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Rates: Published v. Reality

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larry baker
Rates: Published v. Reality
on Oct 20, 2009 at 2:14:28 pm

My company has a problem. We have our "rates" that we publish and use on invoices, but then we have our "real rate" which is less than half of our published rates. Maybe our time estimates are way off or we are afraid to scare clients away with the true cost of production. We tend to break even on most projects and get a few that we make money on, but I think our margins should be higher.

I know it depends on the market, we are in mid-size, mid-west market.

What are some rate structures that are being used out there?

If we went by our published rates and the time that it actually took to produce a 15 minute training video would cost $30,000, but we end up charging a third of that. We feel that our market would not accept $30,000. Is that an accurate price or are we right to do it for less?

I hope this post makes sense. If you need clarification of anything, let me know. Thanks.

Larry


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Mark Suszko
Re: Rates: Published v. Reality
on Oct 20, 2009 at 3:40:48 pm

$30k for a 15 minute training video on how to use a DaVinci surgical robot to remove a lethal brain tumor? Sounds fair. $30k for a lecture and powerpoint slides on how to hook up a network printer or fill out some bogus paperwork, not so much. But you don't say how much goes into the project. For $30k I would expect very high-end work and frills like helicopter aerials, practical special effects, etc. Perhaps the real question is about how you figure your expenses and procedures and how you derive a rate off of that.


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Todd Terry
Re: Rates: Published v. Reality
on Oct 20, 2009 at 4:08:40 pm

My first question is why is there such a disparity in the "real" rates vs. the "published" rates?

Why are you actually working for a rate that is less than the rate you say you will work for?

It would seem to me that is either scaring off potential clients who think they can't afford you when they actually can, or forcing you to work cheaper than you want.


T2

__________________________________
Todd Terry
Creative Director
Fantastic Plastic Entertainment, Inc.
fantasticplastic.com






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walter biscardi
Re: Rates: Published v. Reality
on Oct 20, 2009 at 4:09:30 pm

[larry baker] "If we went by our published rates and the time that it actually took to produce a 15 minute training video would cost $30,000, but we end up charging a third of that. We feel that our market would not accept $30,000. Is that an accurate price or are we right to do it for less? "

I have no idea what your market is or what's fair for there. We've done training products for $10k and as high as $50k. Each project is unique and just the pre-production alone can run $10,000 or more depending on how long it takes.

You need to charge what you feel is fair for your time, your market. You live / work there so you know your market better than we do. I charge a much lower rate than many of the facilities who do equal quality work, but we're booked solid while many of them are looking for gigs. And once you charge a high rate to one client, it's difficult to charge lower rates for anyone else because everybody in Atlanta knows everybody. Very easy to find out what various folks are getting charged. So I just keep my rates fair from the get to with the feeling that I'd rather do a larger volume than charge higher fees.

I've also all but eliminated all of my corporate clients. I love them all, but their budgets are small and the time it takes to turn around a project ends up costing me more money than building what we have established the past four years. A very high end post facility for broadcast and feature film. Those budgets have remained steady or increased.

Oh and I don't publish any rates. Period. I do have a rate sheet that I keep in-house.



Walter Biscardi, Jr.
Editor, Colorist, Director, Writer, Consultant, Author.
HD Post and Production
Biscardi Creative Media

"Foul Water, Fiery Serpent" now in Post.

Creative Cow Forum Host:
Apple Final Cut Pro, Apple Motion, Apple Color, AJA Kona, Business & Marketing, Maxx Digital.

Blog!

Twitter!


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larry baker
Re: Rates: Published v. Reality
on Oct 20, 2009 at 4:37:05 pm

Thanks, Walter. It means a lot to get your response. I like what you are saying. I guess maybe we are having more of an issue with estimating, then actual rates.

Our estimated time in post-production tends to be about half of what the post actually takes to do. So, when the project is done, there' a thin margin, which is better than no margin. We look at the estimate and realize we estimated 40 hours of post but it took 80. Then we do some math and get a number that we don't feel confident the market/client could handle had we estimated 80

This doesn't happen on every project. Just more projects than I would like.

I will say that a lot of these projects have little to no pre-production. Which is probably part of the problem.

How do you get a client to put on the brakes and allow for more pre-production? They always seem like the video needed to be done two months ago.

Thanks for the response so far. Any further advice would be greatly appreciated.



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grinner hester
Re: Rates: Published v. Reality
on Oct 21, 2009 at 12:41:23 am

Client sin a hirry are your buddies. It allows you to stick to your hourly rates and bill multiple rooms to meet their deadline. It also keeps revision time happy time.
If needing to bid a flat fee for an entire project, just multiply the hours it should take by your hourly rate and fluff it for unexpected whatevers. I'm not a bif fan of pre production. The projectsI do have much of a documentary vibe so I'd rather just make thevideo than talk about making it but if pre pro is required, just make room for that in your bid.



