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Commercial Bid itemization- How much detail to give

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Tom StrodelCommercial Bid itemization- How much detail to give
by on Aug 3, 2014 at 4:32:38 pm

I want to start a discussion on the issue of bid itemization on proposals to ad agencies and directly to clients. Specifically - how much detail to give, and what not to disclose.

But before I relate a recent experience, I want to take an informal poll of the members on this list...

For those of you on the list who submit bids for commercials here in the US and Europe, how much detail do you provide in the pricing? Do you itemize every line item?

Thanks,

Tom


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Joseph W. BourkeRe: Commercial Bid itemization- How much detail to give
by on Aug 3, 2014 at 6:57:43 pm

Generally speaking, I would break my clients into two broad groups: those who want every detail of the project broken out, and those who just want to know the bottom line. If you can get a feel for the type you're dealing with, you'll be able to tailor your proposal to please either type. I always have two types on hand - the full breakdown, and the bottom line. But I always start with the full breakdown in Excel, so I can then cut and paste to create either type in my Word template.

I have found that nothing bugs the "bottom line" type more than seeing all the gory details. Their eyes glaze over, and they seem to think you're putting something over on them.

On the other hand, the ones who want to see all the detail feel as if they're being bamboozled if you don't show them the details.

I prefer to present the full details in a proposal, since it gives me a position to work from if the quote is too high for the client. Rather than just caving and cutting the price, I can show the client exactly how I intend to cut the budget, by making it clear that they don't get everything for a lower price.

Joe Bourke
Owner/Creative Director
Bourke Media
http://www.bourkemedia.com


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Todd TerryRe: Commercial Bid itemization- How much detail to give
by on Aug 3, 2014 at 7:24:24 pm
Last Edited By Todd Terry on Aug 3, 2014 at 7:28:20 pm

This will probably stun people (and no doubt will get labeled as a poor business practice), but we hardly itemize our estimates for commercial productions at all. Sometimes none.

Usually we will just give a flat "guesstimate" number and mention that it includes whatever it's going to need... such as concepting, writing, meetings, casting, talent, voice talent, location fees, props, wardrobe, meals, music rights, craft services, transportation, and the list goes on, varying according to the production needs, of course. Usually it will make mention of how many shoot and edit hours that includes, but not always. Sometimes we just throw out a number.

Now in our justification of that... we don't have tons and tons of random clients, and a new client doesn't crop up all that often. Most of ours are the same dozen or so advertising agencies that we've worked with over and over again for almost 20 years. Most of them know exactly how we work, trust us not to gouge them, don't try to unnecessarily scrimp, and can pretty much guess what something will cost before they even give us a job.

We're lucky that our biggest/best client trusts us and doesn't even WANT to know the "gory details," as Joe put it. He likes to say "I don't need to know how the sausage is made, just make it taste good." We're also exceedingly lucky that this guy knows the value of time and never even asks for so much as a phone call or meeting without saying "Ok, start the clock." He's one of those that just gets a flat number... and honestly, he often doesn't even get it in advance. We're in pre-prod for a series of commercials for him right now, and he hasn't even mentioned what they might cost. He knows we'll treat him fair because we've worked with him for so long. If we start gouging him (which we won't), he'll start asking for upfront numbers sooner, or even itemized estimates.

Every once in a while (maybe once every year or two) we'll get a brand-new client that needs an estimate broken down to pretty much every penny... and that's always a nightmare that leads to micromanaging and haggling on every single thing....
     "Do we really need a makeup artist?"
     "I don't think this will take that many meetings."
     "Maybe instead of a professional actor we'll just use my brother Bob."
     "How could it possibly take two days to shoot a commercial? It's thirty seconds."


You know the drill.

I think we are probably exceptionally lucky... but my own advice would be to itemize as much as you need to get a job (and to protect yourself later), but not to over-itemize any more than you have to. I won't discredit Joe's advice at all, though, and it has a lot of merit in that it gives you wiggle room to show what will be cut if you need to bring in a lower number. Personally though, what works best for us is to keep it as simple as possible.

