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Charge for a short corporate web video

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Erich RauCharge for a short corporate web video
by on Apr 9, 2015 at 12:03:30 pm

Hi all,

I just finished up a two-minute web video for a plastic injection mold company, and I don't know what to ask for my services. I graduated a year ago with a major in Media Communications with an emphasis on TV and video production, but previously all of my work has been through school (no-pay) or work for non-profits and starving artists (again, no pay). Also, this is not my main line of work so I don't have office costs or anything like that. I teach English in China and just happened upon an American factory owner who needed some video work done.

Anyway, here are the details:
- Like I said, the video is approximately two minutes long
- 4 hours or so in planning meetings
- 10 hours shooting on location in factories
- 8 hours editing (FCP and just a little After Effects)
- I used all equipment that I already own
- My client wrote the script

I have a finished product, and my client is very pleased. He wants to do more videos in the future, so I want to set a rate that will be beneficial to me, but doesn't scare him away.

Also, I'll repeat that I don't need the money. I'm honestly more interested in building my portfolio, but I know I need to set rates at some point.

So please let me know what you think. Even a ballpark would help. Thanks.

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Mark SuszkoRe: Charge for a short corporate web video
by on Apr 9, 2015 at 2:23:53 pm
Last Edited By Mark Suszko on Apr 9, 2015 at 2:39:20 pm

Well, start with what you make hourly at your *real* job, then mark that rate up by fifteen percent. Or fifty bucks US per hour, whichever is higher.

The "proper" way to figure out a day rate and an hourly rate is something they should be teaching you kids in school now. I think it is criminal that they don't. It's a rather involved process, almost like filing out long-form tax forms, but once you run thru it, you'll have a much greater appreciation for why tradespeople and self-employed people like restauranteurs and shop keepers charge what they do. You will also understand more clearly that directly comparing rates between yourself and another editor/producer can be tricky, because no two people live in exactly the same circumstances, and you can't know what the other guy or gal has for total expenses and total profits. They may be a kid fresh out of school living with mom and dad and not paying rent, utilities, or food and laundry, thus, they can charge less but still make a "profit". Until, that is, they hit a snag that requires insurance, or gear they don't own and can't rent, replacement or back-up gear, license music, stock footage, and software, permits, a lawsuit, a fine, an accident or illness, or any number of grown-up type money problems.

This is why I don't complain too loudly about the labor rates of tradespeople like plumbers, electricians, and garage mechanics. Seems extortionate out of context. But.... When you figure in all the hidden costs they have to cover... it adds up.

It starts with a calendar. You look at 365 days and decide for yourself, how many of them you want to be working, and how many you take off for weekends, holidays, vacations, sickness, contingencies, etc. Now you have, say, 300 days where you want to be working.

Next, you start computing all your costs. Costs of living, costs of doing business, from gas to rent to insurance to food to utilities, medical care, equipment, SPARE equipment in case a key unit fails, training, postage, blank media, TAXES... EVERYTHING. Add the monthly payment of any debts, loans, etc.

Figure how much profit in the bank you need each year, to put away towards retirement, to save for major purchases, to invest, in the market or in the business, to cover debts, and to have for "walking around money" or "working capital".

It's adding up, I bet. Add up all those costs, divide by the 300 days, and this is the number below which you dare not charge, or you will be LOSING money. If you make that much per day, you're breaking even. This is a useful calculation for people trying to decide between working for one's self or working for someone else: freelancers always have to charge more, not just for demand for their special skills, but because they have to carry so many costs of doing business that you never think about if you work for a company that handles all that for you.

Now add a markup for profit (and the tax on that profit) on top of that. Whatever percentage you think you can get away with. That gives you a realistic basic day rate, less any traveling costs on a particular job. From the day rate, which could be 8 or 12 hours a day, you get an hourly rate.

Once you have an hourly rate, you probably need to declare a minimum number of hours, because people will try to hire you for just one hour or a half-day, with a project that in practical terms, takes you out of play for the entire day anyhow. They may also ask you for a discounted rate for multiple days. And you want to already have in mind a policy for overtime for weekends or holidays, as well as a policy for last minute cancellations and for a "travel rate" en route to and from distant gigs.

