Advise on setting an agreement for project
We have a new client with an on-going project. This project will be shot and edited every 2 months for the next 2 years. We typically create a contract/agreement for every client. This agreement spells out deposit amounts and the fact that final payment is due before the project is delivered to the client.
We're wondering what the best strategy is for an on-going project. Most likely, each video will have different pricing depending on what and where we're shooting. They are a global company, so we may from time to time need to pick up a crew in another location.
The question is, do we set a contract in place for payment up front on multiple projects? This may allow us to create shows and not worry about chasing payments from the client on a regular basis.
How do you folks handle projects like this? On a project by project basis, or do you get a chunk up front?
One thought is to offer a base price and if some parameters change, send them a change order with additional payments. However this seems like a pain for us and for them.
Because these things kind of mutate over time, requiring flexibility, I would say treat each job in the series as it's own contract, self-contained.
One important reason is that with a certain date of completion, comes a definite time for PAYMENT. And cash flow is everything on a long-term project like this. You don't want to be waiting a long time to get paid, you are not a bank giving out zero-interest loans on your own money.
So, draw up a master contract for one job, and make it the template for all the others in the series, where you just have to change the dates. Should the series have to stop early at any time, you will not be caught out of pocket. Should the scope of the work change, the next contract can reflect the newer realities and relationships, without changing what went before.
You are probably mulling over giving them some kind of discount, in exchange for the steady work. Or they might have suggested it, or soon will. Be cautious. I advise angainst any such discounting in general but in particular for the first couple of shows. If your rate calculations are correct, your rate is your rate and it is irrelevant how many programs you do. This is not a commodity like making boxes, that could use scaling effects to decrease customer costs yet still make a good profit. This is one at a time hand craftsmanship. It costs what it costs.
[Mark Suszko] "This is not a commodity like making boxes..."
HEY!!! I make a lot of money with people who make boxes, Mark. Some are commodities. Some are works of art.
Back on topic: Greg (and especially Steve) should consider a progressively increasing discount that provides an incentive for this to remain a long term project and NOT build in a discount of which there's a risk of it not being earned. As to money, IMHO, you should set a schedule of regular payments which should mirror your normal procedures -- third up front, third in the middle, third at the end, for example.
We recently had a similar situation. A promise for lots of work over a period of time - except it was a smaller client. He wanted a discount upfront - but all the future work was undefined. I resisted his plea to set-up pricing based on the "big picture." Instead, we agreed to pricing based on each individual project with payment due dates clearly spelled out.
From your post, it sounds like you've got a "real client" with a "real plan." Nonetheless, it many be easier (and represent less risk) to keep track of one thing at a time.
My advise: I would define scope and payment of each project as a separate contract. If after several projects you feel more comfortable with a macro approach it'll be based on actual history with the client instead of promises.
Production is fun - but lets not forget: Nobody ever died on the video table!
[Greg Ball] "The question is, do we set a contract in place for payment up front on multiple projects? This may allow us to create shows and not worry about chasing payments from the client on a regular basis. "
A contract for each project might be safest since each may involve different contingencies. The downside is that doesn't actually lock them in to a long term commitment. The "lock in," if you want to go that route, has to present advantages to both you and them.
There is one justification for a lower rate for "bulk" projects is that you don't have to spend as much time and expense marketing for new work during that period. Even that has a downside because the greater the dependency on a single client, the greater the void to fill when the work ends.
Generally I'm opposed to flat rates. That's different than living within a prescribed budget though. It must be clear what the client gets for the dollars though. I always build in Change Orders, which require approval by both parties, as part of the contract.