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Correct way to calculate our rates, by Harvard Business School

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Ned Miller
Correct way to calculate our rates, by Harvard Business School
on May 23, 2010 at 11:14:22 am

After viewing this educational video I am throwing away my Excel bid sheet. I wish I learned this financial technique years ago:







Ned Miller
Chicago Videographer
http://www.nedmiller.com
http://www.bizvideo.com


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Bob Zelin
Re: Correct way to calculate our rates, by Harvard Business School
on May 23, 2010 at 7:21:08 pm

this is why I am a loser at business. I have seen real professionals that understand sales use this exact technique. I look at something, and say "I normally would charge $450, but I think I can push this up to $500 - they are a bigger company". The successful salesperson looks at this model, and says "$8000". And they get it. That is why I am a loser. I see all my clients trying to get 2 grand for a shoot, when Toyota will pay $50,000 for the same type of shoot (corporate video in Vegas) for the same end result. Of course, you have to know who you are dealing with. I don't know how to ask for 50 grand.

Bob Zelin




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grinner hester
Re: Correct way to calculate our rates, by Harvard Business School
on May 23, 2010 at 9:19:10 pm

I'm with you, Bob. I'm way too much of an artist to haggle. I find it offensive when folks offer less than I'm worth.
I'm like "I can do it for 5 grand, man. No?, k later."
Not the best business practice on the planet... or is it?
Time is money. I'd rather spend the time creating than talking about what is to be created and how cheap it needs to be done while looking the best. lol
This is not unlike asking a high class call girl for suburb street walker prices, imo. Yes, I'm a video whore. But dammit, I'm no 20 dolla ho.



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Terence Curren
Re: Correct way to calculate our rates, by Harvard Business School
on May 27, 2010 at 4:57:34 pm

[grinner hester] "Yes, I'm a video whore. But dammit, I'm no 20 dolla ho. "

PERFECT! LOL.



Terence Curren
http://www.alphadogs.tv
http://www.digitalservicestation.com
Burbank,Ca


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Mark Suszko
Re: Correct way to calculate our rates, by Harvard Business School
on May 24, 2010 at 3:20:26 pm

Bob, I respected you before: I respect you even MORE now. If the jerks on Wall Street were more like you, the world might be a better place today.


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Bob Cole
Re: Correct way to calculate our rates, by Harvard Business School
on May 28, 2010 at 5:03:37 pm

[Bob Zelin] "says "$8000". And they get it."

Oddly, clients sometimes seem to treat the gougers with more respect.

Bob


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Ron Lindeboom
Re: Correct way to calculate our rates, by Harvard Business School
on May 28, 2010 at 5:36:01 pm

[Bob Cole] "Oddly, clients sometimes seem to treat the gougers with more respect."

I remember back in the 80s I read a report that looked at the cost per mile and the standings and ranking of all of the cars then sold in America.

At the top in cost per mile, as I recall, was Mercedes Benz, whose oil changes alone can run you into hundreds of dollars. They also showed how often a Mercedes would be in the shop, on average. It is definitely one costly ride, comparatively speaking.

The report showed that in the 80s, the Toyotas and the Hondas were the most reliable cars with the lowest overall operating costs per mile.

At the bottom of the reliability standings were the Renault Alliance, which seemed to be a vehicle made to drive between shops on its way from one fix-it to the next.

Ah, but here's the interesting part: the difference between the best cars on the road and the worst? About $600 a year.

But the cost difference in buying one initially? Huge.

I used to chuckle at the thought that humanity is so caught up on the symbols that we'll drive metal, plastic, fabric/leather and wood with one sticker on it -- which costs three- to four-times what the other pile of metal, plastic, fabric/leather and wood costs -- and one is an "automobile" and gets huge respect, while the other is just a "car."

As someone once said long ago: "What's the difference between an 'automobile' and a 'car'"? About $40,000.

