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Production charges

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Nicholas JohnsonProduction charges
by on Apr 11, 2008 at 4:49:46 am

Hi there,

I'm news to the whole contract production arena and have a company inquiry about my video services for a short promo video -

any basic pay rates or breakdowns any one can help me out with?

Shooter/day? Camera/day? editting? etc

Any sort of suggestions or breakdowns to point me in the right direction would be great!



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Timothy J. AllenRe: Production charges
by on Apr 14, 2008 at 3:38:45 am

There are generally two schools of thought on this.

Some production companies list many line items and some list few. If you list a lot of line items, you run a risk of clients "nickel and diming" you to get a better rate by second guessing your line item charges. It also can make it easier for a client to figure out your profit margin. For that and other reasons, some production companies tend to be vague about specific breakdown and go with a "blanket" rate.

On the other hand, with blanket rates, you may not have enough details in the contract to spell out clear responsibilities and deliverables. (And that is a good portion of what a contract is for.)

While I'm used to preparing a specific breakdown of services, I generally keep those numbers to myself and give the client a "bottom line" number. If they want specifics, I can easily break it down a bit further (since I already did that homework when preparing the budget), but I tend to start with the "big picture" first. Most of my clients like to keep billing as simple as possible.

It's a very good question and I'd like to hear other opinions on this.

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Mark SuszkoRe: Production charges
by on Apr 15, 2008 at 7:34:24 pm

This is a constant drumbeat you'll hear from many: know your rates before you start negotiating. Really know all your expenses, including insurance, retirement, health, utilities, space rental, equipment maintenance and replacement... etc. Then understand just how much time you want to spend, divide the money into the time to get the break-even point, below which, you're losing money, then add on your profit margin, and re-compute to get your day rate and hourly rate.

With that info in your pocket, most jobs boil down to your best estimate of the time the particular task will require to accomplish, times your rate, plus any outstanding expenses like tape stock or rentals, etc. There's a little bit more involved, but that's the basics.

Oh, and, my personal rule is, never give a flat rate for a job, even a supposedly simple one; always bill by the hour or day. If you make a mistake or hit something unexpected with a flat fee, you stand to lose money even if it's not your fault. By billing for time and materials, if the project takes a sudden turn, you're not paying out of your pocket.

Bill in thirds: one third up front to begin the project and get anything you need to do the work, one third at the mid-point, where your expenses are all covered in case the plug gets pulled. This is where the client reviews the master and asks for final changes or corrections. Final third is billed upon delivery of the master, COD, and here is where your main profit comes in. Actually, you could be getting some profit from the other two payments as well, but my rule is to ALWAYS pay off my suppliers and people working for me, even before I get paid. This keeps up your good name as someone people can trust. I'd rather have that good rep than see a big profit on a job and have people hate me behind my back because they didn't get paid on time or at all. They wind up "unavailable" the next time you need their help on a job. Conversely, should you get into some kind of jam, like the job came up too close to the weekend and there's no time to arrange the payments in advance, they're likely to give you a little slack on their billing because they know you're good for it.

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Max KaiserRe: Production charges
by on Apr 15, 2008 at 9:51:19 pm

We bill line items. It takes awhile, but once it's all entered in Quickbooks, you can put an estimate together fairly quickly. Also, it allows the client to see very transparently where their money is going. If it is not going through an agency, we will charge a 5% admin fee for all the rounding up people etc. that happens on a job.

I'm always on the fence about whether this is better than the "value" type billing mentioned above. They each have their pros and cons, for sure. One thing, though, I think it is easier to start adding charges when projects start taking unexpected twists when all of the line items have been clearly laid out for both parties.

Just be sure to build into those line item costs enough for all of your overhead. The suggestion that you add up all of your expenses first and work backwards to determine your rates is a really good one. After being in business for about a year and half I finally did this and realized why I was so busy, but so poor. I was able to adjust my rates to pay all of my expenses better and have been much happier for it ever since.

Good luck, but know that billing is always a bit of an art that you will be fiddling with forever - just try not to fiddle with the prices on the same job!


Max Kaiser
Hand Crank Films

Various Intel, and Power PC
OS 10.4

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Bill DavisRe: Production charges
by on Apr 21, 2008 at 6:55:37 pm

Nothing wrong with these "traditional" ways of billing.

Once upon a time I did them all as well.

Today I don't. I have 3 forms in Filemaker. A Production Estimate. A Quote. and an Invoice.

The Production estimate calculates my costs & margins. It's a semi-traditional above-the-line/below-the-line format. Above are all administrative expenses that are fixed no matter how many assets or how much time anything takes.
Below the line are incremental charges - how many cameras, how much crew, how many hours estimated for editing, etc, etc.

But it's the very first line in my "Above-the-line" costs that makes my life easier these days.

That's my Production Fee. It typically hovers between 20-50% of the entire job cost. (a larger percentage on smaller budgets) I tell clients - right up front - that that's the fee they're paying me to make their video. It covers my experience, judgment and knowledge. If it's a $60k video, that production fee might be $20k of it.

Most of my clients are long time accounts, so few of them ask to see the production estimates any more - so I seldom send out Estimates, but if they ask for one, I'm happy to provide it. They give me a projected budget - if I agree, that's what I bill.

The cost number this form generates gets put on a QUOTE that I usually send out. The Quote figure becomes the invoice with no need for line item listings. Again, if someone wants the numbers, the Production Estimate is in the system waiting to email out.

The funny thing is that in the past 15 years, I've NEVER had a client argue that Above the Line PRODUCTION FEE. Not Once. If the budget it tight, they'll work on the below the line stuff - but they seem to think that hacking at the Production fee is equivalent to saying that I'm not worth that money - so as I said, I've never had a single client mention it as a negotiating point.

This approach reflects that the difference between a typical video and an excellent one isn't the time, materials, or even the crew you use, it's the knowledge and understanding YOU bring to the process.

I think that's something the client should pay for. And the client's I've built up over the years appear to agree.


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