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Mike Cohen
Re: Rates: Published v. Reality
on Oct 20, 2009 at 4:57:44 pm

This comes down to, "know what it costs you to do what you do, and charge enough that you make a good living, can pay your bills and have some left over for profit or to reinvest in your business, and charge your client a fair rate. A fair rate takes care of you, and takes care of the client. You have to find a balance." If ever you doubt that your rate is not taking care of either yourself or your client, or both, then you need to re-evaluate, which is what your post seems to be about.

In general, you don't want to publish rates, unless you only charge by the hour, but even then maybe not. Or if you do work for hire 1 day video shoots. But even then, it depends upon the shoot. Would you charge the same day rate for documenting a conference vs a full day film style shoot with many setups? Maybe, maybe not. Again, it comes down to your business model.

Here's a good exercise. Create an Excel spreadsheet and calculate your actual costs for each type of service you offer, add a markup to get the actual rate you should charge (remember your overhead and profit, not just your actual cost) and based upon the average amount of work you do, figure out where you break even and where you do pretty well.

As you get good at estimating costs for new projects, you will just know how much to charge so you cover your expenses, make some profit and are fair to the client, but ultimately you need to be fair to yourself.

Mike Cohen


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grinner hester
Re: Rates: Published v. Reality
on Oct 21, 2009 at 12:37:37 am

The simple fix is to just not paint yourself into a corner by publishing rates. You can only run off business doing that. Leaving it open ended creates the dialog you want to create with potential clientele, gets you both on the same page with the project and allows you to bid on it accordingly.



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Rich Rubasch
Re: Rates: Published v. Reality
on Oct 22, 2009 at 2:35:26 am

We publish our rates. Why? So clients don't call when they are making an estimate to recall how much we charge for graphics. Works for them, works for us. How much for 5 DVDs? It's on our site. Why not publish that? It's not going to change. For big productions, we do meet and prepare a formal proposal.

Without production, we hover around $300-$600 per finished minute for basic editing with some graphics. Been consistent doing that. Client sits over our shoulder for the entire edit or we add in a bunch of compositing or complex green screen and it ranges from $600-$1200 per finished minute.

With production it depends on crew size and production needs like prompter etc. But for HD editing and post it can range from $2000-$4000 per finished minute. But probably not a training video, but perhaps if it has a lot of 3D elements and the editing gets complex or the client is not prepared with the scripts. Training requires critical pre-pro because it needs to visually describe the process and it can be done many different ways.

My guess is we would create a proposal for the 15 minute training video under $30k. And we would probably come close to what we proposed if we apply our current posted rates. We have done enough projects to know what it will take...and if we know the client well enough what will make things smooth or bumpy.

Hourly post rates in our area don't vary by much. So published or not, it's not a mystery. Walter's point about moving away from the corporate squeeze means you can put more money in the production and post finishing (where most corporate projects come up short) which also means your work will begin to look better and better. meaning you can sell to even bigger clients. Walter, correct me if I'm wrong!



Rich Rubasch
Tilt Media Inc.
Video Production and Post
Owner/President/Editor/Designer/Animator


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walter biscardi
Re: Rates: Published v. Reality
on Oct 22, 2009 at 10:16:19 am

[Rich Rubasch] "Walter's point about moving away from the corporate squeeze means you can put more money in the production and post finishing (where most corporate projects come up short) which also means your work will begin to look better and better. meaning you can sell to even bigger clients. Walter, correct me if I'm wrong! "

Well yes and no Richard and you do make some great points in your post about publishing rates. As we started to work more in broadcast, especially when "Good Eats" came along I had to make the decision to either start turning away some of the smaller corporate gigs even though I really liked working with the clients or hire more staff just to keep those gigs going. The return on investment for those corporate gigs just wasn't there even though they were a lot of fun to do.

With broadcast and independent features, we don't do as many projects per year, but the budgets are a bit higher and the work more consistent allowing us to get a much better return on investment. And yes, it does make your work "look better" because suddenly we were delivering the #1 show on the Food Network in HD so it does raise your profile and it gives other broadcast producers the confidence that we have the skills to work in broadcast.

The funny thing is, and I'm sure all the folks who work in corporate agree, the quality of the work is oftentimes even better in corporate because there is so much emphasis these days on motion graphics, music, sound design, especially for those presentations that will play in larger events or larger venues. I mean have you been to a concert lately? I'm still trying to figure out how Brad Paisley incorporates all the live material into his video presentations, it's just awesome.

But I digress, it was really just a decision I made to move towards broadcast and it's paid off well for us.


Walter Biscardi, Jr.
Editor, Colorist, Director, Writer, Consultant, Author.
HD Post and Production
Biscardi Creative Media

"Foul Water, Fiery Serpent" now in Post.

Creative Cow Forum Host:
Apple Final Cut Pro, Apple Motion, Apple Color, AJA Kona, Business & Marketing, Maxx Digital.

Blog!

Twitter!


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Todd Terry
Re: Rates: Published v. Reality
on Oct 22, 2009 at 2:18:02 pm

[walter biscardi] "it was really just a decision I made to move towards broadcast"

We've made the move a bit in the other direction.

When we started our company a dozen or so years ago... 99% of what we produced were broadcast commercials. A corporate gig was almost unheard of here.

