Wednesday, February 23, 2011

Economics 2011: A Modern Parable

So, let's say there's a painter (we'll call him Joe) who a few years back made $5000 to paint a house.  He was generally painting 3 houses a month, so his annual gross was $180,000 (before taxes, expenses, labor, and other costs).  Now flash forward to today: the market has changed.  Incomes have gone down, and property owners are either A.) Painting the house themselves, B.) Putting off painting, or C.) Only hiring the painting work when absolutely necessary or economically worthwhile.  This, combined with the lower demand of painters equals a surplus of painters looking for work.

Joe continues to work his business by advertising more, laying off some of his help, doesn't replace equipment as often as he used to, and in short does everything he can to cut costs.  However, he and his competition continue to bid the work at $5000.  In the end, he now only paints 1-2 houses a month, grossing him $90,000. 

Another painter, we'll call him Fred, also used to paint houses at $5000 a pop.  He grossed about the same $180,000 per year.  After seeing a decline in business, Fred also cut his expenses and tried to wait out the market.  However, after spending a lot of time sitting on the couch and not painting, he decided to start bidding his work at $3000.  With Fred now having a lower price point, he is easily able to paint 4 houses a month, and is now booked solid.  This grosses him $144,000.

Is Fred making less than he used to and working harder? Yes. Is Fred making the per-house money he used to? No. Is Fred making more money than Joe? No question.

Who is more successful in today's market?  In my opinion, it's Fred.

Ultimately this is a great example as to why AllRequestsLive's services have been so successful and well-reviewed by google "hotpot" users.  Clearly the market has changed, and we needed to change along with it.  We still offer the same high-quality entertainment delivered with professional equipment and talent.  We have simply decided that working more often was better than sitting around complaining that "no one wanted our services this weekend."

Whether it's simple DJ/MC services or our full "All Requests Live Band" with lights & fog machine, we look forward to making your event one to remember.  Give me a call and let's talk!

DJ Dave & the "All Requests Live" Band
Call/text (503) 489-8275
facebook / twitter @allrequestslive

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