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The under-pricing dilemma in the audio-visual industry

The under-pricing dilemma in the audio-visual industry

By Tweuya Nelumbu.

The audio-visual industry in Namibia has witnessed a significant presence of new companies seeking to meet the demand for live event technology services across the country. The need for live streaming services grew popular during the COVID-19 pandemic, and further brought the realization of hybrid events to meet the demand of physical and similarly online audiences.

The audio-visual industry facilitates communication for many of our crucial industries in Namibia through corporate events such as exhibitions and conferences to music concerts and festivals. Audio-visual involves all audio-related equipment like speakers, microphones, and video equipment such as LED screens, projectors, and cameras.

Having been actively involved in the industry as an audio professional for the past ten years, I have observed a common trend of new companies and professionals under-pricing their products and services to gain customers and increase sales, eminently devaluing the industry in the long term.

Economist and author of the book: The Economics of the Audio-visual Industry: Financing TV, Film and Web, Mario La Torre, summed it up in his book by stating that the price of an audio-visual product should allow for the costs – both financial and operational – and the production risks, to be covered by the revenues derived from selling a given quantity of the product and still generate a profit. La Torre, suggests the major concern of an audio-visual company is to identify the price level that would cover both direct and indirect costs attributable to that product.

It may seem encouraging, in the beginning, to gain a share of the market by under-pricing but like all businesses, profitability is the goal, under-pricing achieves the contrary. Securing events may look positive on the company’s financials, however, the company needs to redeem its entire cost of production and still make a profit from every event.

Another implication of under-pricing is furnishing the cost of maintenance; all new audio-visual companies I have engaged with have a reactive approach to servicing their equipment, meaning they only repair when there’s a breakdown. Although this can be considered poor equipment management, in some cases, equipment breakdown can be unforeseen. Without positive revenue growth, maintenance will be impossible and eventually slow down sales.

The current state of the economy has made customers price savvy leaving no room for negotiations to restore prices to their initial value at a later stage. Under-pricing leaves no room for bargaining power and further creates a lack of appreciation for the product and service.

Audio-visual companies and professionals should educate customers on the value of audio-visual products and services. It is a collective responsibility to save the industry from cheap skates and establish a pricing policy that ensures revenue growth.


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