Finally, you need to have a memo ready for them to sign regarding payment terms. It's dangerous to wait for delivery to get paid; it's common practice to estimate overall costs and ask for a third to a half up front to begin the work and cover your out of pocket costs or sub-contractors, then the rest is paid at major milestones of the project like the first edit and then the last part is paid on delivery and final approval. What you don't want to be is a bank, charging free interest on loans to other people. That's what you are, if you don't get some money up front and wait thru the entire project to get paid, all the time accruing bills of your own. Their late payments will ruin you.

Now you have an hourly and day rate that makes sense, for you. One more step you should take is to benchmark the local competition, check their rate cards, see how your rate compares. It's good to be in the middle of local rates, neither the highest nor the bottom-feeder. If you're low compared to the middle, consider marking up a little bit.

And now, finally, when they ask you what you charge, you can look them in the eye without hesitation, and with complete confidence, and tell them. But you shouldn't.

Not until you know all you can about the nature of the job and how many hours you think it will take to do it, with contingencies in mind for problems along the way. Then you put your bottom line price estimate in context with the work.

If they balk, you never offer to cut your rate, but you ask them to look over the estimated hours with you to see where hours can be cut from their production. This may involve trade-offs on production values, changes in the script, changes in how and where it is shot, or in the casting or special effects, etc. That is where you offer to trim costs. Not your rate. Your rate is your rate. If they won't pay your rate, you have to be willing to walk away, knowing in your heart that to accept less is really to be losing or paying out money. And you are in this as a business, or you can't afford to stay in it as an artist or craftsperson.

Don't be bullied or cowed into taking less. I don't care that this is a side-line for you, *today*. Some day it might not be. And you might as well start charging the right price from the very beginning, instead of low-balling it now and having to try to sell people on paying you more, later.

Under-value your work today, and you will be struggling forever forward to justify asking for more.

And, if they offer to pay more "on the next one" if you "cut them a deal" on the first/current one - this has never actually happened in the history of show business. It is really a test to see if they can rip you off because you're an ingenue. If you are ever offered this particular deal, smile, thank them for their time, and walk away. That's the best you can do in those circumstances. You will come out ahead on dollars as well as on sanity and reputation.

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Mads Nybo JørgensenRe: Charge for a short corporate web video
by on Apr 9, 2015 at 4:09:32 pm

Mark is right, but he forgot one essential piece of advice:

Doing a whole project for free!!! Without agreeing any kind of compensation, are you out of your mind? - client will most definitely be happy, but you are likely to work for that same fee on the next job.

You may not need the money, but do have some respect for your skills and other people doing it for a living.
How would the situation be for you if "out of work" local video producers went to your classroom and offered English lessons for free?

Not withstanding that you are exposing yourself to all sorts of trouble if you go on location without a suitable insurance cover.

Anyway, I think that it is brilliant that you have made a video for a client and that you want to do more. Follow Mark's excellent advice and you will do just fine.

All the Best

@madsvid, London, UK
Check out my other hangouts:
Twitter: @madsvid

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Mark SuszkoRe: Charge for a short corporate web video
by on Apr 9, 2015 at 4:21:00 pm

There's a time to work for free, but it has to be on the right terms. I push the idea that it is better to give away free work than to under-charge for it, because charging even partially for it brings in a completely different set of expectations and perceptions, of the work and of the worker. If you took any money for it, now you're on the hook for any problems with it, or changes on it. If it was a donation, they have no hooks in you to make free changes ad infinitum. If they need changes, they will have to pay for them, Either to you, or someone else.

If you believe in a cause or charity and you make a PSA "on spec" for the cause, if you just give it to the charity, they will value it at zero. It says nothing about what you're worth or what you normally charge. It makes you seem like a desperate person who would be lucky to accept any money and hasn't gotten a dollar for his or her work. If instead you present the PSA with a bill for your time, with the notation that you're waiving the fee in lieu of a donation to the cause... now, they value the PSA at the face value of what you'd have charged at full rate, and they will talk about it to everyone as "the thousand-dollar spot they got for free from Erich Rau". Or: "Erich normally charges a grand for this work, but he donated this one to us!"

I know which version I'd prefer to hear.

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Post removed by author on Apr 9, 2015 at 11:04:52 pm.

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