Using statistics to get the most out of your clients…(among other tricks)

This post is a case study from Phil Nicholas, a music industry professional managing Emily Barker (a folk artist) and running a record label to release her music.

It is a time of rapid change in the music industry. Tried and tested ways of reaching customers, the products themselves and income streams for artists and record label have largely been replaced over the past five years and whilst the internet now boasts myriad ways of monetising your music product, many of these business are still in relative infancy.

The challenge is varied: people are buying less CDs and downloading instead, thus margins for labels and artists have been slashed. The piracy of music versus legitimate downloads has been a big issue, but coverage of this phenomenon often misses the wider point that now customers have experienced ‘free’ music, it is difficult to get them pay for music, even when legitimate outlets gain huge worldwide status (how many of you, for example, know that Amazon.com’s mp3 download store offers better quality mp3s for the same cost as iTunes, the market leader by a long stretch?)

Although reaching your current customers as well as gaining new ones still occurs via traditional methods such as press & radio campaigns to promote album & single releases and live touring, these are crowded media. Massively increased use of the internet has spawned new methods of fan contact and nurture via social networking sites, targetted content delivery (signing up for RSS feeds and email newsletters) and data collection at point of sale. The beauty of online trading is the ease with which data can be collected and presented to the user.

An example of this is online store Bandcamp.com, which is still in development but with tens of thousands of users. It allows the artist or label to sell both digital music downloads alongside physical product. The neat management tools supplied to the store owner include a stats page which lists the number of visitors listening to tracks on your page, purchasing items and importantly, from whence they arrived upon your page. Thus we can tell that over 50% of net traffic to our bandcamp page (http://emilybarker.bandcamp.com/) during the month of January has come via an embedded widget on the number 1 Wallander fan site (http://www.inspector-wallander.org/index.html). Needless to say we will be placing future advertising with them.

In order to widen our customer base (potential CD or download buyers and gig-goers) we employ a service at Musicglue.com which simply captures customer emails and location in return for a free download. The advantage of grouping your fans by location is to be able to inform them of events taking place in their area, a live show, for example.

These websites and other like them are becoming evermore simple for users to customize and exploit. So whilst a playlisting on Radio 2 and a national headline tour remain the most powerful ways of promoting an artist and generating merchandise sales at gigs plus CD sales over the internet and on the high street, a new artist looking to maximise earnings from lower-priced items sold in small quantities, can confidently monitor customer behaviour and collect payments on a global scale from the comfort of their home studio.

Phil’s next post will centre on how to fund the recording of an album when record companies are spending a tiny fraction of their previous expenditure in this area…..

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Tags: client, download, management, monetise, music, promotion, reports, sales, tracking

What’s the difference between your ideal rate and the minimum you’ll accept?

In the last post on the subject of how you price time, we looked at what your ideal daily rate would be.

In this post we’ll look at how you might actually offer a range of rates (you might not publish this but you might negotiate it) depending on what the work is and how busy you are. We’ll also look at how you move this range upwards over a period of years.

Using the same example as before, where you want to:

• to charge £750 per day
• to sell 100 days of time in a year
• therefore to turn over £75,000
• assuming £25,000 of costs achieve a taxable income of some £50,000

In reality you may not be able to charge this top rate for every job. There are a number of reasons for this:

• the market rate for your skills and your level of experience may not be as high as this so if you charged it you’d price yourself out of the market
• you may take on work for which you are over-qualified, particularly if you’re not as busy as you’d like to be and need the income … but you may therefore not be able to charge top rate for the work
• you may choose to over-deliver. .. spending more days on a project than actually budgeted for
• you may have some clients whose budgets are simply smaller, yet they offer exciting work so you drop your rate in order for them to be able to afford you (in these cases the work had better be exciting!).

In practice you may well need to have a range of daily rates, and the rate you quote to the client depends on what the work is, what sector they are in, how much you need to the income etc.

So if £750 is at the top of your range what is at the bottom? Only you can answer this – what fee is so low that you’d rather spend that day having a lie-in or a holiday?

For the purposes of this post let’s say that the minimum rate you’ll accept is £250/day.

Now your range is from £250-750 per day.