T2

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



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walter biscardiRe: Commercial Bid itemization- How much detail to give
by on Aug 3, 2014 at 7:29:32 pm

[Todd Terry] "Every once in a while (maybe once every year or two) we'll get a brand-new client that needs an estimate broken down to pretty much every penny... and that's always a nightmare that leads to micromanaging and haggling on every single thing....
     "Do we really need a makeup artist?"
     "I don't think this will take that many meetings."
     "Maybe instead of a professional actor we'll just use my brother Bob."
     "How could it possibly take two days to shoot a commercial? It's thirty seconds."

You know the drill."


When that happens, I usually will say something like "Ok, but if we do end up needing some of these things later or your brother makes the shoot run over, the rates will be double because they will no longer be part of the package but ala carte."

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

Craft and Career Advice & Training from real Working Creative Professionals

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Richard HerdRe: Commercial Bid itemization- How much detail to give
by on Aug 4, 2014 at 11:18:58 pm

[walter biscardi] "Ok, but if we do end up needing some of these things later or your brother makes the shoot run over, the rates will be double because they will no longer be part of the package but ala carte.""

Do you state that in the contract also?

Thanks!


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walter biscardiRe: Commercial Bid itemization- How much detail to give
by on Aug 3, 2014 at 7:31:20 pm

[Tom Strodel] "For those of you on the list who submit bids for commercials here in the US and Europe, how much detail do you provide in the pricing? Do you itemize every line item?"

As much or as little as the client requests. I used Showbiz Budgeting which makes it ridiculously simple to create both itemized and high level overview budgets.

At the very least we always break out our proposals in Pre, Production, Post.

Just depends on what the client wants. If they are a brand new client, ask them how detailed they'd like the budget to be.

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

Craft and Career Advice & Training from real Working Creative Professionals

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Al BergsteinRe: Commercial Bid itemization- How much detail to give
by on Aug 4, 2014 at 1:17:18 pm

Though I have not done TV commercials, all these folks great feedback is very much inline with what I have done to get business. Some clients want details, some not. I've been told by clients I've won, and that wanted detail that I've had the most professionally done budgets they've seen. (not that I've got some special tool, just Excel). Once a client has been with me a while they usually trust me to help the understand a budget that's just a ballpark. If they don't know you, a detailed budget helps them understand their choices.

Al


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Mark SuszkoRe: Commercial Bid itemization- How much detail to give
by on Aug 4, 2014 at 2:43:19 pm

I'm with Todd and his very well thought-out answer.

But also, I agree with todd because if you always break out every little detail, you are giving away a bit of your "secret sauce" regarding what deals and suppliers you use that make you competitive. You don;t know who else those number will be shown to. You won't be in that meeting, when this other person starts going thru YOUR figures line by line and under-cutting this and that or offering alternative versions of a line item, etc. and you will not be able to defend or explain those numbers.

Leave too much of those secrets out in the open, and you are asking for someone to copy your formula. Or, as has been mentioned, to nickel-and-dime and second-guess every line item until it's no longer a client relationship but some kind of war or debate contest.

List everything internally, know where every penny goes, sure, absolutely. But boil it down to less-detailed "executive summary" levels for the billing statement.


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Tom StrodelRe: Commercial Bid itemization- How much detail to give
by on Aug 4, 2014 at 3:09:10 pm

Thanks so much for the replies. It's definitely enlightening to see what others are doing, and the types of practices out there.

Our budgeting approach usually varies based on the agency, client, and specific situation. There’s never any one solid rule for every situation.

But generally speaking, we typically try to avoid showing itemization in budgets. It almost always leads to problems with micromanagement of the budget, and other issues. We’ve been around for a while and have done a lot of award-winning work, so we’re don’t need to show the agency or client that we know how to line-item budgets. Everything is covered in the price, and what’s not we clearly list. And from our perspective, if we’re bidding on lower-budget commercials, and coming in at less then most production houses (since we typically do television series), we should be allowed the opportunity of less disclosure.

