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Do FCPX freelance editors charge for your “Edit Suite”
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[Jeremy Garchow] “You actually like it, or you have to like it? :)”
I don’t know about Walter, but for me, it’s a bit of both.
When I cut films, it’s generally for a fixed bid. My usual approach is to carefully define the time frame and parameters. I usually assume some leeway. For example, I might stipulate 10-weeks (period), but then I’ll be willing to absorb a week or two over that if it looks like we are pretty close to a locked cut. If not, then it’s overages after that fixed window. That’s only for the creative edit.
Then if I’m also doing the finishing and color correction, too, that will be bid separately on a per-week or per-day basis.
– Oliver
Oliver Peters Post Production Services, LLC
Orlando, FL
http://www.oliverpeters.com -
In complete seriousness, the doubling of the cost of my family health insurance recently costs more than my gear and software. My health insurance went up $4,800 this year. I don’t spend near that on video gear per year!
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[Jeremy Garchow] “You actually like it, or you have to like it? :)”
No, I actually like it.
I don’t believe that cost creates value. A piece of work is not worth paying a lot for because someone worked a long time on it; it’s worth working a long time on because someone will pay a lot for it.
Hourly billing is a poor proxy for value delivered, and it creates a perverse incentive for hourly-billing vendors. If we have a smart new way of doing things that saves a production time/money, we can work hourly and make less money than we would have doing things the dumb old way. We’d rather split that benefit with the client: capture some of that value for ourselves and get some back to the production. To do that hourly, we’d have to be dishonest about our time spent (padding the timesheet) or raise our rate way outside of market expectations, neither of which fits your ideal that hourly numbers provide a level playing field.
This comes up a lot in workflow design. A tweak in a production workflow can be way more valuable than the billable minute and half it took to come up with is.
Some time-based budgets are really project fees in disguise. When we quote an hourly or daily estimate, our clients generally look at that as a maximum. If we underestimate how long something will take us, too bad for us. If something changes from the additional estimate that needs more time to complete, then we can talk about increasing the budget. But then sometimes the risk/reward isn’t fair: we have given a ceiling on our price which we are not allowed to exceed for a given deliverable, but if we get it done faster/sooner, they’d like us to charge less for being efficient and taking less time than we both agreed was reasonable!
I don’t see a huge difference between saying, “We’ve run out of hours in the budget, we can’t do any more until you give us more money for more time” and “That is outside our agreed scope, we’d need a change order to make it happen.” (For me, one of the biggest lessons in scope management has been defining the scope of a project two ways: both what’s included in the scope, and things that are specifically excluded from the scope.)
Where I do see a huge difference is the client understanding the price for what they’re buying. You know that great video about how a customer would never ask a restaurant’s chef to teach them how to cook a steak so they can do it themselves next time? On the other side, a restaurant would never leave their clients guessing what the meal will actually cost, telling them instead, “Our steaks cost $3/min to cook.”
This is especially important in work that is hard to price. We’ve just finished our first Oculus Rift VR project (a big success!), and since no one really knows what that costs yet, our fixed bid guaranteed the client a result without them bearing the pressure of unlimited liability if we went over time.
Basically, we like project fees because we want to be rewarded for output, not for effort. That puts pressure on us to work effectively. Sometimes we win and sometimes we lose, but our interests are completely aligned with the production’s. Clients really buy results, not hours, so what should we sell them?
Walter Soyka
Designer & Mad Scientist at Keen Live [link]
Motion Graphics, Widescreen Events, Presentation Design, and Consulting
@keenlive | RenderBreak [blog] | Profile [LinkedIn] -
I would agree. Hourly is best reserved for situations where you have no control over the scope. Generally when you’re an editor for hire. When someone else is in control of the shooting, the script, the end client, etc.
But when you’re being asked to produce something from start to finish, hire the writer, hire the shooters, book the editor, and control the ideas and scope with the client, then a budget should be established. And you’re right, a estimate or quote should be the maximum. It should have a hefty contingency built in. And if the product is much simpler than expected then I’d suggest some of that go back to the client.
I have two types of clients. First, producers that book me to edit THEIR projects where I charge by the hour. I try my best to meet their budget but I have little control over the scope. The other type of client is a company that hires us to take responsibility for the entire project, from idea to execution. We control the scope and build a good contingency in our budget and try to both exceed expectation and come in under budget. This type of project usually brings in much more per hour.
