How to charge client?
To all of you freelance/independent business video editors out there...
How often do you:
Use a contract?
request full or partial payment upfront?
or how else do you avoid getting stiffed?
We always use a contract/agreement that states everything we're doing and have the client initial each page and sign the last page. This way everyone is in agreement about what the project includes. If there's a change in the scope, we send the client a change order to sign.
Request for payment depends on what you feel comfortable with. Some people prefer to take payments at certain milestones. For example 30% at the start of the project, 30% after the shoot, 60% upon approval and before delivery.
Some people take 50% up front and 50% at the end. Always try and cover all of your expenses in the upfront deposit
My suggestion is to only deliver the finished product after you receive final payment. That's how you avoid getting "stiffed".
Greg Ball, President
Ball Media Innovations, Inc.
Be it a full-on contract or a deal memo, GET IT IN WRITING UP FRONT.
I recommend payment in thirds, and work doesn't start until the first third clears the bank. The first "third" needs to cover any of your out of pocket expenses and pay off all the stock fees, crew and rentals. Second "third" is due at the screening of the Director's cut. Third payment due on delivery of final, approved version.
The client does not get a clean copy without watermarks, until the last third payment clears. Under any circumstances.
You retain the project files, raw footage, and elements as proprietary, they only get the finished product. Get that initialed.
They get two edits: one after the first cut screening, and a second one after that, to cover any last, minor changes. Any more edits or changes are a new contract, separate. Edits to fix mistakes by the producer are free. Edits to fix mistakes by the client such as misspellings of titles or names given, are charged at hourly rate.
You are not liable for continued storage of the product or production assets in post unless agreed in writing and paid for.
Client is liable for continued rights payments on any stock media. A detailed report and schedule will be given.
There is a "kill fee" for terminating the project once begun. The Fee for a cancellation is zero if done at least three business days ahead of the start date. If cancelled within less than three business days, the first third down payment will be retained as the kill fee, to offset expenses and time already committed to the task.
Get in writing the name of the person at the client organization who ultimately will declare if the project is done and accepted. It should probably be the same name as the one that signs the checks.
If you hear this phrase:
"Cut us a deal on this first one, and we'll make it up on volume with lots more jobs later"
Smile, nod, stand up, and walk out of the room. Best move you can make.
If they tell you your rate is too high, ask them what they want cut from the production to make the budget figure they want. Tailor the production to the resources available, but NEVER drop your rate. If you drop your rate, for any one-time reason, you will be stuck with that lower rate forever, going forward in that market.
A common way for businesses to stiff people like us is to tell you to fill out purchase order paperwork that commits you to a payment term of 2/10/net 30, 60, or even 90 days from delivery and mandates a delivery therefore before you get a payment. They'll tell you they don't have a payment mechanism to pay you any other way and that's what they do for all vendors. That will be a lie. If the plumbing breaks on a Saturday they have a way to pay the plumber on site, I guarantee you. I refuse to deal with those purchase order thingies, but I will offer a 10 percent discount for fast payment within a week. Your best and only leverage with clients is when you have the final clean copy of what they need, and you don't hand that over without them handing you the check first.
I seldom use a contract because I am too small to sue and they are usually too large to sue. I have gone to Small Claims Court a few times and the first thing the judge says is, "Let's see your paperwork." It's more like a TV court show than a real courtroom, but it does have rule of law. What we consider to be a "contract" is laughable to real attorneys, they can see holes in our contracts you can drive a truck through, but in Small Claims the judge may smile upon you, but there are LIMITS. I use a layman's Letter of Agreement which spells out who is responsible for what and when and how much. It does get touchy when you insist they sign every damn tweak because I think it's tantamount to saying, "I don't trust you." I have had web designers do that to me and I don't care for it myself. It is more common when working for government or agency contracts because the bean counters in accounting won't pay for overages unless there's a paper trail of Requests/Approvals, but most companies I don't think it's necessary.
I have been ripped off a few times in my 38 years of doing this and invariably they can be attributed to miscommunications. I even had a 36 year old female client die without a will, so it went into probate and took forever for me to get .60¢ on the dollar. Bankruptcy Court too. Contracts are used to wipe up coffee spills there because first there's the IRS, then the Secured Creditors, then the *%#@! bankruptcy lawyers and they make sure there's nothing left after them!
If you do develop what you consider to be a contract, just for grins, walk into your local strip mall lawyer's office and ask (for free) what he or she would charge you to enforce it and you will quickly walk out and know what I mean. They will never be able to give you a final figure and will use the word "if" a lot, plus the phrase "On the other hand...". The costs to enforce your contract are so onerous, possibly way above the budget itself, that having a signed contract and not being able to use Small Claims makes it financially unviable or impossible to enforce.
