When Cheaper is Not Less Expensive

Photo courtesy of Tim Parkinson

Photo courtesy of Tim Parkinson

Now that much of my time is spent developing AVL budgets for churches, I’ve spent a lot of time considering what constitutes a good value. One of the things I’ve noticed for a long time is that many churches shop based on price only. They may be comparing two pieces of equipment that do similar things and choose the least expensive. Sometimes that’s a good idea, but more often than not, it turns out the lowest price doesn’t equal the lowest cost. 

This is especially true when you begin to factor in the cost of labor. This has been one of the more fascinating thing for me to start looking at closely. Here’s an example that might surprise you.

A Tale of Two Microphones

Shure makes two mid-range digital wireless mic systems, the ULX-D and the QLX-D. Both offer similar audio performance, but the QLX-D brings several key features to the table. They also make a ULX-D dual and quad system, which is two and four receivers in a single rack space. 

Now, if you look at the line item pricing on the ULX-D Quad, you might think it’s a lot more expensive per-channel than both the regular ULX-D and the QLX-D. However, when you price it out with all the accessories you need for four channels of wireless, and consider the installed cost, the Quad actually comes out ahead. How can this be?

The big selling factor for the Quad is the fact that it’s four receivers in one space. The installers take it out of the box, rack it up, connect the four audio lines (or better, the Cat5 for Dante), connect power and two antenna lines and they’re done. With ULX-D single or QLX-D, they have four units to unbox, build into two rack mounted units (the receivers are normally 1/2 rack space), rack, wire, and then on the QLX-D, there’s the antenna distro. 

The extra time of doing all the work, especially when you go beyond four channels really tips the scales in the favor of the Quad. So we use it almost all the time. The more expensive product is actually less expensive for the church. Now, if a church wants to do all the install themselves and they have the time and knowledge, then the QLX-D is a better deal even with the antenna distro. 

Choosing Poorly

For years I’ve regaled you with tales of tearing out poorly chosen equipment that didn’t meet the goals of the church. This happens with speakers, wireless mic’s, projectors, lights, and a myriad of other gear. Often, it happens like this: 

The church has a need for something, say, new speakers. They’ll head down to the local Guitar Center or music shop or do some shopping at one of the large online retailers. They’ll talk to a salesman and ask, “What speakers should we buy?” The salesman may suggest something good, they may not. Speakers are bought, installed and everyone is disappointed. It may not be loud enough, clear enough or focused enough. Then they buy more speakers. If two are good, four are better, right? Then the sound gets worse. No one can figure out why the sound keeps getting worse. 

Finally, perhaps out of desperation, they’ll hire a company like the one I work for and we will actually do a design (for which we get paid), and take down all the “less expensive” speakers, and put up some good ones. Quite often, I’m taking down 2x as many speakers as we put back up, and people are stunned with the results. 

At the end of this road, the church has wasted a good deal of time, money, energy and may have even lost some members. The original intent was to save the congregation some money by not hiring one of the “expensive” integrators. But all they did was waste money and time. 

Doing it Once is Always Less Expensive

This is my rule; do it once, do it right. Spending money twice for a given system will always be more expensive than spending it once. This is just math. If you call me for a new PA and I tell you it will cost $50,000, then you decide to try to do it yourself with a $20,000 PA that we end up taking down in 2 years because it didn’t work, how much do you spend for the $50,000 PA? Hint, it’s more than $50,000. 

Here’s the bottom line: Get good advice. Take good advice.

Roland

Church Tech Budgets--End of Life

Not that end of life. Photo courtesy of Ken Mayer

Not that end of life. Photo courtesy of Ken Mayer

As we reach end of life, I think we’re reaching the end of this series. Again, I’m talking the lifespan of equipment, not tech directors. Last time, I made the distinction between capital expenses and budgeted expenses. One of the keys to staying on top of capital expenses is to have an end of life plan.

Every piece of equipment has a fixed lifespan; stuff just doesn’t last forever. That means that even the nice, shiny new equipment I’m putting in today will need to be replaced. And I’m not sure anyone ever considers that.

See, I think most churches look at A/V/L equipment as a one-time capital expense. They buy all the stuff they need once, and forget about it for a long, long time. At least until it breaks. At which point there is a sense of panic and urgency to get it fixed or replaced. 

When I was at Coast Hills, I decided fairly early on to run some end of life projections. The rationale was simple; I knew there was a lot of outdated gear to replace right now, but there was a significant amount of equipment that would needing replacement in about3-4 years. And when you start looking at the numbers, it wasn’t chump change. Take a look:

As you can see, we’re talking some serious dollars. Now, I’m just considering major systems; that is systems that have a price tag over $10,000. I figure the smaller stuff will just get rolled into the normal yearly operating budget. We will always have mics, DIs, single light fixtures and maybe even a video monitor or two to replace. But when it comes to the big stuff, we need to think that out in advance. And here’s why:

Over 10 years, the church needed to spend almost $300,000 to keep pace with their equipment’s end of life. Is that something that needs to be planned for? I think so.