How can you move this range upwards over time?

Well for a start always quote your top rate when you’re busy. If you’re not really earning enough consider what projects you might take on at lower rates … one of the keys here is not to burn your bridges with cheaper clients when you’re busy and to be humble enough to go asking for work when you need it

Over the years move the range upwards so that both your top and bottom rates go up! This may require you to drop some of your least well paid work and perhaps the clients that offer it simply because they may not be prepared to pay more for that work and may prefer to hire someone else without changing the rate. Such is the price of success!

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Tags: charge out rate, client, customer, daily rate, financial, management, planning, pricing, sales, tips

Improved function: multiple items on invoices

We have improved the ‘Add Item’ function within MyCake invoice creation.  Until now, after adding the first item, you had to return to the invoice screen and click the ‘Add Item to this Invoice’ button.

Now, once you create a new invoice and click ‘Add Item to this Invoice’, you will see an option to check ‘Add more items to Invoice’. This means that you will keep adding items to your invoice without returning to your invoice screen. Once you’re done with adding items just click cancel to return to your invoice screen.

A very good feature if you have lots of small items to enter on your invoices.

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Tags: client, customer, invoice, invoicing, management, project, sales, tips

Improved project function for invoices and receipts

You can now assign invoice and receipt items to a project rather than a whole invoice/receipt. Which means that you can have a more accurate data on where every penny goes.

To enable this go to SETTINGS > PROJECT SETTINGS > Option 6: Set your preferences

Don’t forget to click “update” to save your changes.

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Tags: client, customer, invoicing, products, project, project management, sales, Services

How can you chase your late paying clients?

We’ve had a couple of requests for a post on this topic so we’re guessing that there are a few more folks out there asking this question too. Lets look at this from a couple of different angles:

Prevention

• At the start of a project – sit down and assess whether you think the client is likely to be a timely payer or not. If you’re uncertain ask around amongst others who’ve worked with them. If you feel that timely payment may be an issue then agree staged payments and make it clear that you need paying on one stage before moving on to the next. You might also want to make them aware of your legal right to charge late payment fees and the conditions under which these would be incurred. The simplest way to do this is to draw the client’s attention to it and confirm with them that your payment terms and theirs are aligned. This allows you to present it as ‘I want to make sure we avoid this so would like to clarify with you ….’. If you think they’ll try and wriggle or will query your right to make these charges make sure you have your fact right and quote the legal niceties if you need to!
• Whilst working with the client – the worst payers are often the larger organisations who have separate finance departments and very fixed processes. This means that your point of contact may not be keeping track of invoices as they go through the system and may not be aware of whether you’re being paid on time. One way to help your contact to help you is to make it very clear to them that timely payment matters to small firms and that you keep a careful watch on cash flow. Again this foregrounds any conversations you might have to have at a later date if they are tardy. You have the moral high ground here in that no large organisation (particularly in the arts) really wants to be seen to be anything other than supportive of the smaller suppliers it works with. On the flipside some large organisations just struggle to get invoices through their system in less than six weeks but at least they are consistent in paying at six weeks instead of four … if this is the case there’s probably not much you can do except invoice as soon as possible!
• Once you’ve issued an invoice – you can put a call in to the finance department a couple of weeks after issuing/before it comes due and ask them to confirm to you the payment date they have planned in their system. This is a polite way of checking that they are processing the invoice and particularly useful if the client doesn’t send out payment notices. We’ve come across examples where the client is sitting on the invoice and not sending it to be processed until several weeks after you’ve sent it … this process is one way to identify such issues. If the client is sitting on it they’re unlikely to admit it so better that you let them save face and pretend it was lost/delayed but still give yourself the chance to chase it before it becomes due.

Cure

Ok, clearly a bit trickier than prevention so let’s deal with this in terms of starting out playing nice and getting to the tough stage if needed.