But that’s just how we work.

Here’s a situation that recently happened to a colleague (whom I’ll call Richard) who has a similar approach to us. I think it’s important to share as a note to others, and as a general statement on the industry. With his permission, here’s his story as told to me over lunch…

----------------------------

Richard’s friend (I’ll call him Al) who works as a creative director at an ad agency (AgencyS) that they’ve successfully worked with in the past, asked him to submit a proposal for a series of four commercial spots for their client in Manhattan. My colleague has done projects through the agency for this client before, and they’ve always been happy with them. The difference this time was that the creative developed by the agency was much more extensive, which resulted in a higher then typical budget.

Though Richard maintains a good relationship with his friend Al at AgencyS, he has had disagreements with his friend’s boss before – the founder of the company, who he has heard holds grudges. Okay – the plot thickens.

My friend Richard presented an estimated budget in his proposal to AgencyS, as a range for each of the four, and as a total range, and also included his thoughts on the creative, and how it could be added-to. After he submitted the proposal, his friend Al at the agency told him that they would be looking at other bids. Nothing wrong with that – that’s normal. Afterwards, Al let my friend know that one of the other bids was just 2K less then his. Hmmmm – that’s odd, my friend felt. Why do close to his bid? When pressed, Al at the agency acknowledged that the copywriter there had given his high range number to the other production company with the instructions: “you need to beat this.” Apparently, she knew someone at this company, and wanted very much to work with them. Adding insult to injury, Al then said, “That’s what everybody does. They needed some number to go by” (ignoring that he never provided my friend with such a benchmark, and that this number typically comes from an approximation of the clients budget, not necessarily a competitor’s bid.). The absurdity of this was lost on the Al and AgencyS.

My friend then countered with a bid that was a little lower – but not by much.

His budgets were not itemized - which has always been an issue for AgencyS, and its founder - but which he said he feels justified not to include based on past experience with them.

His agency friend then calls Richard later that day saying that they’re going to recommend the other production company to their client instead of him, and that: “There’s a lot of battles to fight, and this wasn’t one that made sense fighting right now” (apparently that he wasn’t going to overrule his copywriter’s desires to work with this other company, or challenge his boss).

----------------------------

Did my friend’s production company do the right thing? I think they did. Providing an itemized budget would have only made things worse for the process.

But I wouldn’t have lowered the bid. That just undervalues them, and makes them seem a little desperate. Who knows If this was even an apples-to-apples comparison. Was the director of the same caliber? Who knows.

I’m a big believer in the notion that “Customer is Always Right.” But sometimes, in some situations, a little more caution is in order, especially when things that border on unprofessional are presented as “normal practice.”

The bottom line is that there’s not a whole lot of loyalty in the biz, and a “Who Moved my Cheese” perspective is in order.

Tom


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Todd TerryRe: Commercial Bid itemization- How much detail to give
by on Aug 4, 2014 at 4:00:33 pm

Well, sadly Tom that happens in business all the time.

That project didn't go to the other production company because of money, not at all. It was purely personality driven. The copywriter wanted to work with the other production company, and it wasn't an important enough issue for the CD to stand up for Richard. There was definitely jockeying and office politics going on there... and Richard got to waste his time being a pawn.

This is why I hate budgets, almost never "bid" on something, abhor any kind of "government work," and virtually never respond to RFPs.

We do good work. We are also expensive. You'd pay a heckuva lot more for our work in NY, LA, or Atlanta... but here in our little city we are by far the most expensive game in town (we actually started 17 years ago as by far the cheapest game in town.... but hey, things change). We will never win a bidding war and we will never be any client's lowest-cost option. We know that.

My philosophy has always been that people hire us because of our work, not because of our price... and those are exactly the clients we want. We don't want the ones that are looking for a low-ball deal, they don't do the kind of work that we want to do, and are a general pain in the neck to boot. I'm not calling what we do "art" by any stretch, but just as an analogy if someone is looking to get their portrait painted and their main concern is who can paint it the cheapest, then they are typically not who we want to work with.

