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Different rates for different clients?

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Jason JenkinsDifferent rates for different clients?
by on May 5, 2015 at 9:32:55 pm

For those of you that produce work for agencies, do you have a reduced rate for them since you are basically working for a middle-man who will mark it up for the end client? Or, do you charge the same rate no matter if you are working for an agency or directly for the end client?

Jason Jenkins
Flowmotion Media
Video production... with style!

Check out my Mormon.org profile.


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Todd TerryRe: Different rates for different clients?
by on May 5, 2015 at 9:44:50 pm

Probably about half of our work is for ad agencies, about half directly for clients.

Here, unlike media outlets, we do not have an agency rate.

I think as a general rule agencies mark up our work about 15% (in fact I know that is the case for some of them). Others probably mark it up a lot more. I suspect one agency marks it up a great deal... as there have been some commercial clients that still use an agency for ad placement but now come to us directly for both creative and production as they were making such huge middle-man payments. Conversely, I know that in some (fairly rare) cases where we had low production costs on a simple project but it was one with a huge media buy, an agency has either not marked the production up at all or even subsidized it, as it was a tiny portion of a big media budget.

Others may do it differently, but here our rates are what they are no matter who the client is.

T2

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



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Rich RubaschRe: Different rates for different clients?
by on May 6, 2015 at 2:32:10 pm

Same rates. Only on some projects do we reduce our edit rate to accommodate a budget....usually non-profits etc.

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


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Mark SuszkoRe: Different rates for different clients?
by on May 6, 2015 at 3:24:11 pm

What someone up the chain in the ad agency charges on top of what you billed isn't technically your concern, whether you are friends with the client personally or not. You charge your rate, you get paid your rate. What someone else is able to get for selling your product is a separate affair, Like in Matthew 20, v 1-16. :-)


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Richard HerdRe: Different rates for different clients?
by on May 8, 2015 at 9:43:15 pm

[Jason Jenkins] "For those of you that produce work for agencies, do you have a reduced rate for them since you are basically working for a middle-man who will mark it up for the end client? "

Never! A discount can be had in other ways though: Hourly rate v daily rate v weekly rate v retainer.

[Jason Jenkins] "Or, do you charge the same rate no matter if you are working for an agency or directly for the end client?
"


Non-profits (already mentioned), something creative that I personally like, videos for family things like graduation -- I will charge almost nothing if I'm sympathetic to the cause. I think it's Mark S who has a great strategy I employed: It is better to have the non-profit say "Richard waived his fee for this project" rather than set a ridiculously low rate.


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Jason JenkinsRe: Different rates for different clients?
by on May 11, 2015 at 3:11:41 pm

I appreciate all the feedback!

I started thinking about this when someone from an ad agency asked me my rate, and when I told him, he then asked if that was my 'agency rate'.

Jason Jenkins
Flowmotion Media
Video production... with style!

Check out my Mormon.org profile.


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Todd TerryRe: Different rates for different clients?
by on May 14, 2015 at 8:38:40 pm

I do have a couple of ad agencies that I've considered establishing "agency rates" for.

Except in those cases, they would be higher than our usual rate. Sort of an "aggravation tax."

T2

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



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Walter SoykaRe: Different rates for different clients?
by on May 12, 2015 at 12:12:02 am

[Jason Jenkins] "For those of you that produce work for agencies, do you have a reduced rate for them since you are basically working for a middle-man who will mark it up for the end client? Or, do you charge the same rate no matter if you are working for an agency or directly for the end client?"

Keep in mind that the agency earns their markup, doing a lot of work that you don't see: gathering client input and feedback, developing briefs and direction, managing the production process and client expectations, taking calls, and handling reviews, changes, updates and versioning, as well as bearing the ultimate responsibility for delivering the product, irrespective of your performance as a contractor.

There's a big difference in what you must do working for a production-savvy agency versus a media-savvy end client. This has a lot of value and deserves to be billed; whether that's in the form of a higher rate is up to you.

