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Suggestions for charging for an unknown amount of work?

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David StoneSuggestions for charging for an unknown amount of work?
by on Sep 28, 2010 at 8:01:14 pm

Hi,

I was looking for suggestions on how to handle charging a client for an unknown about of work. I have a day rate that I usually bill clients at, however most of my jobs do not last longer than a week. I am going to be working on a project that will be ongoing for several months, but the amount of work over that time frame is unknown.

My involvement in the project consists of color correction requiring masking, tracking along with rotoscoping as well. The client has one particular scene that needs the work and it is for a cable series that they are just getting ready to start editing the new season for. The scene which needs the work
will be in every episode, probably quite a bit, but it is unknown at this point exactly how much it will be used.

They of course want to sit down before hand and discuss a rate that would work for this situation and I was hoping to go into the discussion with some good suggestions on how to handle this. Any suggestions would be helpful. Thanks ahead of time for your thoughts on this.

David Stone

Email me at: david@baldguycreative.com or visit us at: http://www.baldguycreative.com


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Mike CohenRe: Suggestions for charging for an unknown amount of work?
by on Sep 28, 2010 at 9:32:04 pm

seems you need to be on retainer, or have a contract that estimates hours of work, with a clause agreed to by all parties that final invoice will reflect actual work performed.

Mike Cohen


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David StoneRe: Suggestions for charging for an unknown amount of work?
by on Sep 28, 2010 at 10:23:33 pm

Thanks Mike for taking the time to read my post and give me your thoughts.

I like your suggestions. I was trying to figure out a way to get a flat rate per episode maybe, but have a clause that said if I went over a certain amount of hours I could bill a rate for those overages.

I also had a suggestion that I could bill at a reduced day rate for the first episode and then sit down after that to discuss future episodes. The idea being I would have a better idea of the amount of work involved after the first episode.

Your suggestions seem like a cleaner method to me though.

David Stone

Email me at: david@baldguycreative.com or visit us at: http://www.baldguycreative.com


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Cory PetkovsekRe: Suggestions for charging for an unknown amount of work?
by on Sep 28, 2010 at 10:38:05 pm

If you bill a flat rate per episode, plus an hourly charge, you defeat the purpose of using that method. See my other response for their perspective. Flat rate means flat rate! ;)

Cory

--
Cory Petkovsek
Corporate Video
http://www.CorporateVideoSD.com


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David StoneRe: Suggestions for charging for an unknown amount of work?
by on Sep 28, 2010 at 10:50:21 pm

Hey Cory,

Thanks as well for your reply. I apologize. I did not see it before writing my response to Mike.

I understand what you are saying about the "flat rate". Your thoughts are very well broken down for me and have given me a great plan to go to the client with.

It seems to me that the retainer option and the "buy time such as 10 days at a reduced rate" is very similar just worded differently. Is that correct or am I missing something. Either way they all seem like excellent ways to handle this situation.

David Stone

Email me at: david@baldguycreative.com or visit us at: http://www.baldguycreative.com


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Cory PetkovsekRe: Suggestions for charging for an unknown amount of work?
by on Sep 29, 2010 at 3:18:04 am

An example of a retainer is:
Perhaps my normal rate is $50/hr. You pay me $800 per month for 20 hours of work, and $40/hr beyond that. If you don't have any work for me I have a guarantee of $800/mo. You get the benefit of my lower rate. Payment is often after the work is done, the retainer may be at the end of the month.

An example of time blocks is:
Given a $50/hr rate. You pay me up front for 20 hours at $800. You can use them whenever you want, even 6 months from now. I get the benefit of cash on hand. You get the benefit of my lower rate.

They are similar, but when you're paid and when they collect are very different. IT companies often use time blocks. Lawyers often use retainers. If you stick with time-based billing, a retainer gives more peace of mind; time blocks give quick cash. Still I recommend you shy away from time-based billing and move to project based flat rates (50% up front); which is how your customers think.

Cory

--
Cory Petkovsek
Corporate Video
http://www.CorporateVideoSD.com


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David StoneRe: Suggestions for charging for an unknown amount of work?
by on Sep 29, 2010 at 3:04:55 pm

Thanks again Cory.

I'd be all for the flat rate option, I just have no idea how much work is going to be involved at this point. I'll definitely bring up all three of these options with them and discuss it with them. Going into the conversation though now I feel a bit better that I know (supposedly) what I am talking about :-)

David Stone

Email me at: david@baldguycreative.com or visit us at: http://www.baldguycreative.com


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Steve KownackiRe: Suggestions for charging for an unknown amount of work?
by on Sep 28, 2010 at 10:51:47 pm

Is this a new client or existing with a track record that you could compare similar product to time invested?

We had a similar situation a few years ago where client wanted 13 episodes of "QVC-looking" sales show that was almost entirely graphics with video elements they provided. We created 65 segments that they tagged together, along with a show open, interstitial graphics, and credits.

What I did was show them a similar product and associate some sliding costs. We agreed on a 'ballpark' figure to develop the look and concept and the 1st segment. All the while we diligently noted times for edits based on their input, render times, etc. We then reviewed the notes and came up with a fixed cost for the remaining 64 segments based on a scope of work. If the scope changed it was billable.

I can see a fixed cost per episode if the work is exactly the same each time. And they may not go for time going over budget 'cause they can argue you got slower or you're milking them. But it the project changes, that's another thing.

