My partner and I have completed a dozen or so promotional/industrial videos for various companies. One of our clients is now with a company that's launching a new product into the marketplace. They are wanting to do a national spot and have retained the services of one of the largest PR firms in the country. Due to our relationship, he has asked us to write/shoot/edit the spot.
I have no idea how to price this. I know what it will cost, but being a national spot should rates be different? As an actor, I get residuals for national spots (union and even non union). Do production companies get residuals? I'm hoping to do this as a non-union shoot. Any advice or pointers would be greatly appreciated.
[GLAW] "I have no idea how to price this. I"
You price it fairly for what needs to be done. Ensure that you have enough crew and equipment to perform the tasks and away you go. It's the PR firms and Ad Agencies who cause commercials to be so expensive. If you hire one of them directly, they simply mark up the Production costs by 100 - 250%.
But if the company is hiring you directly and you hire the PR Firm, they there's no ridiculous markup. We did a national spec spot for Heinz a few months ago and total cost for the cast and crew for a one day shoot was approx. $40,000. So that's what it would have cost the client.
No, I've never heard of production companies getting residuals.
Walter Biscardi, Jr.
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No, I've never heard of a productions company getting any kind of residuals.
We do a lot of local commercial stuff, as well and regional and national stuff... so there is a very wide range of budgetary concerns there. However, going through their productions line-item-by-line-item we charge the biggest clients exactly the same as we charge the mom-and-pop clients (that is, the hourly rate for editing is the same, the shoot rates are the same, etc.)...
With a big national client you often have the luxury of much bigger bugets than with a small one. You can hire better talent. You can use a bigger/better crew. You can book a longer edit and do it the way you'd like rather than rushing a job where a client is pinching pennies. If you normally do more than one job yourself (for example, I am usually both director and DP), you can hire one of them out (I will hire the best DP that I can find on a big project where my hands and brain are full with other things). You can simply spend a lot more.
Now, I'm not saying that throwing money at a production makes it good or better (one of our favorite productions to this day is a PSA we did a long time ago, for free, and we spent NO money on it), but it can make life a lot easier. And of course, since one would assume you have a profit margin on each of the things that you charge for, the more the total production costs then the more profit you make. Well, in a perfect world it does.
Fantastic Plastic Entertainment, Inc.
Your situation is very similar to what happened to me while I was employed at a small post house. About 12 years ago, our client wanted to produce two national TV spots and priced us against their ad agency. We had never done national spots. We came in at half the ad agency price (shot on 16mm film and transferred to Betacam SP video for post).
Once we go the job(s) my boss and I decided to hire a colleague director who had a lot of experience producing national film spots for big companies and agencies. His cost was a small amount compared to the overall total budget. Also, because we were newbies to film and national ads, we learned a tremendous amount about the whole process and what it took to create a "slick" client experience. Basically, I felt that I was getting paid to learn.
A few things I took away from the experience:
1) If you're unfamiliar with any of the processes, budget for and hire people who are better than you are (i.e., story board artists, audio sweetening, etc.). You?ll learn a lot and you may even get some business in return from them. Some people won't do business with other people unless they are the vendor first.
2) Never skimp on crew meals during shoots. The crew works their tails off and expects good food, the client will bring their bosses and entourage, and the PR/ad agency will probably insist on being at the shoots so that they can "police the brand." Have it catered and catered well with good choices.
3) Try not to use a courier to ship film or any other camera originals to the transfer house. Use a courier service if you can. If it gets lost, the whole thing has to be re-shot. It cost us about $200 to courier to Chicago. A tiny price in the overall budget.
As far as unions... you don't have to hire any union people if you don't want to. We hired all of our crew, actors, etc. as "work for hire" buyouts. No residuals whatsoever. Even today, 15 years into the business, I never hire talent in which my clients have to pay residuals.
Just my thoughts. You should let us know how it all turns out and post a link to the finished product.
Bennett Marketing & Media Production, LLC - http://www.bmmp.com
Thank you so much for the responses! They are extremely helpful. I'll send a link when we are all set up. I work with a couple of companies: http://www.gunslingerproductions.com and http://www.itikproductions.com
As far as I'm concerned residuals have no place at all in local/national commercial or corporate production. My understanding is that residuals are typically paid when a film is released outside of the originally intended market - the US theater market - to other profit centers such as DVD, foreign markets etc. Since a commercial will most likely never be sent out on DVDs or any other secondary market (and definitely not as the product consumers are actually paying for) there is no point in paying a residual.
I guess what my sleep-deprived brain is trying to say is that commercials are not profit-earning entities unto themselves, and never enter secondary markets, so there would be no "residual" profit owed to the talent.
[beenyweenies] "commercials are not profit-earning entities unto themselves, and never enter secondary markets, so there would be no "residual" profit owed to the talent."
Sorry, but you're using logic related to motion pictures, and its not proper logic where commercials are concerned. Low-paid actors working in television commercials often earn four times as much from residuals as they do from their initial fees, and for a reason.
A hot commercial runs on both cable and network TV, saturating the country with its message, while an ineffective commercial is taken off the air very quickly, before you know it. An effective commercial therefore sells product (which is, something both advertisers and corporations can track in terms of daily sales), has a very long shelf life, and only disappears when it?s impact wanes.
So, an actor in a commercial that runs 5000 or 6000 times deserves to make more than an actor in a commercial that runs 100 times. Don't you think?
David Roth Weiss
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[David Roth Weiss] "an actor in a commercial that runs 5000 or 6000 times deserves to make more than an actor in a commercial that runs 100 times"
You won't remember them now, but you'd definitely have known the spots my aunt appeared in in the 70s. She did just fine from other acting gigs, but the residuals were where the real money was. Pretty serious money in fact.
I have no idea how this got set up or what the terms were -- maybe handled through SAG?
In any case, something to account for, even apart from the guild.
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Good point, and honestly I haven't dealt with the business side of national spots much. I guess I shouldn't have opened my big mouth, should I? ;)