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I feel I’m worth it, but am I over priced?
Ok, so my business has spent it’s time in video work that doesn’t include broadcasting and making commercials. Recently, I was asked for the first time to produce 4 30 second spots for a new business that will be opening their doors in November.
After we signed an agreement and got paid about $1500 for each commercial(they paid up front), I realized I should make some connections with the local stations as well as larger media groups such as Charter Media. I am now listed as the advertisers agent which is fine, I apparently get discounted rates as an agent. But one local station keeps forgetting that we don’t need anyone to come out and do scripting, filming, and editing since that’s what I was hired to do. And because of this, they keep saying it would only cost $200 for each commercial to do this. So here is the short mathematical formulation to my question.
(My charge of $1500 for each commercial to produce + broadcasting fees – my discount that I make money off of) – (the local stations alternative charge of around $200 + broadcasting fees which they would keep all of it if I wasn’t in the picture as the clients agent) = Me overcharging and the client hasn’t realize yet they can go cheaper by cutting out the middle man.
In my defense, I do believe in my abilities and that I’m worth it. I stand by my service and acting as an agent to handle all of the different stations that they want the commercial to be aired on is pretty much covered since I get about %15 of what the stations will be charging for broadcast fees. Still our area only has 3 stations that he wants to air on and that’s including CharterMedia, and that means that I’m making more income than what these stations would have.
I mean, it’s not like I’m filming this from a camera that I got at Best Buy or anything. I use the Sony HVR-Z5U and when I go to post production I don’t use Windows Movie Maker, I use professional stuff like Adobe. But with all this higher-end equipment, I cant stop but wonder still…Am I overpriced? or should I keep my rates?
Jeff Bonano
http://www.bonanoproductions.com“I want to have a cool quote at the bottom of my signature, just like everyone else on the cow forum!” -Jeff Bonano
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11 Replies
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Jeff:
Are you overpriced? No
Will someone do it cheaper? Yes
Someone will always do the job cheaper, what are you offering that they are not. Quality, personal service, faster turnaround.
In this day and age of cheap gear and cheap people to run it, there will always be someone that will so the job cheaper. You have to sell your strengths.Roy
Roy Schneider
Long Live Da Cow! -
Jeff,
Most local commercials that run in my market have the Best Buy / Windows Movie maker look to them. Unfortunately local tv commercials are usually very cheaply made if not included in the price of the air time, so it is an uphill battle to convince customers that there is any value in doing a higher end commercial. When was the last time you saw an ad for a local car dealership or pawn shop that did not resemble a Monster Trucks commercial?Mike Cohen
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Clients don’t let local stations or Charter make their spots cuz they are good. They let em cuz they do it for free in exchange for selling air time. This only makes em look bad and becomes more harm than good in most cases as folks laugh at their spent dolalrs or turn the channel. This is your selling point if wanting to produce local spots. They’ll simply pay for your services if wanting a decent product. The local dudes can then make em a package deal for the air time… and will often start calling on you for production, you’ll find.
Don’t try to match these guys low end prices. You are not competing with them.
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For some clients, price is everything, and you may not be able to beat that.
You have to know your own bottom-line, below which it pays better to go flip burgers, or go hunt up better clients, than to keep making the spot. And you have to be brave and never go below that line, even if it means losing an account. Below your defined price limit, it costs you money to keep doing it.
The station can afford to give away production services in exchange for the time buy, they are after all the station, where it all ends up one way or another; a natural monopoly. But uniformly, the production services given away are worth exactly what clients paid for them. The writing is poor, the execution weak, with a high reliance on canned motion backs and canned effects and animated still grabs. The audio is thin and weak, with no skill applied. And the scrips patently SUCK. Because they are working volume, the crew they send out to the client location (if at all) can only spend an hour, so the lighting and set up are rushed… and they look it. They all look weak and they all look the same.
You want to compete with that? Why?
Instead, work on the “value-added” nature of your service. Leverage the Tv spot audio for a short buy of cheap radio spots. Leverage a free YouTube spot out of the broadcast spot, heck, that just costs you the time to set up a render. Throw in little things like closed-captioning. Work HARD on the best lighting and camerawork, the things that take time the station won’t bother to spend. Make your own demo-reel of the worst of your competition’s spots, so you can point out the “quality” issues in comparison to what you give them. Enter your spots in awards competitions like the Telly’s and if you win, give the CLIENT the trophy.
The distinction comes out of how hard you work it, and how SMART you work it. The competition is lazy. Use that.
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Hold on your price and work towards becoming a valuable asset to the client. Another point you might want to find out more about is who owns the $200 commercial meaning will that station allow you to run it where ever you want.
In my market, a lot of the stations offer things like the $200 commercial or free commercial but you can only air it with their station. If you want to air elsewhere or if you even want your footage they have an additional fee which generally ends up close to what you are already charging.
In the end, it’s mostly about customer service and meeting the needs of your client. They won’t mind paying you if things are working and they feel you are giving them good service and a good product.
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It can be very difficult to convince clients to spend more on production… and you see a lot of clients who are simply ignorant to the value of it. We know of many local clients who will spend tens of thousands of dollars on airtime, but don’t see any flaws in their $200 commercial.
A local car dealer in our market (one of the biggest in the nation, before they went belly up) regularly spent about $60,000 a month on media… but aired crappy cheapo commercials.
