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Do FCPX freelance editors charge for your “Edit Suite”
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[Jeremy Garchow] “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. “
A good bit of my business was for US government agencies — jointly funded by NOAA, EPA, and Everglades National Park — so the budgets were small, but very, very reliable. I loved these guys.
Also reliable: zero money up front, payment 90 days after completion. I was under the impression that that was typical, but in any case, that was my world: me carrying the entire load until 100 days after completion.
They only wanted to hear project numbers, because most of their budgets were written in advance of course.
So I came up with an informal agreement on my side that said, okay, for this per-episode price, here’s how much shooting time I’ll give you, here’s when I’ll get it to you for review, here’s how much time you have to review the episode before I ship it. We can talk about what needs to happen if any of those slips.
They were educators who understood the need to stretch budgets, and had also learned the hard way what happens to educational projects whose budgets stretch too far. Our arrangement worked out so well that the following year, they added budgets for things like side projects, repurposing footage for other projects….all of which ALSO had fixed prices.
This worked so well overall that I rebuilt my business around it for all my commercial clients. I think I billed my last hourly project in 1994.
As I mentioned in another post, all but a handful of them billed their own work as projects, and appreciated the need to respect limits. None of them ever asked for a specific breakdown either. I understand that this might be different today, where clients understand more about production and post, and might own many of the same tools I would….
…but everything in my experience points to project billing as the way I’d build a new business, not hourly.
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[Jeremy Garchow] “Time based fees all us to have better control of costs, that is to say, how much it costs US to do the job.”
Yes, I understand, and cost control is important, but cost is not value, which is why it’s not my preference to charge that way.
[Jeremy Garchow] “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.”
We generally get deposit payments on longer-term projects.
[Jeremy Garchow] “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?”
We do have salaried staff, and we’ve been keeping a group of freelancers busy most of this year. We’ve done both project fees and hourly billing for freelancers. It’s up to them and how they prefer to bill, but we don’t change how we bill our clients to match how our vendors bill us.
[Jeremy Garchow] “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.”
See where the money is going and getting something for that money are two different things. If a bill is high but that value isn’t showing up in the final product, does it really matter from the customer’s perspective that 27 people worked on something all month long?
[Jeremy Garchow] “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?”
We didn’t share the risk: we assumed it ourselves. We had to deliver what we promised at the price we quoted, whether it cost us exactly that, a lot more, or a lot less.
I would absolutely structure the next 10 jobs that way.
Walter Soyka
Designer & Mad Scientist at Keen Live [link]
Motion Graphics, Widescreen Events, Presentation Design, and Consulting
@keenlive | RenderBreak [blog] | Profile [LinkedIn] -
[Tim Wilson] “That COW’s Business & Marketing forum has in fact largely been supplanted by this one.”
Cool. I just checked it out. I mostly just lurk here for kicks, but the business forum sounds interesting. I rarely have time to post here or anywhere, but maybe I can add something of worth at that forum.
Thanks,
Dave -
[Walter Soyka] “Yes, I understand, and cost control is important, but cost is not value, which is why it’s not my preference to charge that way.”
[Walter Soyka] “See where the money is going and getting something for that money are two different things. If a bill is high but that value isn’t showing up in the final product, does it really matter from the customer’s perspective that 27 people worked on something all month long?
“I don’t know what you keep meaning to try and say here. How do you determine the value* of your client’s value?
*edit
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[Tim Wilson] “As I mentioned in another post, all but a handful of them billed their own work as projects, and appreciated the need to respect limits. None of them ever asked for a specific breakdown either. I understand that this might be different today, where clients understand more about production and post, and might own many of the same tools I would….
…but everything in my experience points to project billing as the way I’d build a new business, not hourly.”
I hear you. From the supplier side, I could see how having an amount of money and setting the limits of the work seems to make sense. I mean, look at all the subscriptions popping up. It’s a rather reliable source of income if you have the subscribers and provide a good service. Our business simply isn’t structured that way. Our products aren’t templated. Rental, labor, equipment rates vary and change per job.
Another agency I know has to bundle their entire gamut of services in to an hourly rate. So, no matter who is working on the job, or how many people at different levels of pay grade, all of that is negotiated in to a master hourly rate for their client. So, there aren’t different design/production/writing/account management rates. There is one rate, and everything is done at that rate by the person, by the hour, and the production company has to try and schedule people to hit that rate, including hiring outside vendors, any set design, everything. Yikes. That is a kerfuffle, and not what I would want.
As far as pay, everything used to be net 30, now it’s “net 60” heavy on the quotes. We don’t any work for the government directly, and I would imagine that would be a different scenario as I’m sure expenditures are setup differently.
I don’t know, perhaps we are missing out on opportunity, but it seems to me, with flat fees, you are setting yourself up for a devaluation of the service, because people don’t really understand the value. I know Walter’s argument seems to be that cost is not value, but there is actual cost, and sometimes that cost is higher.
More over, a broken out or time based style of billing shows people how much video can cost. This is not a money grab, this is me, being very honest about what it takes to make a living in a modern video world, especially when clients are asking for more and more complicated (and yes, Walter, expensive) ideas. I don’t know how much the client will value it, but I can tell them how much it will cost. I don’t think it’s my job to determine the value they will get out of it, or how they will use it to assign value. That is a different business entirely.
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[Jeremy Garchow] “This is not a money grab, this is me, being very honest about what it takes to make a living in a modern video world”
I don’t think ANY business model is a money grab, as long as the customer feels they’re getting their money’s worth.
