Most typical American wage earners have a good grip on where their money comes from: work, resulting in a pay check.
Where things get murky is what happens to the money after they get it, primarily because many people go through life without creating or living by a budget. They just make payments and buy stuff.
And that’s OK if you don’t mind not knowing at all times where your financial ship is on the Ocean of Life.
When I was little, every week after I had done all my chores, my father reached into his pocket and gave me a quarter.
I didn't start thinking about where that quarter came from for a few years . . . .
Musicians are notorious for lax financial habits. We’ve all seen the memes.
There is one specific work force that knows were every penny goes is going.
Restaurant and bar owners.
Their profit margins are slim and anything less than assiduous financial habits can drive their investment into the ground.
When you are a gigging musician, you are working for an investor before you are working for a club owner.
Everything they spend money on either means more money going out of their pocket or more money staying in their pocket.
What they spend on toilet paper, cleaning supplies, potatoes, cocktail napkins, and yes, salaries are always and justifiably under their scrutiny.
While many musicians bitch about playing gigs in the 2020s at 1970s wages, they rarely take the club owner’s perspective.
That $150 they get at the end of the night comes from somewhere other than a fairy godmother’s satchel like in Cinderella.
It comes out of the club owner’s pocket.
And aside from the obvious point that you are working to keep the club owner happy, it behooves the gigging musician to embrace the basic idea of where his paycheck originates.
It comes from the profits of the club owner. If he doesn’t have an act to pay, that means he has more money to keep in his pocket.
As musicians, we have to give them constant reassurance that their investment in us is truly a profitable investment and not ill-conceived charity.
One place where club owners get to make a profit and mark up their prices is with alcohol, especially beer.
Let’s construct several scenarios focused on beer and hiring an act for $150.
Ok.
The club owner pays an act $150 for three hours on a Friday night.
Where does that $150 come from?
FYI, the average markup on beer is 75%.
Scenario 1:
So, for the sake of discussion, there is no act and a beer is $6.
The bar sells 100 beers at $6 per beer . . . $600, right?
The cost of the beer, 25% of that $600, is $150. That $150 is out the door.
The bar ostensibly pockets $450 (75%) to cover overhead.
Scenario 2:
There is an act and a beer is $6.
The bar sells 100 beers at $6 per beer . . . $600, right?
25% of that $600 is $150. Again, $150 is out the door as the cost of the beer.
The bar ostensibly pockets $450 (75%) to cover overhead.
So the club pays the act $150 and the beer distributor $150.
That leaves the club with $300 . . . 50% profit on beer to pay their overhead. That’s a 25% drop in their profit.
Would you be smiling if you lost 25% of your profits?
Scenario 3:
How about if the bar sells 200 beers and hires an act!
200 beers @$6 a beer = $1200.
Cost of the beer = $300
Cost of the act = $150
Profit on beer = $750 (62.5% profit)
Scenario 4:
How about if the bar sells 400 beers and hires an act?
400 beers @$6 a beer = $2400.
Cost of the beer = $600
Cost of the act = $150
Profit on beer $1650 (68.75% profit)
Notice how the club owner’s profit on beer is never as high as it was when he/she wasn’t hiring a musical act.
Restaurant owners are continuously prioritizing – what to buy, what to pay, what to put on the menu, what to take off.
They almost always know their “number” - that is, when they are in the red and when they move into the black.
Their number one priority is to stay both afloat and open.
Before an act plays a single note, every club has to pay a yearly fee of approx. $1000 to ASCAP for the right to play background music in their club.
And since Covid, every club is struggling just to find staff to work in their kitchen and serve food.
Back to the beer.
In our models, if people drink 3 beers, in order to do the math, Scenario 1 needs 34 customers, Scenario2 requires 67 customers, and Scenario 3 requires 134 customers.
Their business gross/profit margins are very slim.
They have already paid for ASCAP/BMI house music, a PA system, and/or a digital jukebox lease.
There has to be a steady stream of traffic in and out of the club. And it helps if the club is larger than average.
You, Mr./Ms. Musician, are there to create more traffic into the establishment.
No matter how large the venue is, if the act does not draw people and then keep people in seats longer, which in turns translates into a few more alcohol sales, which turns into more profit margins, which keeps more of the owner’s money in their pocket, it makes no sense for a club to have live music.
When you understand this paradigm, things fall into place on gigs and you achieve what we call “flow”.
Several months ago, I did a last minute three-hour gig at a restaurant in Old New Castle. When I loaded in, there were about a dozen people in the place.
I immediately started asking for requests and played all of them. As more people came in, I edged the volume up to raise the conversation volume level and drop inhibitions a bit.
Pro tip: people drink (read: spend and tip), socialize, and laugh more when given a reason to talk louder than they do in their normal setting.
I was getting multiple requests for songs as I was playing the previous request.
People started facetiming me with their friends, telling them that they need to get to the bar because “this guy is playing everything” and “everyone was there and party was starting”.
The bar was exceptionally busy.
I didn’t take any breaks – just played continuously.
The tips were as steady as the stream of requests.
The flow resembled the sustained rush of the Monongahela River.
And the requests were mirroring the increasing energy in the room.
At the beginning of the third hour, the place was packed and a full-fledged party had broken out.
The owner of the club came running up to me.
“We’re swamped! You’ve got to play some slow stuff to get some of these people out of here.”, which I did.
Mission: accomplished.
When we play a bar gig, we need to be armed with knowledge.
We are not there to play our five most soul-searching originals or deep cuts by obscure artists.
We are there to help the owner achieve their business goals as well as entertain the customers as intensely, relentlessly, and memorably as possible.
