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Finding a Balance

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Mike Cohen
Finding a Balance
on May 7, 2009 at 1:17:29 am

We have all had clients who do one of the following things:

1. "I agree to your price. Let me know when it is finished."...time passes..."Great, just what I wanted with these few changes."

or

2. "I need a GANTT chart listing every deliverable, exact time spent, a credit for unused time vs estimated hours, daily conference calls, clarification on "mileage" (exactly how many miles is it from your office to mine?), and "I know we agreed to X, but we decided we should be getting Y and Z, that's how projects like this are done", and finally "I know we agreed to your price, but we feel it is too high. Now that you have done most of the work, we would like a refund. A Grinder.

Then there are clients somewhere in between the two extremes - just right.

So what is the "just right" happy medium between 1 and 2? How much is too much and how little is too little as far as client oversight. Is a little micromanagement a sign of a client who is quality conscious, or is any micromanagement too much?

I think we learn the nuances of clients and find that the happy medium is either there or it isn't.

Your thoughts?

Mike


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Craig Seeman
Re: Finding a Balance
on May 7, 2009 at 4:56:57 am

[Mike Cohen] "1. "I agree to your price. Let me know when it is finished."...time passes..."Great, just what I wanted with these few changes." "

Never happens to me. When I cost out the job I include changes. If the changes go over budgeted time they pay.


[Mike Cohen] "2. "I need a GANTT chart listing every deliverable, exact time spent, a credit for unused time vs estimated hours, daily conference calls, clarification on "mileage" (exactly how many miles is it from your office to mine?), and "I know we agreed to X, but we decided we should be getting Y and Z, that's how projects like this are done", and finally "I know we agreed to your price, but we feel it is too high. Now that you have done most of the work, we would like a refund. A Grinder."

Sorry client doesn't get to change the rules. I include shooting, post production, mastering/dubs. That's what I estimate when I show them the projected price and that's what the get as a breakdown.

BTW I get paid in three parts on final payment is on rough cut or, in some rare cases, when I hand over the final. If they want to know the hours they can come by and supervise the whole thing and if that slows down the process the bill grows.

I've worked on staff on 6 companies that went under and I will never make the mistakes they made.

The ONLY clients who every get "invoiced" are ones with PROVEN credit history with me. It takes only a small percentage of grinders to tank an entire business. It's like surviving 95% of your car crashes. I've seen companies taken down by a small number of clients.



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william primrose
Re: Finding a Balance
on May 12, 2009 at 12:11:21 pm

On any project over 5K it's 50% 7 days ahead of production, 30% on the first day, and 20% after edit. No exceptions. In this day and age of banking tech. there are no excuses for not paying. banks are open 7 days a week 24 hours a day. If they can't meet any of the terms, then there is no production. Not trying to be cruel or unjust, there is a lot of expense in producing any project, and other people rely on being paid, so I feel it's fair to set these terms as it fits our company.
aside from the creative end of things, there's the business end, and this is a business.

We also offer our own interest free credit to clients, up to 8K when they use our package truck. We use our employes for these projects. These clients are under contract, and we to date have never had any repayment issues. We have saved then a ton of money, time, and hassles dealing with banks, or other lending companies. It is used a lot by companies making music videos. with the average production costing 5K, and with terms of 12 months to 48 months. It also frees up their creative abilities as they don't need to run around picking up gear or cameras for a day or two, a 3 minute phone call, and they are all set to go. In Canada there is funding available for music videos and they use our credit as a means of getting the project done until they get their funding cheque, then they pay us.

If anyone wants a cheaper price, I remove services in accordance with how much they no longer want to spend.
Our market is low budget productions, and those starting out that need gear that they normally can't afford to pay for rental all upfront, even though, most do.


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walter biscardi
Re: Finding a Balance
on May 7, 2009 at 12:17:17 pm

I would never agree to terms with Client #2.

All of my clients get an invoice showing the breakdown of each area of production. But never the breakdown of "Estimated Hours" vs. "Actual Hours" so they can have a "refund" on time not used. All Clients are billed for actual time. If that's less than the estimate, they're really happy. If it's more than the estimate, they were already notified and agreed in writing (usually email) to the extra amount.

The happiest client is the one who is not surprised at the end of the project. It's my job to keep surprises to an absolute minimum.

Walter Biscardi, Jr.
Biscardi Creative Media
HD and SD Production for Broadcast and Independent Productions.

Read my Blog!

STOP STARING AND START GRADING WITH APPLE COLOR Apple Color Training DVD available now!


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Karla Patterson
Re: Finding a Balance
on May 7, 2009 at 8:38:50 pm

Every project is fluid and can expand or contract in size. I include a certain number of hours in my estimate, and bill on actual hours.

It is also my experience that new ideas come during the work. These ideas are often so good that the customer does not want to trash them. In those cases, it is a matter of re-allocating production time or adding to the cost.

As a producer, I think that it is important to "manage" the project with the client. I include the name of the person with final approval in my service agreements. This eliminates many of the problems that you listed in #2.

Have a wonderful day!