The times I produced really large jobs, in the tens of thousands and had a real contact written by a pro, the client's attorney or in-house counsel "marked it up" because the laymen clients I was dealing with naturally don't want to sign such legalese, and then there was a lot of back-and-forth and the changes are always made in the large company's favor. When dealing with large Fortune 100s they will have a contract so onerous I have to close my eyes and sign it. Black ink of course...
So in sum, get some money upfront, half is best for me, and beware that most clients don't want to paid until the job is "finished", and the definition of that word is really squishy. You can watermark the corner and remove it when fully paid. But...your gut instinct as to whether they are honest is most important, since using the legal system for paltry amounts isn't viable. Walk away if they smell fishy. That's what I do. The problem with doing post as a living is that most of the budget has already been blown through by the time they get to editing.
State Dollar Limit
$10,000, except that a plaintiff may not file a claim over $2,500 more than twice a year. Limit for local public entity or for businesses is $5,000. $6,500 is the limit in suits by an individual against a guarantor that charges for its guarantor or surety services.
$5,000 (except in landlord-tenant security deposit claims).
District of Columbia
$15,000 (no limit in eviction cases).
$5,000; no limit in landlord-tenant residential security deposit cases. For return of leased or rented personal property, the property must not be worth more than $5,000.
$6,000 ($8,000 in Marion County)
$5,000 (city court); $5,000 (justice of the peace, but no limit on eviction cases).
$7,000; no limit for property damage caused by motor vehicle.
$15,000 ($4,000 for claims involving consumer credit transactions, $15,000 for claims involving money or personal property subject to criminal forfeiture)
$3,600 from July 1, 2015 through June 30, 2020 (adjusted every five years based on the Consumer Price Index)
$3,000 ($5,000 for claims relating to security deposits); certain landlord-tenant suits cannot be brought
$5,000 ($3,000 in town and village courts)
$25,000; no limit in eviction suits or suits to recover personal property
$10,000; no limit in eviction suits
Ned, I don't use a contract so I can sue someone or prevent my company from being sued. I provide an agreement so the client and I have a complete understanding of what the project entails.
My agreement was created by an attorney so it wouldn't be "laughable". I have however had the occasional client's law department, make changes in the agreement and then I've either compromised kept it the same.
I've also had the occasional client send me THEIR legal agreement to sign. I never do that. My goal is to do the work to the best of my ability, and do what I say I'll do. I always consider my clients, but I need to protect my business first.
I don't think too many clients go to a car dealership to purchase a car while bringing in their own contract for the dealer to sign. I feel that our business is the same, the client hires us, we do the work, and we expect to be paid. I feel that an agreement just lets all parties know and agree to what's being provided. Change orders are only used with significant changes to the scope of work. I don't have the clients sign for every tweak. Tweaks are usually discussed in emails.
Greg Ball, President
Ball Media Innovations, Inc.
Perhaps I should do it more your way. I always assumed the purpose of the contract was to collect in a court of law? For over ten years, the client which sent my two kids through college (5 years each of course) was the US largest bank, and their contract, which could not be abridged (take it to leave it), was the size of a short film's script. If you dropped it on a desk it would make a loud thud. Same with a major university I produced for. I closed my eyes and signed figuring if I was every sued to the hilt, I'd declare bankruptcy because Lord knows I couldn't pay to defend myself. Too bad a Public Defender can't be assigned for civil court!
Happy New Years to you and everyone here. May 2017 be healthy and prosperous (because 2016 wasn't so much).
Wish I could credit the original source, but he said:
"With the right people, a contract is not necessary. With the wrong people, a contract is never enough."
Still, anything on paper beats nothing at all on paper. The contract is not just about expectations but also about what happens if things go wrong some how.
I had grown up with the myth that golfer Arnold Palmer never had a contract, he only did handshakes but boy I was wrong. I just read about his famous "handshakes only" myth, PR hooey:
Arnie was about to agree to his first endorsement and a young lawyer he met said he would draw up a contract:
I said, ‘No you won't.' He said, ‘I'm a lawyer, that's what I do. My business is doing contracts.' I said, ‘I don't really care what you do as a lawyer. What you're going to do is you're going to tell me what you're going to do for me, and I'll tell you what I'm going to do for you, and then we'll shake hands and go ahead and do what we said.'"
Wow...so until today I always believed this BS about him doing handshakes which molded my anti-contract attitude. Maybe it's a Midwest thing? If you can't trust someone, don't do business with him. Check this out:
Happy New Year!