I believe you get paid for responsibility. A skilled laborer charging by the hour isn’t generally sharing in the risk and should be paid handsomely per hour/day. But if you’re taking on the risk and responsibility for a project you should also be rewarded for it.
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Here’s another way of looking at this.
You aren’t selling editing time or gear.
You’re selling professional story telling.
I’ve been a network correspondent, an editor, producer, voice over guy, writer….
I’ve got my own gear and edit write and produce various projects, from documentaries to corporate video.
Selling myself as an “editor” often has the client look at you as just one cog in the machine…when in fact you are the entire story telling machine who can make or break the message they want to deliver. When you sell yourself as a total solution, you’re value soars in the potential client’s eyes. Just an “editor” has them running to Craigslist for the lowest price.
I manage and control costs this way.
I lay out how long pre to post production will take, with locations, prep time, pre-interviewes etc. Then build in log and edit time for rough cut — graphics etc.
Each has a price tag depending on how much I want/need to make on that project – my costs for crews etc and reasonable mark up for profit and taxes.
Then I tell the client – YOU CAN CONTROL THE COSTS.
if they follow the guidelines – get sign off on each step – script approval – rough cut approval – polished cut approval. The estimate won’t change.
When they step outside that realm — then they understand the meaning of hourly rates — we tell them – after the second round of edit changes – the meter starts running again at x per hour. It’s then up to them to determine the final cost.
This is a far more profitable way to produce for hire work….and lets the client know up front you’re trying to save them money with a methodical step by step production approval scheme.
We get them to sign the agreement for all of the above. When the client says – but our accounting department has changes after the 12th edit – you point them back to the original agreement and say – no problem – here’s what they will cost extra.
Andy Field
FieldVision Productions
N. Bethesda, Maryland 20852 -
[Walter Soyka] “I don’t believe that cost creates value. A piece of work is not worth paying a lot for because someone worked a long time on it; it’s worth working a long time on because someone will pay a lot for it.”
Just to be clear, I don’t either. Just because things are more expensive doesn’t mean they are worth it.
Also, I am not arguing that one model is better than the other. Clearly, whatever works and maintains profitability is what is best for the business. We often work with project fees, and they are often the least profitable in terms of margin. Margin feeds the business.
Time based fees all us to have better control of costs, that is to say, how much it costs US to do the job. We also have to be a mini lending facility. Very often, we extend out and pay for the entire production and post. This means, you are essentially giving out a 6+ month interest free loan to whoever is ultimately paying for the job. If you have 4 or 5 really large jobs going at once (we are a small company after all), this is a lot of cash out on the table. Sure, we can get up front deposits, but those are almost always spent immediately, they can take a while to get (meaning the job is started before the money shows up), and final billing is now at least 60 days, it seems, with most entities, and often it take much longer than 60. In general, there seems to be a lack of liquidity. A job that takes 6 months to complete, can take 9 months to get paid for, and we assume all of the risk. We pay our vendors, but we have to wait to recoup those costs. An hourly cost structure helps to maintain control of that cost, it gives clients a visual marker, something that can be seen and sometimes felt, about when a job is lagging behind on time.
Not to get too personal, and divulge as much you want, but how often do you hire freelancers, or is your staff salaried? If you hire a lot of freelance, and you have a set budget, do you then set a fixed cost with them as well?
The reason I like an hourly/daily/time based structure (even though, as you mention, it sort of ends up being a project fee in the long run, especially in post) is that right up front, people know how much something may cost. It’s all broken out. With project fees the difference between a $20,000 job, and a $200,000 job is less clear to clients, at least that’s my experience. When things are broken out by time/person/fee, a client can see where the money is going. With project fees, this can be obfuscated. With repeat clients, if they paid $X for the last job we did, and this job is now $X*10 for what seems like less work, then project fees seem to be a “we will take all the money you have” type of scenario.
A lot of the really large design firms and agencies we work with a now charging and billing, hard core, by the hour. This also allows teams to be spread around and work on jobs for different clients, and those costs can then be tracked (and therefore estimated and billed) much more easily.
[Walter Soyka] “Basically, we like project fees because we want to be rewarded for output, not for effort. That puts pressure on us to work effectively. Sometimes we win and sometimes we lose, but our interests are completely aligned with the production’s. Clients really buy results, not hours, so what should we sell them?”
Of course. I didn’t mean to insinuate the clients need to actualize our efforts. Part of our job is to make the process seem easy and fun. We don’t need to be rewarded for that as that we want things to be fun as well, and we also enjoy challenges.