The only consolation for Richard is that he did nothing wrong, because there was no "right." He could have given a flat number, or he could have itemized every penny. Doesn't matter. He could have been 10K higher, or half the price. Didn't matter. Someone at the agency simply wanted to work with the other company (for whatever personal or creative reason), and that was the end of the story.

It's been interesting to hear how other people itemize budgets.... or don't. But in this case I don't think it mattered one bit. That wasn't the issue.

T2

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



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Mark SuszkoRe: Commercial Bid itemization- How much detail to give
by on Aug 4, 2014 at 4:18:17 pm

If you go chasing to undercut someone else's bid with a counter-offer, I think you've already made two mistakes.

Mistake number one was, not bidding the job accurately enough in the first place to do it right AND make a reasonable profit. If you put in so much "fat" someone else can undercut you by a good percentage, it may mean you misunderstood the client's stated needs or their resources. Bad, either way.

The second mistake is getting into a bidding war if your first bid was honest and workable. When you cut below your day rates you are losing money. If you leave the rates alone but cut some other aspect that affects overall aesthetic impact, like staff or particular equipment used, your stuff looks cheaper than the competition's. You then commit yourself to working harder to get back less. And should you fail, you hurt your reputation, and thus, your future negotiating position. And if everybody knows they can scare you down in bidding, what are you going to do? If you ask the proper amount, they'll insist it be lower or you're out, reasonable or not, because they know that you've caved on rates before. If you try to account for that downwards-negotiation by raising the markup in advance, thinking you'll get back to the right number... you're now exacerbating the original problem, making your bids look artificially inflated, and confirming the client's suspicions,... and your competitions claims - that you're over-priced.

Sometimes you just have to stick to your guns and say: "it costs what it costs, and if you say you can get a better deal, have fun and good luck, no hard feelings, but we're sticking to what we know will work, what we can stand behind without worry".


It's a well known aspect of bidding that often a client already has someone else in mind and just needs to be seen to be going thru the motions of an open bidding process, getting two or three other bids. The less they tell you about the project, the more likely it is that they're insincere and only using you as a stalking-horse for the preferred bidder. If they have more questions for you along the lines of "how would you achieve so-and-so?"... they're tire-kickers. Or they're scouting to help their preferred vendor.

Try not to take it personally. Try to leverage such cases as opportunities to educate a customer, which re-sets the discussion into one about quality or accuracy - an area where you are strong - over price. You still may get out-bid. But if the low-baller fails, you are established as the more knowledgeable source and could be the client's next call to fix it.


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Rich RubaschRe: Commercial Bid itemization- How much detail to give
by on Aug 4, 2014 at 5:29:02 pm

We created a Pages (Excel) doc that has a complete breakdown of all services needed on a bunch of pages....within those lists there are summaries of pre-pro, production, post and even a production fee which is a markup. At the top is a summary page of the scope of the project, then a second page that pulls in the numbers off the detail pages into a nice summary. If they ask why post is so expensive we can provide the breakdown of hours for editing and graphics.

Has been working great. Then, when we invoice we added a column which are the actuals in time and costs so we can track how we did in the original estimate. Very valuable!

Rich Rubasch
Tilt Media Inc.
Video Production, Post, Studio Sound Stage
Founder/President/Editor/Designer/Animator
http://www.tiltmedia.com


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Tom StrodelRe: Commercial Bid itemization- How much detail to give
by on Aug 5, 2014 at 2:50:38 am

Thanks for all the great responses.

A couple of replies…

Specific to Todd's point on not being being the most expensive, that's a tricky one here in NYC. My brother who works for a custom house builder in the Thousand Islands utilizes that strategy - "we're not the cheapest, but we're the best." That works for them because they have very little competition on their scale. In our situation, and similar to my friend Richard's production company, there way too much competition here in NYC to be able to do that at our size. There's always someone willing to do it cheaper. Simple supply and demand. .