I see this same kind of phenomenon happening in our industry, as well. The guys that command big money do so not just because of their expertise -- sometimes, they actually have even less than the guys they are competing against -- but it's sometimes because they know how to ask for the deal, keep a straight face, look you eye to eye while doing it, and have an air of confidence that makes the other guy think he'd be stupid not to do business with them.

Things like trust and confidence are intangibles that humans seem to place high value on, and the pricetag for them adds an "abstract value premium" that drives people to pull out the wallet and reach for the big bills.

No one I knew back in the 80s wanted to drive the Renault, even though its $600 a year in maintenance costs equated to $3,000 if you owned the car for 5 years -- but it sold for a lot less than $3000 difference many of the cars that were "better" and more reliable.

Man, I love a good story -- especially one with a happy ending. Oh wait, Renault pulled out of America and ceased operations here for the third time following the Alliance, didn't they? Never mind.

Meanwhile, people are still lining up and pulling out their wallets to pay hundreds of dollars for an oil change. Go figure...

Best regards,
Ron Lindeboom
CEO, CreativeCOW.net

Creativity is a type of learning process where the teacher and pupil are located in the same individual.

Graveyards are full of people the world couldn't do without.


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grinner hester
Re: Correct way to calculate our rates, by Harvard Business School
on May 29, 2010 at 3:18:36 pm

Ron, many purchase prestige, not product. We see this from Neiman Marcus to those old but expensive post houses that are going away. Many people can still afford prestige, even if they can easily change their oil in their driveway for 20 bucks. Few big companies today can play that game due to current economy and the fact that their distribution prices have multiplied since W's rain of terror. They really do just want a video in most cases and they like to know how much it'll cost instead of finding out how much it cost em after the fact. They can say yes or no before hand or the production company can alter the production to fit their budget. If GM would do that, they'd be 750 billion dollars poorer in failout money. ;)

To me, that's the bottom line. Habitual behavior.
Do what you've always done and ya just aint gonna be doing it much longer.



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Ron Lindeboom
Re: [Ramble] Correct way to calculate our rates, by Harvard Business School
on May 29, 2010 at 3:47:52 pm

[grinner hester] "If GM would do that, they'd be 750 billion dollars poorer in failout money."

At least GM paid it back. The banks took the money and ran, didn't do with it what was supposed to happen, took their big management bonus checks because they preen and pose so well that we owe it to them -- and so I have far more mercy for GM than I do for AIG or the mega-banks.


[grinner hester] "Do what you've always done and ya just aint gonna be doing it much longer."

This is a mantra for business in the new world order. In fact, we have a slogan here at the COW that we use regularly and which all the team members know quite well, it is: If you are succeeding in business, then you better do everything in your power to kill and replace your company and your product...before someone else does.

THAT is the reality of business in the new world order and nearly all the people I know using and relying on MBA concepts they earned in the 80s and after are flailing and floundering and failing to understand the insane pace and change of protocols in business today.

I have had a few ask me how we do what we do and why it works so well, I tell them that in everything we do we build it around people, listen to our market, serve them, and in the end we keep listening and changing it all the time as the market changes and shifts.

Most of the time, they scratch their heads in befuddlement and confusion and keep trying to ask, "Yeah, but where's the formula?" Many just don't get what it means to build a business in today's world. They use words like "social media" and "the interconnected world" but they don't mean it and they don't get it.

In the end, it comes down to what my pal Nick Griffin espouses regularly over the last decade or more, things like: there is no substitute for relationships and getting your head into your client's mind-space; look at things from their point of view, get to know the company you are working with; think about their problems and their issues; think about what they do that excels and sets them apart from their competitors. Help them communicate that message when you work with them. Make yourself an extension of their business.

I have learned a lot of things from Nick over the years, and I am honored to have my picture up there alongside his. Oh, and Mark Suszko. And you, Grinner. And Mike Cohen. And... (insert your name here)

Best regards,

Ron Lindeboom
CEO, CreativeCOW.net

Creativity is a type of learning process where the teacher and pupil are located in the same individual.

Graveyards are full of people the world couldn't do without.



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