When I said effort, I meant that often clients don’t know what they are asking for. And when they ask for something, that very well could be a very expensive idea,. With project fees, this expense is less clear because it isn’t tied to a tangible amount of time, people, or in the case of production, equipment and locations, and therefore it is harder to ask for more money, so what happens is that these new costs end up eating up the little margin that’s left.
To our clients, there is no difference between working on an estimated time schedule, or a project fee in terms of our effectiveness.
[Walter Soyka] “This is especially important in work that is hard to price. We’ve just finished our first Oculus Rift VR project (a big success!), and since no one really knows what that costs yet, our fixed bid guaranteed the client a result without them bearing the pressure of unlimited liability if we went over time.”
Yes, this is a good example of where a project fee might make sense. If you don’t really know how to bill it (or how much it’s going to cost), then sure, sharing the risk between you and your client is the right thing to do. You get the ‘billable R&D’, the client gets the product they set out to purchase and what probably ends up being a pretty good price. But would you structure the next 10 jobs the same way?
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[Jeremy Garchow] “A lot of the really large design firms and agencies we work with a now charging and billing, hard core, by the hour. “
That’s it for me, right there. I charge the same way the client charges. The object of the game is to avoid being seen as “the help.” Even $500/hr lawyers can be “the help.”
And indeed, lawyers, retailers, and companies providing labor were the people I charged labor for. Hotels, restaurants, medical offices, architects/design firms (in my neck of the woods anyway) — those all charge by the job, and they pay employees by the hour.
So do you want to charge like a peer, or do you want to get paid like an employee?
And sure, if all your clients bill THEIR clients by the hour, then the more familiar your invoice looks, the better. Hourly, without blinking. I preferred project billing, but the object of the game is ALWAYS to stay out of the way between their wallet and your pocket.
Of course, all of the “by the job” folks I worked for understood that there’s a behind-the-curtain calculation that includes an hourly rate. They did the same, so I never found it at all difficult to say, “Let’s talk about our next steps,” and never found the client hesitant to engage.
Actually, you know who REALLY got this, was realtors. I think if they’d calculated their income hourly, they’d have killed themselves. They worked such long hours, with everything a gamble, and they wanted a price. Gimme the bottom line. What’s it going to take to get this done? Which is of course how they got paid. For the job.
And the people they paid hourly were the guys who planted signs in the ground for them.
I also preferred project jobs because I could typically get away with charging more, to be honest. Some of it was because I always built in a 20% overrun, but if I could pitch a 50% overrun from my “real” estimate I would. More often than not, I pocketed a meaningful premium above my hourly rate.
Answering the original question, though, in charging the way my clients did: none of them billed separately for tools. Very simple math for me.
But then I was never a straight freelancer for whom working with anyone’s gear but my own was ever realistic.
That was my plan though. My billing was absolutely part of my marketing, much more important as part of my branding than as a fixed financial model that everyone had to fit into because it worked best for ME.
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[Jeremy Garchow] “A job that takes 6 months to complete, can take 9 months to get paid for,”
jesus really?
This is an interesting discussion if only because I understand it from a really tiny tiny limited perspective. Freelance edit this side is daily rate. Longer term stuff is either a buyout for the gig or a somewhat reduced rate given the length of a solid long term booking.
But once a shop is even two people together they seem to immediately and generally bill as a project budget for completion. Anyone setting up a real company, as opposed to my notional company of one, has more cop on than me and the people you meet do –
but really isn’t the point with a budget that you can determine a number you rationally know somewhat exceeds not only your notional billing hours, but basically the cost to execute? You’re taking greater risks by calling a fundamental budget and relying on your competence to call a mutually correct number. also it makes life clear for the client in their organisation when selecting you for the job? Also budgets set buy in parameters? You’re drawing up an agreed definition of the goals, which they subscribe to, and then if you’re lucky and they’re corporate, their own incoherence leads to late stage overrruns as their own internal structure turns out to be a decision making FUBAR where late stage entrants start tearing up nearly agreed final pieces.I watched a good talk from a bearded design guy called “f**k you pay me” it dealt with the travails of design agencies who seem less hard headed than production companies, but even in that case, they had mechanisms to control overages where clients had a pool of revisions they could make in stages, but that at each stage they could only choose from within the set of prior notes. That they get progressively and consensually corralled in order to help control the process, and ultimately, their costs. I found it interesting like I would a documentary about mars given how likely I am to ever engage with the issue, but still – I’d like a project budget me.