I think part of it starts with education. We try to convince clients that that should be investing at least 20% (more, if they can) of their media budget in the production side. If they’ve only got $30,000 for a budget, they still need to put at least $6,000 of that into production. It can be a hard sell, but it can be done, especially with smarter clients.
The argument is, you’re spending a lot of money to get your message out. Why are you shelling out buckets of dough to put out a bad message?
Some clients have a hard time grasping that such a “huge” chunk goes into the production side (we of course contend it’s not a huge percentage at all). That’s usually when we whip out our “Superbowl Analogy.” There have been several several instances of advertisers airing a one-time-only spot in the Superbowl. They probably spent about $2M for the airtime. Some spent several million on the production. They understood the value of the message being good.
In the end though, some just can’t be convinced. There are always those that think cheaper is better… and for some of those you just can’t win. My advice would be, as your build your business, try your best to gravitate to those clients who do appreciate the quality of your work. Those who don’t will eventually get weeded out as you no longer need them as clients.
T2
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Todd Terry
Creative Director
Fantastic Plastic Entertainment, Inc.
fantasticplastic.com
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Those are all really good points! And you’re right, I hate turning on the TV to see a commercial for Billy Bob’s Funeral Service and Magic Shop where its just a bunch of pan shots of the store front and people chatting away followed up by a group shot of everyone waving to the camera. I would always watch them wondering who in the world produced this pile of cow dung, is this the extent of the business’s creativity, and did they actually pay money for this? Sometimes, retarded monkeys with crayons can produce a better commercial and I do feel embarrassed for some of these small businesses who opted to go with less quality.
The idea of a demo real of the competition is a cool approach when you then compare it to what the client can get with my company instead. And really, I take ownership of the work for every project I work on so it shows that I care what message they want to convey. Thanks for the tips and the boost of confidence in this matter!
Jeff Bonano
http://www.bonanoproductions.com“I want to have a cool quote at the bottom of my signature, just like everyone else on the cow forum!” -Jeff Bonano
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[Jeff Bonano] “Am I overpriced?”
No!!! You’re not overpriced by a long shot.
The cable companies employ a “loss leader” strategy, which you could never compete against, and that’s purely intentional.
The loss leader is a pricing strategy that involves selling products/services at a price that will generate little or no profit, and in some cases not even cover all associated costs (marketing, overhead, direct costs, etc). The bargain attracts customers who will purchase other products/services even if they don’t buy the $200 product that was initially offered. This is where the cable operators make up for the loss, as they’ll sell other items that generate high profits.
David Roth Weiss
Director/Editor
David Weiss Productions, Inc.
Los AngelesPOST-PRODUCTION WITHOUT THE USUAL INSANITY ™
A forum host of Creative COW’s Apple Final Cut Pro, Business & Marketing, Indie Film & Documentary, and Film History & Appreciations forums.
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I do low budget cable spots too.
I won’t repeat what others have said (i think) but I do have stuff to add.
You too can price production relative to the media buy as you’ll be getting 15%. Bigger buy means a lower price on production. For example, if the buy is $10,000 or more I can start to trim the price a bit.
Your prices are fine depending on the time you put it.
I found the local cable companies welcomed my business and even asked for my reel to keep on file.
When one of their would be clients asks for more than they’re (the cable company) is willing to put in to production, they refer them to me. Of course my prices are higher than their’s but they know I’m low enough that their clients won’t get scared away.
And as others have mentioned you can certainly offer more (Ok I’m repeating what others have said) such a repurposing the spot, using the additional video for other marketing for the client, easy updates without having to shoot an entire new spot. Sometimes I’ll offer a client, TV, Web, Digital Signage, DVD handouts for example.
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Interesting thread and several good points. Especially the re-purposing ideas, smart as usual, Mark.
What comes to mind for me from the original post is that the basis of good spots is the IDEA. That’s where your real competitive edge is against the $200 station-produced spots, Jeff. They are never going to spend more than a minute on their concept which is why their stuff all so often involves the advertiser’s staff waving at the camera. They are never going to adopt a “competitive positioning” message or a “unique selling proposition.” You can and should. Search out and read up on advertising strategies and tactics. Get ahold of case studies which detail how the initial creative brief sets a number of criteria and how the execution worked to fulfill these. How many hours you’ve spent learning your editing software? Now put that kind of time into understanding the concept part of the business.
Jeff also seems to have become an agency by accident. That’s more or less how I got started so let me give some advice in that area. If you’re going to be buying airtime in any market big enough to be covered by a ratings service it’s your job to learn how to read and fully comprehend ratings. It’s also your job to learn how to calculate “reach and frequency” so you can demonstrate to the people you are buying the time for that you truly add value to the process, not just skim 15% off the top. This also puts you in a position to make the stations compete on the basis of “grips” (Gross Rating Points) and not just who buys the best lunch. Advertising is a business and, as such, it deserves your attention.
Now the downside to being an agency. Are the media outlets billing the clients directly and then paying your 15% after the fact? If so you are much safer than the traditional approach of the station billing the agency and the agency billing the client. In this second scenario YOU are on the hook even if the client goes bad and stiffs you. This is a bad place to be and over the years I’ve been there more than a few times. It’s why you have to be especially careful of who you’re doing business with and watch your receivables like a hawk.
Best of luck and remember to never stop learning.
“Some people say that I’m superficial. But that’s just on the surface.”
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