Published 18 June 2018.
Hi I’m James, cellist and co-founder of Encore.
I wanted to let you know that as of today, the Encore Service fee – the commission included in your quotes – will be changing from 15% to 20%.
Here are the three key details you need to know:
- We’re making this change because we realised that our commission of 15% is no longer sustainable
- 20% is still a lot lower than the big agencies, who charge 30% on average
- With this small increase, we can invest more into the future of the Encore platform and win you more bookings
We’ve put a lot of thought into this change, so I’d be really grateful if you read this update until the end to understand where we’re coming from.
We founded Encore 4 years ago because we believe musicians deserve a better bookings platform that guarantees fair and prompt payment.
Many of my friends were beginning careers as pro musicians, and they’d often tell me horror stories about payment. Playing gigs and never getting paid. Spending weeks chasing clients for late fees. Needing to wait months for agencies to finally pay them.
The fact that musicians still spend so much time chasing money in the 21st century is frankly shameful.
So we began building a new payment system which provides musicians with secure deposits and guaranteed automatic payments after their gigs.
Encore Pay – the first automatic musician payment system.
We also introduced minimum rates to ensure musicians were paid fairly, and to make it impossible for amateur musicians to undercut with low rates.
As a result of these minimum rates, I’m proud to say that the average fee paid to musicians on Encore has increased by 45% since 2016.
Our business model
To build this fairer world for musicians, we had to find a fair business model.
We did our research and considered various ways of building our business. We considered charging a subscription for Encore membership, but felt this was unfair as we’d be asking musicians to take a risk and pay before they had been booked for any gigs.
The solution for us was a simple commission model.
Working on commission means that we only make money when our musicians make money, so our focus from day one has been to win more bookings for our members.
We chose 15% as it was lower than all of the big agencies we had researched, and we always communicate this transparently to our musicians so that you know how much the client is paying and how much we’re making.
Comparing Encore to other booking platforms and agencies
Here’s a graph of the commission taken by the top 8 online booking services. Many of them are quite secretive about their commission, and we could only put this graph together by contacting them directly or speaking to musicians who work with them.
You can see that most charge between 20-30% (some hide the fact that VAT is added on top), and some charge up to 50% commission.
You’ll note that our new 20% is much lower than the average, which is 30%.
We initially thought we could build a better platform while charging a lot less than our competition. We now realise that this decision was holding us back and preventing us from competing.
After 3 years of managing bookings, and looking at closely how other platforms are operating, we’ve realised that charging 15% is simply not sustainable for the future of the Encore platform.
Breaking down the Service Fee
One of the reasons is that we don’t even receive all of the 15%. In fact, we only receive two-thirds of it.
Unlike other platforms, we include VAT within your Service Fee. We hate when there are surprise VAT charges when we buy things online, so we never add it on top. This means we lose 16% of our revenue.
To guarantee your payments, we use a payments provider called Stripe. Stripe handle the logistics of getting money from the customer’s bank account to your bank account, as well as running advanced fraud checks against our customers. Thanks to Stripe, we’ve never had a fraudulent payment on Encore. They charge a 1.9% fee (based on the total price) for this service.
That means that, after VAT and Stripe fees, we only receive 10.6% commission.
We’ve realised that choosing a low commission of 15% was a mistake, and so from today onwards, the Encore Service fee will be 20% of your quote which is still a lower all-in commission than anyone else offering the same level of service.
The good news is that if you’re VAT registered, you can reclaim the tax, which means the commission you pay is only 16.6%.
You can continue to earn the same fees as you did before. You have full control of your pricing, so we recommend you raise your prices slightly to account for the new fee.
How the Service Fee is used
Since we started Encore, we’ve always been fully transparent about how we operate, so here’s a breakdown of where your Service fee goes.
- Breakdown of costs pie chart
- Marketing costs
- Customer Support and Sales
- Musician Support
- Artist development (forming partnerships, hosting events, writing guides and videos)
- Stripe fees and VAT
- Server hosting
- Small London office
- Team salaries
- Breakdown of costs pie chart
Our team work hard behind the scenes, and that work is often invisible to musicians. Every day, we’re calling customers and winning bookings for our musicians, improving the technical side of the platform, improving our marketing, and providing support to musicians when they have problems.
Our goal is to build a platform and a business that grows and supports musicians for decades to come. This change in commission means we can acquire more customers, compete with bigger agencies, and ultimately win you more bookings.
If you have questions or would like to chat about this with us in-person, we’re hosting an open office at our London HQ on Friday the 22nd of June. Alternatively, you can send us an email at [email protected]
I look forward to meeting some of you then.
Note: this change only applies to quotes made before 3pm Tuesday 19th June. Any quotes you have sent before that time will be subject to a commission of 15%.