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Contingency Fees

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Greg BallContingency Fees
by on Nov 14, 2012 at 4:43:02 pm

I'm working on a proposal for a very large project. It will require about 8 weeks of studio shooting, talent, crews, editing, etc. Probably about a $4-$500,000 project

We do not have scripts yet on which to base this quote, so the amount of shooting can go up or down depending on the scripts. With that in mind, I'm considering adding in a line item for a contingency fee.This would be paid by the if we need additional funds based on the scripts. Of course we would also provide a change order, but we'd like to have the money in hand so we do not have to layout the cash and wait to finish the project before we're reimbursed. Does this make sense? If it's not used, it's returned to the client.

I've seen many people just add a hidden 10% contingency fee to their quotes, but I'm concerned about losing out to another company because our fees come in 10% higher than our competition. How do you guys handle this?

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Jack WoodyRe: Contingency Fees
by on Nov 16, 2012 at 1:10:21 pm

All the business plans I have seen include the 10% contingency.
They should be prepared for that, especially when they haven't even provided the scripts yet.

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