And also, I think, over here a client would probably be surprised at the notion that they were kicking off a per hourly billing process for multiple personnel within a facility. I think they’d run a mile? (with the proviso that I might have mis-understood everything you’ve been saying jeremy, which, let’s face it – is a solid possibility.)https://vimeo.com/user1590967/videos http://www.ogallchoir.net promo producer/editor.grading/motion graphics
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[Aindreas Gallagher] ” (with the proviso that I might have mis-understood everything you’ve been saying jeremy, which, let’s face it – is a solid possibility.)”
Again, I’m not saying I’m right. In fact, I don’t know what’s right and would love to figure out how, in production, people can work with flat rates especially when working with freelancers when jobs continually creep out of scope, and still make a favorable margin.
Through my experiences, I find that clients are willing to spend more if they know what they are buying. And let me be clear, if clients pay more, that doesn’t necessarily mean we pocket the money, it just allows us to complete the job the way we want to complete it. Also, when the job starts to creep out of scope, you can maintain good working relationships with freelancers as they will also be compensated for time.
[Aindreas Gallagher] “jesus really? “
Sure. Start a job in January, finish around June, get paid in September. It is happening more and more frequently. And these are relationships you want to keep. Good, client relationships. These are people that are doing real jobs, with real money, that have real clients that have real money.
[Aindreas Gallagher] “but really isn’t the point with a budget that you can determine a number you rationally know somewhat exceeds not only your notional billing hours, but basically the cost to execute?”
Yes, but at some point that threshold is crossed, especially when it’s jobs without an air date or tangible deadline. The jobs can drag on for what seems like forever, clients will make endless changes, and when that happens, all of that cost and risk falls on us, especially if we’ve hired in some freelancers or if we are so busy we can’t go out and find more work. I think project fees are more limiting. Sure, you can argue for a change order once all the money is spent and time has run out, but then what do you renegotiate?
We have worked with some project fees, and at some point, after being completely understanding and working well beyond the agreed scope, we have to throw up a flag and have the conversation about money and time and all of it being spent. Most often, we offer to switch to an hourly billing system. This does one of two things, clients stop making endless changes, and the job finally completes, or the client, suddenly and without warning, comes up with a lot more money to continue the endless changes. We don’t mind making changes, and we don’t mind when clients come up with new ideas, but that has to cost something, as it certainly costs us something, and project fees have a harder time of recovering those costs because it’s not rooted in actual costs, at least from a client perspective.
I will be clear in that setting up a time based system does not automatically equal a 1:1 timer-to-money ratio. Meaning, just because we all agree to and then work for an exact amount of time, and the time runs out, it’s automatically time to renegotiate. Often, a time based estimate becomes a project fee, but I find an advantage where it’s time to go back to renegotiate, the client now has a sense of how long things actually take, and we can point to the results that we have produced thus far, and then have a much easier time providing another estimate that includes actual costs, and gives our clients a digestible amount of items so that they can see where the money is going and what they are asking for.
It also helps when you are working on multiple jobs with multiple page budgets. Having a way to roughly track all of that makes accounting a little more tolerable. If you are working on one job at a time, then a project fee can be totally fine as there’s a lot less to track.
Perhaps it’s sacrilege to talk about this out in the open, but since it came up I thought it might be worth talking about. I know there’s also a dedicated forum for this, but…this is such a lively place.
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[Jeremy Garchow] “I know there’s also a dedicated forum for this, but…this is such a lively place.”
That COW’s Business & Marketing forum has in fact largely been supplanted by this one.
That forum had also originally been started for the owner-operators and small shops who were the original constituents of the site, people like the founders themselves, Ron & Kathlyn Lindeboom, who started the community to find help that wasn’t available anywhere else on the web. (That was certainly me as well, when I joined up as a member with my own business issues in 1996.) Moving from that first community to found Creative COW, the Business & Marketing forum that Ron Lindeboom formed here was the first of its kind for our industry.
Those guys are some of the true lions of the business, and in that owner-operator realm, a peerless found of knowledge…but yeah, now, if anybody wrote me offline and asked which was the best forum to bring this up in, I’d say this one, for sure.
Not just because this forum has become more of the “village green” forum than that one once was, but also because the FCPX-ness of it steers the question away from full-range boutique post services.
Tim Wilson
Old-ish lion-ish-in-Chief
Creative COW
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