• Are they aware that the invoice is overdue? – to start with you can ring your main contact and ask for their assistance in sorting the issue. You can give them the benefit of the doubt and assume that they are unaware of the issue. When you have this conversation make sure that you agree how they will get back to you with an answer and set a date by which they will respond (and if they don’t they should expect you to call again). This is about holding them accountable in the nicest politest but firmest way possible. You could also ask them who is responsible for invoice payment in the finance department and offer to speak to that person. Make it clear that you’re happy for them to chase the finance folks but equally you’d be happy to do the chasing yourself. You could also point out that if this can be resolved quickly you’re happy not to charge late payment fees. Much of the game at this stage is to be confident in your rights so that the client knows that you’re keeping the velvet glove on the iron fist! A little bit of polite giving of a guilt trip is ok!
• They are aware the invoice is overdue and it’s still not been paid – again stick to the asking them to help you approach for a while here. Sympathise with their frustration that the finance department is moving slowly but indicate that you are keen to avoid current projects being delayed or late fees being incurred. Give a deadline by which the invoice needs to be paid if late fees are to be avoided and indicate this to both your main client contact and the finance department. If the delays are due to part time finance folks or the need for a board members signature on a cheque then ask them when the key person will be in next and confirm that your cheque is on their desk. Put this date in your diary and either call on the day or call if the payment has not been made within a couple of days of the date given. By this point your job is to keep holding them to account. Agree a deadline and make sure you follow up on it. If you agree a deadline and it’s not met and you don’t chase the client will learn that you’re all bark and no bite. In MyCake you’ll find that once an invoice is overdue a new option pops up with three letters of increasing firmness which you are welcome to use or tailor to your own needs. You’ll also see that we automatically calculate the late payment interest you’re able to charge.
• Escalating the issue – this can work just as a threat … asking who you need to speak to get the issue resolved, asking for the name of the Finance Director or putting a call in to the Director/CEO. Re-issuing the invoice with a late payment fee added is another way to move up a gear (even if you later waive them). If you do this make it clear that these fees are growing daily and tell them by how much. Business Link has a useful tool to help calculate the amount of interest you can charge on the outstanding debt. If you can avoid involving lawyers then it will keep down the cost of recovering the debts owed but sometimes you need to demonstrate that you mean it. A letter from a lawyer demanding payment would probably cost you a few hundred pounds but sends a very clear message. At the same time you might also want to talk to folks at your local Citizens Advice Bureau or a trade association (for example the Institute of Directors offer a free legal advice line) so that you can work out what the steps are for things like small claims courts.
• Clients with cash flow problems of their own? If you genuinely think that they may be having cash flow problems then one approach is to ask them if staging payments would help them in their cash flow. An employee of a larger organisation than yours will hopefully feel guilty and embarrassed at such a suggestion.

Much of the above is about working out what your client will respond to quickest and with least embarrassment to both sides. If you can clearly lay out the ground rules before a project is started so much the better but of course life isn’t always that simple. Knowing your sources of legal help is a good way not just to get assistance when things get sticky but also for assistance in preparing good contracts in the first place. There are several legal firms who specialise in working in the Creative Industries. For more help with contracts, lawyers etc a good place to start is the ECCA site.

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Tags: cash flow, client, debt, interest, late payment, overdue invoice

Four Questions You Must Ask Before Starting Any Project

Let’s face it, you’re not just in this for the money.

Yes you need to pay the bills, and no, you wouldn’t say ‘no’ to that mansion. But if you’re in a creative profession, you went into it for reasons other than your bank balance.

For one thing, you love the work itself. And if you’re honest, you’ll admit there are rewards on offer that have nothing to do with money — such as fame, critical recognition and hanging out with cool people.

All of which makes for a complicated mix of motivations for taking on any new project. This is part of what makes a creative career so interesting — but it can also lead to a load of confusion, disappointment and recriminations.

Like the time you did the work and didn’t get paid for months afterwards, and only after a fight.

Or the time you did a great job but your name mysteriously failed to appear in the credits, so someone else got the glory.

Or the time you took on a project to get a big-name brand on your client list — only to discover they were a nightmare to work with.

Or the time you thought you were being hired to do the sexy creative stuff, only to spend days and days on the nitpicking boring bits.

Or the time you were handsomely paid by a very nice client, only to see the tacky end product — and now you cringe whenever someone mentions it with your name attached.

If any of that sounds familiar, it could be time to take a new approach.