My fear for you is that the work that takes place over the course of time is how available do you need to be and the immediacy of getting finished. If you have to rely on last-minute assets from others, does that mean you work all night to get done or do you have time to put it in your schedule? Rush work should be billed additional if it becomes their habit. Just put it all in writing.

Steve






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David StoneRe: Suggestions for charging for an unknown amount of work?
by on Sep 28, 2010 at 11:06:45 pm

Thanks Steve.

I have worked with these guys before. Just not to this depth. Usually a couple day job at most and not very regular.

I did work on a test shot to make sure I could pull off the job and to get an idea of how long it would take, which I did not bill them for.

To me the amount of time a shot takes depends on the amount of roto work involved, the amount and difficulty tracking and the length of the shot. The combination of the three in all different variations will dictate to me, my time. Based on the test shot I worked on, I can now give an estimate of time involved when I see the shot, but there is no way of knowing at this point what shots are going to be used since the edit process has not started.

I will have to talk to them about work flow and time frames requirements or deadlines. I too am always concerned about last minute or rush work, seems all to common over the years. I am also concerned that I will struggle on some shots that will put me well over the hours I allotted, but hope that the easier shots will balance that out.

I think Cory and Mike had great suggestions, but you gave me good things to ponder and make sure are addressed in any kind of contract we put together. Thank you for that.

David Stone

Email me at: david@baldguycreative.com or visit us at: http://www.baldguycreative.com


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Cory PetkovsekRe: Suggestions for charging for an unknown amount of work?
by on Sep 28, 2010 at 10:36:47 pm

Hmm, I suggest that what they are looking for is a price point they can budget for final cost (to see if it's worth it). They also don't want to pay 100 times your day rate if they use you for 100 days (bulk pricing).

You of course want to be paid fairly, but I presume would be happy to give a bulk rate for a guarantee of a large amount of work.

Mike's great suggestion of a retainer gives you both that. A commitment from them for work, and a commitment from you for a reduced rate. It's on them to determine how much work they want in the episodes, thus coming up with their budget. But they may not have figured that out yet and are hoping you'll say, "You guys are cool, I'll give you half my day rate".

So I'd suggest telling them, "Here's my day rate. I can certainly be flexible on that for a large amount of work."
Then look at which options might work for you:
- We can work this on a monthly retainer, a minimum guaranteed amount, plus reduced hourly (or daily) over that.
- Or we could go with blocks of time; buy 10 days for 80% of my day rate.
- Or we could go with a fixed price per episode; Regardless of the work, I'll make sure it looks good.

From a business perspective, that last option is very appealing, as they can plan for that amount. It is also great for you; it will incentivise you the right way. Figure out a price point for a typical episode for you, add a contingency buffer and offer it. You'll win some, you'll lose some, but you'll win more as you gain more efficiency, or farm out the work. Finally ensure the scope of what you will do, and when payments are made are in the contract.

Cory

--
Cory Petkovsek
Corporate Video
http://www.CorporateVideoSD.com


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Mike SmithRe: Suggestions for charging for an unknown amount of work?
by on Sep 29, 2010 at 7:59:29 am

Credit control remains an issue with a known client, when you move up to a more expensive project. You might want to explore a regular weekly, fortnightly or monthly billing arrangement, with an agreed payment period, and an up-front deposit, to control your risk in non-payment.


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David StoneRe: Suggestions for charging for an unknown amount of work?
by on Sep 29, 2010 at 3:09:57 pm

Thank you Mike for your input on this. I agree I need to come up with some kind of billing and payment agreement ahead of time. With these guys, I typically invoice them after the job is signed off on and give them the typical net30 on payment. They are pretty good at paying about a week after the 30 days.

I am a push-over when it comes to money though. I need to be careful on this one for sure.

David Stone

Email me at: david@baldguycreative.com or visit us at: http://www.baldguycreative.com


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Mark SuszkoRe: Suggestions for charging for an unknown amount of work?
by on Sep 29, 2010 at 9:13:51 pm

I have little to contribute to this thread except to point out that if they use or don't use a shot they assigned you to work on is immaterial, as far as your billing: they are paying you to make an effects shot, and if it makes the actual show or not is not your decision and also not your problem.

You don't give back hours you spent in good faith on an effects shot they asked you to work on, just because they later changed their minds. You should get paid for the work on the shot, up to the point they tell you to stop working on it or when it is completed and handed off.

We would all be in a heck of a fix, if it were not the case; every shot you worked on would be a "spec" job, done for free, just "hoping" you would get some kind of money for it.

Nothing wrong with submitting tests on spec, for free or for a negotiated lower rate, to prove up front that you CAN do the work and to give them a good idea of what to expect in advance of the actual work. But once the test is approved and you are hired to complete a sequence, they are paying you to do a job, and you are doing it, and you should get paid for that. Imagine if client hired me to shoot three day's worth of footage and the client came back and said they would only pay me for the two hour's worth they actually kept in the final cut. Madness, MADNESS, I tell you!


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David StoneRe: Suggestions for charging for an unknown amount of work?
by on Sep 29, 2010 at 10:21:43 pm

Thanks for chiming in on this Mark. I couldn't agree with you more. I have not had that problem before and would not agree to anything of the such.

I suggested that I work on the shots after most of the online has been completed. So I should only be getting shots being used with heads and tails. Not a big fan of roto work on more than necessary. If they don't need the shots after I am done with them, SOL on their part :-)


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