To Mark's point on my friend not bidding accurately in the first place, I would disagree. There's many ways to "skin the cat" on the details of a project to affect the pricing before, and sometimes during - without necessarily jeopardizing the aesthetic. You can make the same commercial for a range of prices. Sure, a $10,000 spot isn't going to compare to a $100,000 spot, but its still possible to do both. Whenever we are presented an RFP or creative boards for a bid, we always think of a "Good, Better and Best" approach to accomplishing the creative. Our next step (which is sometimes wrought with it's own issues) is to ask the agency or client what their budget is - which then helps us to dial in which approach we'll take in our bid. And yes, we always try to up-sell where we think the spot would benefit. but again, this is just our approach.

Specific to my friend Richard's situation, I will be very curious to hear how the project progresses with this other production company.

Tom

24fps Productions
New York City


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walter biscardiRe: Commercial Bid itemization- How much detail to give
by on Aug 5, 2014 at 11:59:34 am

[Tom Strodel] "Al at the agency acknowledged that the copywriter there had given his high range number to the other production company with the instructions: “you need to beat this.” Apparently, she knew someone at this company, and wanted very much to work with them. Adding insult to injury, Al then said, “That’s what everybody does. They needed some number to go by”"

Normal operating procedure for most agencies and even larger corporations. Go to a known production entity that can do the work, then hand over the budget to another production company they would prefer to work with for whatever reason and ask them to match or beat the price.

We've run into that so many times through the years and will continue to run into that in the future.

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

Craft and Career Advice & Training from real Working Creative Professionals

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Malcolm MatuskyRe: Commercial Bid itemization- How much detail to give
by on Aug 9, 2014 at 8:17:26 pm

For producing industrials I give a package price, no line item. They either like it or go with someone else. I spend more on intent and scope of work than a line item budget, that is usually where clients get "confused" that their $10k industrial does not look like a $250k commercial. People in other lines of work really do not know how much it costs to make something look like a movie or TV show, but that's what they want, but affordable! (cheap).

I don't work for ad agencies, so I don't use their forms or procedures for line itemizing everthing, which is BS anyway because they always want more than they pay for!

If I'm asked for a lot of detail I charge a fee to do the clients work for them as I'm now working as a production manager and not a producer, they will obviously shop the entire job around and go with the lowest bidder on each segment. If I get a decent day rate for putting a budget together for them, fine otherwise I pass.

As usual this "business" depends upon whom you call and how desperate people are at the moment. Having worked in NYC, California and now Arizona, I have never seen any aspect of this industry as well organized as attorneys, physicians or plumbers.

Malcolm
http://www.malcolmproductions.com


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walter biscardiRe: Commercial Bid itemization- How much detail to give
by on Aug 13, 2014 at 12:39:07 pm

[Malcolm Matusky] "If I'm asked for a lot of detail I charge a fee to do the clients work for them as I'm now working as a production manager and not a producer, they will obviously shop the entire job around and go with the lowest bidder on each segment. If I get a decent day rate for putting a budget together for them, fine otherwise I pass."

That part I don't understand. I always have to work out a full budget before I place a bid whether I show them the work or not. I don't see any reason to charge a client to show them the work I did to come up with the budget.

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

Craft and Career Advice & Training from real Working Creative Professionals

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Bob ColeRe: Commercial Bid itemization- How much detail to give
by on Aug 14, 2014 at 3:05:51 am

[walter biscardi] "I don't see any reason to charge a client to show them the work I did to come up with the budget."

Unless the client simply shared that budget with another producer, and had no intention of hiring you.

All that said, how would you all react if a potential client sent you, unasked for, another production company's budget, in the context of a bidding situation?

Bob C


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Malcolm MatuskyRe: Commercial Bid itemization- How much detail to give
by on Aug 19, 2014 at 8:26:51 pm

That is exactly what has happened to me. That's why I no longer do it.

Malcolm
http://www.malcolmproductions.com


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