[Jeremy Garchow] “Another agency I know has to bundle their entire gamut of services in to an hourly rate. So, no matter who is working on the job, or how many people at different levels of pay grade, all of that is negotiated in to a master hourly rate for their client.”
I actually get this. To me, the highest value of any approach is to reduce the number of questions between the work and the payment, while offering the balance of control and simplicity you want on the supply side.
I saw the flip side of this in a law office where they charged differently for the principal’s time and paralegal’s time. Clients asked all day every day, for anything short of court time, “Why can’t the paralegals do this?” Of course, he billed the time spent answering those questions to the client as “consultation” LOL but man, that’d drive me insane.
So if I were to go hourly, I’d totally do it this way: this is how much it costs to put the team’s resources at your disposal.
This gets to a project model of course, but I pay the same for a visit to the dentist whether I spend more time with the dentist or hygienist.
[Jeremy Garchow] “. I don’t think it’s my job to determine the value they will get out of it, or how they will use it to assign value.”
I think that Walter is stating the philosophical underpinnings, and doing a much better job than I’ve done in my own attempts to describe my positive experience with project billing.
My own take on the philosophical underpinning is that I wasn’t interested in being evaluated on an hourly price along the lines of “more than a plumber, less than an electrician” or whatever. You want a half hour of TV? This is how much it costs. You want a spot that’s mostly stills? One where I write the script and we shoot on location? This is how much it costs.
Day rate? This is my day rate. More than an hour over that kicks into my half day rate, which is more than half of my day rate. If *I* felt that another set-up or two would make my life easier in the edit suite, *I* added the time on location, but otherwise, clients were well incentivized to be efficient on their part.
I do think it comes back to billing in terms that your clients understand. If most of your clients bill their work to THEIR clients hourly, then sure, trying to fly project pricing past them could introduce unnecessary friction.
In practice, for me, there wasn’t that much friction with clients who charged hourly (such as the aforementioned attorney), virtually all (maybe all) of the other producers in the area also billed by the project.
So, in addition to billing the way clients bill their own work, I suspect there might be regional differences in the approach for the entire environment. Chicago might not let you get away with anything but hourly. It sounds like that might be the case, yes?
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[Tim Wilson] “…but everything in my experience points to project billing as the way I’d build a new business, not hourly.”
Tim. what about people who use Adobe do the projects? Would it be fair to slightly increase the cost due to subscription only as a small business? Would this be a flat rate, per project? Just curious as I have subscribed to Photoshop and Lightroom for a year, billed to me monthly. Love to hear your thoughts.
Today is my first wedding video and a bit nervous.
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[David Mathis] “Would it be fair to slightly increase the cost due to subscription only as a small business? “
Subscription is overhead, just electricity, property rent/mortgage, cell phone, internet, errors & omissions and liability insurance…and frankly, $49 is typically the least of my monthly expenses by at least half. I think water might be the only bill I pay that’s less than $49.
Needless to say, any rate, no matter how it’s calculated, has to at least cover your overhead. 🙂 My suggestion is to calculate overhead — EVERYTHING, including depreciation on your office chair, how much you want to earn, how much you want to be saving, taxes, pencils, etc etc — then at least double that.
That’s because overhead also includes business time that no clients are paying you for….although hey, if you can be posting in the COW on the client’s dime, more power to you. LOL
So then you take that number, divide it by the number of hours you want to work, and there’s your rate. How you bill in order to bring in that money isn’t as important as making sure your rate covers your REAL costs with room to spare.
Speaking as your old Uncle Timmy, this is the mistake I see young ‘uns making all the time: chasing a rate that they think will get them work, instead of charging a rate that they can live on. Nobody can sustain a meaningful gap between those numbers for any length of time.
In general though, I don’t see a way to realistically bill almost ANY overhead costs to a client as a line item. Travel time maybe? Although I’m sure that some of the business whizzes here may have even more creative ideas. 🙂
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[Jeremy Garchow] “I don’t know what you keep meaning to try and say here. How do you determine the value* of your client’s value?
“it’s a statement of principle right? I think you’re (possibly) being deliberately obtuse here? And if you are it’s a good way to force someone to refine their argument. But surely the whole point of positing a budget is declaring your value in the chain. That it presents a figure partners can consider to achieve goals? As opposed to simply declaring the hourly burn rate you run at.
A budget is a higher level object I think – insofar as it moves you up the value chain? Said someone who has no clue about any of it. But budgets look like respectability to me. Respectability and a semi-opaque process where you simply tell them what your engagement is likely to cost.
https://vimeo.com/user1590967/videos http://www.ogallchoir.net promo producer/editor.grading/motion graphics
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I think, as always, I’m being misunderstood in this thread. I’m certainly not trying to be obtuse. I’m trying to have an adult discussion with peers.
Walter says higher cost does not equal value, which implies less cost equals value? Or value is a feeling that had nothing to do with cost?
Look at it from a client side. Have you ever purchased video services before as a client?
If you have a regular vendor from which you purchase video services, and one job costs $100,000 over a scope of 6 months, and another job costs $500,000 over a scope of 8 months, how do you discuss the value and how do you know what you’re paying for? And since I’m paying more, was it worth it?
Did we sell more product? Did our viewership increase? Did our social network hits go up? Was it a
piece that meant something to you professionally? Or was it more of a general feeling of a good deal and a pleasant experience and did nothing to help my business? Certainly, that has a value to a client, so how do you assign that repeatedly without having some sort of basic framework?Basically, I’m asking, how do you know when a flat fee is good value? And as a supplier, how is that calculated, and how do you know your client is getting a good value?
“30 minutes of TV” does not cost the same per show, per episode, per minute.
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