Anything else is rock and roll fantasy and not business.
Where things get murky is what happens to the money after they get it, primarily because many people go through life without creating or living by a budget. They just make payments and buy stuff.
And that’s OK if you don’t mind not knowing at all times where your financial ship is on the Ocean of Life.
When I was little, every week after I had done all my chores, my father reached into his pocket and gave me a quarter.
I didn't start thinking about where that quarter came from for a few years . . . .
Musicians are notorious for lax financial habits. We’ve all seen the memes.
There is one specific work force that knows were every penny goes is going.
Restaurant and bar owners.
Their profit margins are slim and anything less than assiduous financial habits can drive their investment into the ground.
When you are a gigging musician, you are working for an investor before you are working for a club owner.
Everything they spend money on either means more money going out of their pocket or more money staying in their pocket.
What they spend on toilet paper, cleaning supplies, potatoes, cocktail napkins, and yes, salaries are always and justifiably under their scrutiny.
While many musicians bitch about playing gigs in the 2020s at 1970s wages, they rarely take the club owner’s perspective.
That $150 they get at the end of the night comes from somewhere other than a fairy godmother’s satchel like in Cinderella.
It comes out of the club owner’s pocket.
And aside from the obvious point that you are working to keep the club owner happy, it behooves the gigging musician to embrace the basic idea of where his paycheck originates.
It comes from the profits of the club owner. If he doesn’t have an act to pay, that means he has more money to keep in his pocket.
As musicians, we have to give them constant reassurance that their investment in us is truly a profitable investment and not ill-conceived charity.
One place where club owners get to make a profit and mark up their prices is with alcohol, especially beer.
Let’s construct several scenarios focused on beer and hiring an act for $150.
Ok.
The club owner pays an act $150 for three hours on a Friday night.
Where does that $150 come from?
FYI, the average markup on beer is 75%.
Scenario 1:
So, for the sake of discussion, there is no act and a beer is $6.
The bar sells 100 beers at $6 per beer . . . $600, right?
The cost of the beer, 25% of that $600, is $150. That $150 is out the door.
The bar ostensibly pockets $450 (75%) to cover overhead.
Scenario 2:
There is an act and a beer is $6.
The bar sells 100 beers at $6 per beer . . . $600, right?
25% of that $600 is $150. Again, $150 is out the door as the cost of the beer.
The bar ostensibly pockets $450 (75%) to cover overhead.
So the club pays the act $150 and the beer distributor $150.
That leaves the club with $300 . . . 50% profit on beer to pay their overhead. That’s a 25% drop in their profit.
Would you be smiling if you lost 25% of your profits?
Scenario 3:
How about if the bar sells 200 beers and hires an act!
200 beers @$6 a beer = $1200.
Cost of the beer = $300
Cost of the act = $150
Profit on beer = $750 (62.5% profit)
Scenario 4:
How about if the bar sells 400 beers and hires an act?
400 beers @$6 a beer = $2400.
Cost of the beer = $600
Cost of the act = $150
Profit on beer $1650 (68.75% profit)
Notice how the club owner’s profit on beer is never as high as it was when he/she wasn’t hiring a musical act.
Restaurant owners are continuously prioritizing – what to buy, what to pay, what to put on the menu, what to take off.
They almost always know their “number” - that is, when they are in the red and when they move into the black.
Their number one priority is to stay both afloat and open.
Before an act plays a single note, every club has to pay a yearly fee of approx. $1000 to ASCAP for the right to play background music in their club.
And since Covid, every club is struggling just to find staff to work in their kitchen and serve food.
Back to the beer.
In our models, if people drink 3 beers, in order to do the math, Scenario 1 needs 34 customers, Scenario2 requires 67 customers, and Scenario 3 requires 134 customers.
Their business gross/profit margins are very slim.
They have already paid for ASCAP/BMI house music, a PA system, and/or a digital jukebox lease.
There has to be a steady stream of traffic in and out of the club. And it helps if the club is larger than average.
You, Mr./Ms. Musician, are there to create more traffic into the establishment.
No matter how large the venue is, if the act does not draw people and then keep people in seats longer, which in turns translates into a few more alcohol sales, which turns into more profit margins, which keeps more of the owner’s money in their pocket, it makes no sense for a club to have live music.
When you understand this paradigm, things fall into place on gigs and you achieve what we call “flow”.
Several months ago, I did a last minute three-hour gig at a restaurant in Old New Castle. When I loaded in, there were about a dozen people in the place.
I immediately started asking for requests and played all of them. As more people came in, I edged the volume up to raise the conversation volume level and drop inhibitions a bit.
Pro tip: people drink (read: spend and tip), socialize, and laugh more when given a reason to talk louder than they do in their normal setting.
I was getting multiple requests for songs as I was playing the previous request.
People started facetiming me with their friends, telling them that they need to get to the bar because “this guy is playing everything” and “everyone was there and party was starting”.
The bar was exceptionally busy.
I didn’t take any breaks – just played continuously.
The tips were as steady as the stream of requests.
The flow resembled the sustained rush of the Monongahela River.
And the requests were mirroring the increasing energy in the room.
At the beginning of the third hour, the place was packed and a full-fledged party had broken out.
The owner of the club came running up to me.
“We’re swamped! You’ve got to play some slow stuff to get some of these people out of here.”, which I did.
Mission: accomplished.
When we play a bar gig, we need to be armed with knowledge.
We are not there to play our five most soul-searching originals or deep cuts by obscure artists.
We are there to help the owner achieve their business goals as well as entertain the customers as intensely, relentlessly, and memorably as possible.
Anything else is rock and roll fantasy and not business.
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