Walter Soyka
Designer & Mad Scientist at Keen Live [link]
Motion Graphics, Widescreen Events, Presentation Design, and Consulting
@keenlive [twitter]   |   RenderBreak [blog]   |   Profile [LinkedIn]


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Mark SuszkoRe: Different rates for different clients?
by on May 14, 2015 at 9:23:07 pm

Time was, there were only three networks, lots of people paid money to read news off of dead trees, and only credentialed ad agencies that belonged to their industry association were able to get a discount on air time charges from the broadcasters, as opposed to an advertiser making a direct "time buy".

In the 80's and 90's, this, plus using a cost-plus billing strategy with their clients, enabled an ad agency to make a profit on the margin between what they could get with that discount and what clients could get on their own. I don't think that's a sustainable model today, though. "Cost-Plus" billing means they charge you, the client, not just for the materials and expendables and the creative, AND the time buy which THEY broker: but then they are charging another percenage over the top of that, a percentage of whatever the final bill is. For essentially the privilege of being the middleman. It hurts a client and rewards an agency that's sloppy and wasteful: the more it costs you to execute the idea, even due to mistakes and waste and inflated estimates, the more profit you make on it.

Seems like the market today is too fragmented and the market space of ad agencies is too glutted, to the point where if you DID have a discount, you would probably be forced to pass it on to the client just to stay competitively priced. I myself would never dream of paying on a cost-plus arrangement like that, without strict controls. But I'm just musing out loud: someone who works at a modern agency, you're input on that would be valuable to the discussion.

But if you are not the broadcaster selling the time, why would you ever entertain giving the agency a discount? Outside of the pro-bono work already mentioned.


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Todd TerryRe: Different rates for different clients?
by on May 14, 2015 at 10:12:32 pm

[Mark Suszko] "But if you are not the broadcaster selling the time, why would you ever entertain giving the agency a discount?"

Well you shouldn't.

A manufactured reason might be the same one the broadcasters use. Broadcasters give agency rates because in theory the ad buys are easier, less problematic, and require less of their resources (i.e., an account executive's time)... the agency just places the insertion order and should be good to go (I said in theory, because often agencies are just as much work for broadcasters as an individual client).

The other reason is volume. An agency might rep numerous clients that are advertising, and the broadcaster wants to keep them happy to keep getting all those buys from bunches of clients rather than the single mom-n-pop advertiser, thus it behooves them to give an agency rate to keep them in business and keep them buying. I could make the same argument for our own agency clients, since we usually do work for many of their clients, I could offer them an agency rate just to keep them coming back, since the volume of their work is much higher than our individual clients.

But we don't. Same rate for everyone.

And that's probably because, frankly, for us agencies are more trouble than individual clients. They seem to micromanage projects much more than the individual clients we work for. That's probably because although most of them predominately do print and web stuff as their in-house work, they are still "in advertising" so they "know all about how to do TV." Even when they don't. The individual clients are much more trusting of our ability to know what we are doing and make the right TV-savvy decisions for them, and frankly the result of that is that the work that we do for individuals is usually far superior to what we do for agencies, as a general rule.

Actually, our best work is usually for the very smallest ad agencies, because they handle all the wrangling-with-the-clients voodoo, yet leave us to do the creative and concepting side as well as just the physical production. It's the bigger agencies who just hand us a script or a storyboard and say "do this" that often get the poorest results... because while many of them are great print agencies, they really don't know how to concept or write for television, or know how to do it efficiently. But they think they do.

Unusually enough, our three biggest clients (a hospital system, a credit union, and an automotive association) do not have ad agencies, but they all still get agency rates from broadcasters. They are big enough and their buys are large enough that the broadcasters consider their marketing departments sort of like "in house agencies" and give them the better rates. Those three are actually our ideal clients because like non-agency clients they let us handle all of the concepting and creative side, but they still have agency-sized production budgets which are usually a great deal larger than the average individual client. Best of both worlds, but it's rare.

T2

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



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