By untangling your own mixed motivations, and finding out exactly what’s on offer, you could save yourself a world of misery. When you’re clear about what you want, and what you can realistically expect, you can fully commit to the projects that are right for you — and learn to say ‘no’ to the rest.

Here’s how you can do just that.

The Four Basic Types of Motivation

A few months ago I published a free e-book How to Motivate Creative People (Including Yourself), which outlined the four basic types of motivation that drive creative people:

• 1. Intrinsic motivation — the pleasure you take in the work itself. This is what leads you to stay up all night working on something just for fun.
• 2. Extrinsic motivation — rewards for work. These can include money, fame, recognition and new opportunities.
• 3. Personal motivation — the values that matter to you as an individual. Depending on your personality, you will devote more or less energy to pursuing things like knowledge, power, pleasure, security or self-expression.
• 4. Interpersonal motivation — the influence of people around you. We creatives love to think of ourselves as individuals, but you must have wondered why so many of us wear black T-shirts, write in Moleskine notebooks, and insist on using Apple computers.

Put the four motivations together in a matrix, and you end up with four basic reasons for saying ‘yes’ or ‘no’ to any project:

A dream project is the one that ticks all four boxes: you’re paid shed loads of cash to work on a fantastically inspiring project with famous people who turn out to be a blast to work (and party) with. When it’s all over, you see your name in lights and win all the awards going. Which leads to an inbox full of offers for similarly lucrative and sexy projects …

Well, I did say that was the dream project.

More often than not, you find a project with a big tick in one box, smaller ticks in the other two, and bad news in the final box. So you have to decide whether the pluses outweigh the minuses.

Often, it’s not a problem to take on several projects like this — as long as the total pluses and minuses are fairly evenly distributed in all four boxes. So for example it’s fine to take on that boring proofreading job to pay the bills because it means you can afford to do that funky website job that won’t pay you much cash that will get your name noticed by the right people.

One of the critical skills in any creative career is making sure you get the balance right over the long term. Too many years working on cool projects for no money, and you’ll start to wonder if the stress is really worth it. At the other extreme, you’ll bore yourself rigid if you play it safe too often, doing routine work for a regular pay cheque.

The Four Questions You Must Ask about a New Project

1. Will I enjoy the work?

You don’t need me to tell you how quickly the hours go by when you’re doing something you love — and how the minutes drag when you’re not. This isn’t just about the quality of your working life. You do your best work when you’re enjoying yourself. And you have more energy to push through the inevitable problems.

Bottom line: a creative career is not sustainable, creatively or commercially, unless you are getting personal satisfaction from the work.

2. Will I enjoy working with these people?

Again, pleasure and performance go together: when you enjoy your co-workers’ company, you encourage each other and spark ideas off each other. You help each other out. When you don’t get on, the work suffers as much as you do.

Bottom line: when you enjoy the social interaction with other people on a project, you do a better job together.

3. What’s in it for me?

This is the nitty-gritty. Will you be paid? If so, how much — and when? If not, what else is on offer? Get specifics. In writing, if possible. Be wary of vague promises of future paid work or ‘opportunities’.

Bottom line: when you are clear about the personal rewards offer, and happy with them, then you’re free to focus all your attention on doing a great job.

4. Will I be credited?

There are times when a prominent credit can be more valuable than a cheque. The bigger your reputation, the bigger the future opportunities and rewards you can command. Is this project a chance to boost your reputation? If so, get written assurances of exactly where and how you will be credited.

And maybe there are times when you’d rather people didn’t know. So if you’re an avant-garde novelist writing trashy romances to pay the bills, or a film star advertising cigarettes in Japan, you may want written assurances that you will not be credited.

Bottom line: publicity can make or break your career — make sure you get the right kind of public recognition.

What Questions Do You Need to Ask?

Which motivations are most important to you in your career?

Which of the four questions do you most need to ask before deciding whether to accept a new project?

What questions would you add to the list?

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About the Author: Mark McGuinness is a coach and trainer for creative professionals and innovative companies. He writes two popular blogs about the business of creativity, Lateral Action and Wishful Thinking. For bite-size tips and inspiration, follow Mark on Twitter.

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Tags: client, creative, evaluating work, Mark McGuinness, new business, project