-employment taxes and we arrive at a grand total of $9,149.10.

The 2011 Federal Poverty Guidelines of The U.S. Department of Health and Human Services puts the income level at $10,890 for a one person household.

Of course this is a theoretical example. Some voices.com jobs pay a lot more and some pay a lot less. No professional voice-over talent should entirely depend on one source to generate leads and make a living. At the same time, not everyone will land one gig a week using voices.com. Stephanie did write:

“10,000+ people have earned a respectable income from doing voice overs with Voices.com.”

In his analysis of the report, colleague Peter O’Connel comments:

Taking the Voices.com figure ($252.97), as a P2P industry average – that figure, I believe, doesn’t reflect what the voice over customer market “dictates”.

I believe it reflects what the voice over customer market “can get away with” with the help of the pay to play (P2P) business model.

ADDING IT ALL UP
There’s no doubt about it: voices.com has become one of the market leaders in online voice casting. That role comes with responsibilities. Market leaders have the clout to be trend setters and power pricers.

Voices.com has become more than a neutral playing field where supply meets demand. It has developed into a game changer that can write the rules of engagement by dictating the terms and conditions (no one is forced to join the club and pay the annual $299 Premium membership fee or the Platinum membership at $1995.00 per year).

One of those conditions is “a minimum project posting requirement for any job posted publicly and this amount is $100.” By the way, this doesn’t mean that a voice seeker can’t go any lower than that. Voices.com states:

“If your budget is lower than $100 then you may post a job privately using the Request Quote function within our search engine or you may email talent directly with your project details and budget.”

Critics feel that the Pay to Play business model is in part to blame for the steady decline in voice-over rates and professional standards. Peter O’Connell:

I don’t believe or financially support any service in which voice talent “pays to play” i.e. pays a subscription to receive auditions. I believe such services lower the rate expectations of potential clients because so many voice talents who swim in the pay to play pool low ball their rates out of what I feel is a kind of sad desperation for revenue of any kind.

The pay to play model negatively impacts the voice over business and its practitioners, in my opinion.

It has been suggested that if voices.com is really interested in their members making a “respectable income,” they should start by raising that $100 minimum rate immediately.

Secondly, voices.com has a global network of over 25,000 members. I am one of them. I think we should expect a lot more transparency and accountability when it comes to numbers. As voices.com so aptly pointed out: they did not make $39,290,580 in total earnings. Their members did.

Paul Strikwerda ©2011
www.nethervoice.com

Technorati Tags: average voice-over fee, David Ciccarelli, Double Dutch Blog, Nethervoice, online voice casting, Paul Strikwerda, Pay-to-Play, Peter O'Connell, Stephanie Ciccarelli, SurePay, voice over market place, voice-over, voiceover, voiceovers, voices.com, voices.com report