Defining End of Life

This big can be tricky. We can’t clearly define “end of life.” Not all equipment will just drop dead at 10 years old. However, we do know that all electro-mechanical devices will begin failing at some point. We have to take some educated guesses as to when our systems will need replacing.

We also have to guess roughly how much it will cost (in today’s dollars, anyway), based on equipment I know that is roughly comparable today. Obviously, there are a ton of variables in this plan, but it’s a best guess, Mr. Sulu. 

It’s important to keep in mind that these are not budgets, they’re not completely spec’d out systems and you don’t want to be held to these numbers. Rather, it’s an estimate for planning purposes. And, you may be able to stretch some of the equipment life to even out the graph if yours looks like mine did.

Making a Plan

Once you map it out and see what your situation is, you have a basis for coming up with a plan. It’s very possible that to strictly follow an EOL plan, you would have to spend more money than the church has. So that means you have some decisions to make. You can stretch the life of the gear, but you need to know—as does leadership—that you’re running on borrowed time. You can also change the way you do services. If you have traditionally relied on a lot of moving light effects during your service, and your moving lights are beginning to fail, you either need to plan to replace them soon, or go for a different look. 

These are conversations you can have with leadership once you’re armed with information and facts. The beauty of this process is that it takes all the emotion out of it. And, you don’t look like a child constantly asking for new toys. When you present the information this way, your stock goes way up and the conversations tend to be much more civilized and productive. 

It also removes the burden from you as things start to fail. When you clearly present the problem and give leadership the responsibility of figuring out how and what to pay for, you won’t be held accountable if things start breaking. You’ve done your job—pointing out the reality of the situation, and they have to decide how to allocate funds. If you go passive-aggressive and just wait for it to break, you’ll look incompetent. Always be proactive about this. 

Well, I’m not sure this was the exhaustive, definitive guide for tech budgeting, but hopefully it’s been enough to give you some ideas on how to get started. If you have further questions, or if there are others areas I need to develop, let me know in the comments. And now, it’s time for something completely different…

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Church Tech Budgets--Capital Expenses

Not that Capital. Photo courtesy of Ed Schipul

Not that Capital. Photo courtesy of Ed Schipul

Over the last week we’ve been talking budgeting. As I wrapped up last time, I realized I hadn’t made the distinction between equipment upgrades and capital expenditures. How we plan for those should be different because the way they get accounted for is different. Right off the bat, I want to tell you that I am not an accountant and I’m not giving accounting advice. Talk to your finance people about this to see how they want to do things. You score a lot of points when you engage them early and find out the best way to accomplish what you need to do. 

Capital vs. Budget

Typically, capital expenses are big ones. A capital expense cannot be written off in one year because it’s useful life is greater than one year. A CAPEX is something like a mixing console, dimmers, a PA or a projector or video wall. These items will show up on the balance sheet as assets and will be depreciated over the course of multiple years. 

Now, you might be wondering about things like microphones. Surely a mic has a useful life of more than a year, so why not make it a CAPEX? Well, it comes down to drawing a line somewhere. For smaller purchases, most accounting folks don’t want to go through the paperwork hassle for a $100 mic. Again, talk to your accounting department and find out how they want to handle larger purchases.

For example, we purchased some high-quality radios at Coast, and while the total bill was almost $800, each piece was under $250. So those were just expensed. However, we found a great deal on 13 Elation Impression 90s. I think we paid something like $700 each for them, but because bought 13 of them, it was a significant expense. Because they work together as a system, and the total was $9,100 or so, it was worth it capitalize. So now, there is a line item on the balance sheet that says, “13 Elation LED Lights” with a value next to it. That value goes down each year according to a schedule. 

Planning for Capital Expenses

Most churches—smart ones anyway—have a capital expense budget every year. That budget pays for things like parking lot repaving, air conditioner replacements, new carpeting, chairs and tables and things like that. The trick is to get leadership to think about large AVL purchases as capital expenses just as important as the parking lot. 

And think about it; if you are working in a production-heavy environment where the expectation is that the sound is high quality, the lighting looks good and people can see the lyrics and video on the screen, the equipment that it takes to make that happen is important. If it’s important, it deserves to be a capital expense. 

The upside of having things like a new mixing console added to the capital expense budget is that it doesn’t come out of your operating budget, and it’s approved differently. The downside is that it may take a few years to come up high enough on the priority list. Which is why planning is so important. 

Next time, I want to talk about end of life—not yours, but your equipment. We all know that equipment has a lifespan, and at some point will not be truly functional anymore. Planning for end of life for the gear is critical to maintaing high quality production systems, and I’m pretty sure no one else is going to do it for you. Stay tuned

Roland

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