Now, while commercials still make up the lion's share of our work, the corporate work has steadily gotten bigger and bigger so that it is now a sizable chunk.

Interestingly enough, when we saw a fall off in our commercial production when economic times got tight, the corporate clients seemed to start calling with more frequency.

We've also found that the corporate clients are gradually leaning toward bigger and better (and more expensive) productions. Part of that I think is just educating them that a 10-minute video of a talking head is not good, nor is a video version of a PowerPoint presentation. But a lot of them seem to be catching on by themselves that their stuff needs to look very slick and high end.

It just depends on your particular market, what works there, and finding your niche like Walter has.


T2

__________________________________
Todd Terry
Creative Director
Fantastic Plastic Entertainment, Inc.
fantasticplastic.com






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walter biscardi
Re: Rates: Published v. Reality
on Oct 22, 2009 at 2:28:00 pm

[Todd Terry] "When we started our company a dozen or so years ago... 99% of what we produced were broadcast commercials. A corporate gig was almost unheard of here. "

I will clarify and say we don't do commercials. Never enjoyed those. We're all long form and series here at the moment.



Walter Biscardi, Jr.
Editor, Colorist, Director, Writer, Consultant, Author.
HD Post and Production
Biscardi Creative Media

"Foul Water, Fiery Serpent" now in Post.

Creative Cow Forum Host:
Apple Final Cut Pro, Apple Motion, Apple Color, AJA Kona, Business & Marketing, Maxx Digital.

Blog!

Twitter!


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larry baker
Re: Rates: Published v. Reality
on Oct 22, 2009 at 2:49:05 pm

Thanks for all the comments everyone. I really appreciate the advice.

Walter,
I'm sure you could fill a novel on this, but I'll ask anyway. How does one break into the world of cable television if they aren't in LA or NY, particularly if the are in media hotbed such as Ohio? It doesn't seem like something that is that achievable, although it would be a very desirable direction to take the company.

Thanks.


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walter biscardi
Re: Rates: Published v. Reality
on Oct 22, 2009 at 4:17:23 pm

[larry baker] "I'm sure you could fill a novel on this, but I'll ask anyway. How does one break into the world of cable television if they aren't in LA or NY, particularly if the are in media hotbed such as Ohio? It doesn't seem like something that is that achievable, although it would be a very desirable direction to take the company. "

The beautiful thing about cable TV is that you can work from anywhere because if you pay attention to all those closing credits on your favorite cable shows, and then look up the production companies, you'll find them all over, including Ohio. Food Network for example broadcasts out of Knoxville, TN.

I built my company up to handle HD Post production from the get go, even when it was a single edit suite in a spare bedroom of my house. I've always worked to broadcast standards from the get go because that's how I was trained. As in video levels meet broadcast specs, audio levels meet broadcast specs no matter the project. And I continually reinvest back into my company upgrading my equipment and software.

So when an opportunity presented itself to do HD Post for "Good Eats" I was in a good position to simply say "Yes" and not even think about it.

And I created an opportunity for myself by making the decision to purchase a multi-format Beta Player several years prior that opened the door to a client relationship that led to these documentaries and PBS series.

Where you are doesn't matter today. What does matter is the quality of your work, how you present yourself to the client and the value of your services you bring to the client. I've written a three part series in my Blog about starting your own business and my latest thoughts are in the Cow magazine article.


Walter Biscardi, Jr.
Editor, Colorist, Director, Writer, Consultant, Author.
HD Post and Production
Biscardi Creative Media

"Foul Water, Fiery Serpent" now in Post.

Creative Cow Forum Host:
Apple Final Cut Pro, Apple Motion, Apple Color, AJA Kona, Business & Marketing, Maxx Digital.

Blog!

Twitter!


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Todd Terry
Re: Rates: Published v. Reality
on Oct 22, 2009 at 2:50:39 pm

[walter biscardi] "I will clarify and say we don't do commercials."

Oh, we know. I wasn't making an apples-to-apples comparison.

Funny how people gravitate toward different things. I think our general manager likes long-form, and maybe commercials not so much. But I hate long form (I'll take their money, just not like it)... and I love commercials.

I think it must be a short-attention-span thing I have. I'd so much rather spend a few days in pre-prod, a couple of days directing a shoot, and throw it to our editor knowing that in a day or two more we've got a finished product (and a bill!) out the door.

Projects that take longer than that really tax my brain. We've got one continuing project right now that is a couple of different very long-form pieces including two half-hour HD broadcast shows (for public TV)... they've been going on for a year and I'm about ready to hit myself with a hammer. It's not particularly hard, there are no unusual struggles with it, and the money is extremely good... it's just that it goes on and on and on......

My world is much more suited to making my little :30 mini-movies, then moving on to the next one. Plus in a dollers-per-second world, we can pour ten times as much money on the screen for commercials vs. long form.

Different strokes.... whatever makes you happy... (and makes ya money!)


T2

__________________________________
Todd Terry
Creative Director
Fantastic Plastic Entertainment, Inc.
fantasticplastic.com






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