Well behaved women rarely make history.
Karla Patterson
Video 7 Production Co., Inc.
http://www.Video7Pro.com


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grinner hester
Re: Finding a Balance
on May 7, 2009 at 3:07:56 pm

I am seeing the best clients today can become grinders in this economy. This is new.
It use to be you could see a grinder coming faaar aw. It was as easy as passing. Today, the folks I respect the most and have billed hundreds of thousands of dollars through are stabbing me after the fact. I have one client who has pulled 4k off of my families dinner table in the last 2 months alone... all after the invoice was sent. We agreed on a price, I did much more work than agreed to then when he gets yelled at by his boss over budget, he wines to me promising we'll make it up on the nexct one. What to do? Freakin see a new trend, learn and explain I have to work for grown ups the next time he calls. I made the MISTAKE of agreeing to alter invoices for him. Just don't do that. If you do, you are teaching them you will do it again and then when you don't they get mad and go elsewhere. Stand your ground and they'll respect you.
To me, there is no medium ground. Folks can either afford your services or they cannot. It doesn't have to be more confusing than that.



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Craig Seeman
Re: Finding a Balance
on May 7, 2009 at 4:29:46 pm

My clients are certainly much smaller than yours but you do make similar points to me.

You business' Prime Directive is to stay in business otherwise you can provide no service to anyone.

Even if just a very small percentage of clients do this it can take your business under. All it takes is the "bad billing" to be enough to pull you below your "margin." You can have 95% good clients and you can still but your business in jeopardy . . . especially if it happens to be a big client.

My opinion is that especially in this economy, you have to think "retail." One pays when one walks with any part of the product. Like retail, if they're "unhappy" you can do them "something" (a fix, a change, and extra, whatever) but the person who has the money has control.




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Mike Cohen
Re: Finding a Balance
on May 7, 2009 at 5:35:47 pm

Great responses, especially that good clients can turn sour - hypothetically speaking of course.

As far as people asking for a refund or change to the invoice - this is especially difficult if the 1/2 down happened 6 months ago - that money, while funding the project, is long gone. Client money does not go into an escrow account waiting to be spent. It's like the scene from It's a Wonderful Life where George Bailey says, "Your money's not in the bank. Why, Tom's money is in Bill's house. And Bill's money is in Steve's house." I paraphrase.

There have been lots and lots of threads about grinders. I was not looking for more of that. I am interested in hearing opinions on what the right amount of client involvement is. At what point do you feel like you have a baby sitter?



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Craig Seeman
Re: Finding a Balance
on May 7, 2009 at 6:01:03 pm

[Mike Cohen] "I am interested in hearing opinions on what the right amount of client involvement is. At what point do you feel like you have a baby sitter? "

I always discuss that upfront with the client. Regarding 1, That's why I include one round of changes as part of the contract. Actually if no changes happen (extremely rare) you can cut the final post bill if you want and they feel they're getting something.

I certainly allow baby sitting. Some clients need that. They prefer that. They can get the service they want (as long as they understand they're paying for it). They can supervise any part or all of it. I do make it clear that it might slow down the process (increase the bill) and it means there's a big more rigidity to the schedule (since I can work crazy hours as I see fit otherwise).

Sometimes you'll find after the start of a baby sit, clients will understand that you can deliver what they want, find that baby sitting is eating up time they could be doing other work, and they'll trust you to go the rest of the way on your own at some point.

If there's a real concern for padding the bill on their part the whole job can be supervised and they pay hourly but they must pay at the end of each day. They get the assurance they get what they paid for. I get the peace of mind of not hearing, "but how could it have taken that long?" or denial, "I don't remember it was that long and I sat there."

I give the client the option to do what they feel comfortable with and even the option to change modes. I discuss this upfront though.




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Gav Bott
Re: Finding a Balance
on May 8, 2009 at 12:49:00 am

I have been heavily influenced by what I’ve read on the COW – grinders articles etc. and it’s completely changed the way I present prospective work to clients

I send a schedule of work with the costs/contract/invoice – it lays out pretty clearly what each part should do and when.

“We will be rough cutting these days – if you want to make changes you better get them in before this day here…..Picture lock down here……….2nd Payment here.”

I find it limits overflow on edit time, lets them know what they have agreed to pay for, and what they need to do to keep things on track for delivery.

Then we both sign it – of course it all moves around in the face of the realities of the project, and it’s not legally binding or anything - but it does give both of us something to return to and work out what actually was expected and paid for at the outset when the inevitable craziness occurs.

Doesn’t take me long to knock out each time – and forces me to think through the project properly rather than sticking my finger in the air and doing a “ah…about this much, if it takes this long…..”.

Thanks

Gav


The Brit in Brisbane
The Pomme in Production - Brisbane Australia.


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Karla Patterson
Re: Finding a Balance
on May 8, 2009 at 4:07:51 pm

Hi Gav,
I love your suggestions. Many times I've done this and the project does run much more smoothly.

Although..... I love the image of you holding your finger up in the air.... ha ha

Have a wonderful day!


Well behaved women rarely make history.
Karla Patterson
Video 7 Production Co., Inc.
http://www.Video7Pro.com


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