hourly rate

[Mark Suszko]

Never charge using a flat fee. That way lies madness. Always establish an hourly rate.

You can use other folks in your area as a guide, but the first step is to calculate what it is costing YOU to edit, then build from there to include the profit. What some OTHER guy charges may have little to do with his OR your reality, so blindly copying another guy’s rate is a mistake.

If you are editing on your own gear, figure the cost of buying, maintaining, upgrading that gear, software, expendables, blank stock, insurance, tax witholding, all your costs of doing business. Put your weekly salary down as a cost. Also put in a percentage that goes into the bank to save up. Total all the costs. Divide the costs into the number of working days you want to be working in the year, that tells you how much per day, per week, per month, per year you must make to break even or make a profit. Your rate is that figure, plus whatever markup the local situation enables you to tack on. Aim for a figure that meets your etsablished calculated personal minimums, but sits in the middle of the range of your competitors. But always defer to the floor you calculated, even if it makes you more expensive than anybody else in your area.

The reason the other guys are charging less may be they didn’t do the same homework as you, and are low-balling the rates at a level they cannot sustain. They may be setting a rate that barely keeps the gear out of hock, but doesn’t allow for upgrades or improvements. They may be limited in what they can offer with that rate in areas like graphics, music, audio sweetening, etc. They may have a second and third job that’s underwriting the video business. They may be taking a page from Gates and just trying to starve out all competitors, then raise the rate once they are the sole survivor. They may just be really BAD, and need the lowball rate because they only ever see a customer once. Hopefully, you want to build repeat business, and you do that on reputation, not on price. The quality of your product and the integrity of your dealings is the number one advertisement for this kind of business.

No matter what, NEVER, EVER, believe the phrase: “give us a price break on this first one, and we’ll give you more business in the future, it will be good for your portfolio”. For me, these “magic words” mean these folks are crooks and liars, best referred to your worst rival. You are an editor, not a bank. Still, if they ask for this, and you would walk thru fire for the chance to work with the particular client, turn the phrase around and say: “I’ll give you a terrific break on the third one, let’s see real money at the real rate for the first one”. If they balk, walk away. Best thing you can do. They may even come back, after they’ve burned someone else, or tried a lowball player and been dissatisfied. Once you set a lowball rate, it is VERY VERY hard to raise it. Our markets are an incredibly small circle, word of mouth and reputation will make or break you.

[Timothy J. allen]

Mark spells it out pretty well. Rather then simply echoing his advice, I’ll add just one more thing…

I don’t recommend setting a pure simple “hourly rate”. I’d set a day rate (up to ten hours) a half day rate (for those times you work between 1 minute and 4 hours on a project during a day) and an “overtime” hourly rate (the overtime rate should be well above your daily rate divided by 10, I’d say at least double).

This keeps you from losing full days of work because you booked a project that only took 90 minutes. I book a minimum half day for any project. There are a number of reasons for doing so, including:

*It keeps clients from “underestimating” the time it takes to edit something.

*It help keep you from working with “grinders” who only want to pay for a couple of hours of work, even though booking the edit session with them blows away the time you could have booked for a larger job.

*In my opinion, that 11th or 12th hour you spend doing “one more thing before we wrap up and you go home” is worth more than any of the hours during your “expected normal” working hours. It gives everyone a reason to wrap the project up in a timely manner rather than keep going that same day. (There’s not as much incentive if you are “already here anyway and it will only add a couple of hours to the finished cost”.)
JMHO

[Pballain]

thank you guys very much for the information. VERY helpful.

[Jiggy Gaton]

Hi, I think this is the best formula on fees that I have seen yet, but where is the next step discussed? ie. u have to bid on a contract, say it’s 6 PSAs (public service announcements) @ 30 seconds each, and you have never done such. Are there any standard charges, expected costs, estimates, etc. on the web for such things? From expierence, I know that 1 minute of music video and 1 minute of doc video are two different beasts to create, and I figure my hours based on my own expierence. But when submitting a bid, it would be nice to know if there are expected/standard/almost consistent rates for the different catagories of projects typically put out for bid. Does that make sense? Thanks a million. I can’t find this anywhere on the web…
BS

[Mark Suszko]

Well some folks use a sort of template approach, extrapolating from the knowns and from previous experience, but if you’ve never done a particular kind of project you just really don’t know, that in this kind of situation a flat fee will KILL you.

When you’re operating mostly in the dark, it can be useful to set certain benchmarks or progress points, and budget to that. Make one as a test case, then use that experience as a rule of thumb for the rest, if they are all of a similar type.

But as you yourself pointed out, documentary, music video, PSA’s all are all very different and run under different assumptions and rules.

What I will say from my experience is, if it is a program that *can* be scripted, then a professionally done Creative Treatment and then a Script derived from it will be the key to unravelling much of the mysteries. As a planning document, the Treatment lays out your needs for locations, sets, effects, actors, graphics, everything. It’s not the script, but a blueprint, a beat by beat description of the settings, characters, action and kinds of things to be said, but no actual dialog, along with explanations of the rationale and the styles needed, and more. With a good treatment, any writer that’s half good can create the actual dialog script with ease. The Treatment stage is where you pitch all the ideas and see which the client likes enough to pay for.

From there, you usually build your strip boards… a kind of mutant version of a Gannt (or is it Pertt?) chart, calendar, and spreadsheet. Whatever you call it or however you create it, it breaks down the script into preproduction days, shoot days, post production days, etc. and by this process of dividing and sub-dividing the tasks into tinier and tinier slices, you get to a point where you can apply rules of thumb and standards to define the slices and generate actual figures for the hours needed. Hours times rate equals budget figures.

In the case of your 6 PSA’s, in the treatment process you work out if they are six chapters of one ongoing story, six variations of one theme, six completely stand-alone pieces all radically different from each other (maybe like the various Geico campaigns all running simultaneously these days). Obviously, just from that much information, you can tell quite a bit about the general shape and cost of things. If they are all variations on one theme, it’s likely you are going to share the same location and maybe talent for every one of them. This may mean a shorter number of shoot days, though probably very intense ones. Travel will be up to five times less using just one location, but overtime may go up. What if the spots are all stock footage-derived? Then no talent or transport or camera rentals, but a budget for aquiring the stock and rights, and maybe more editing time will be needed…

All kinds of numbers start to suggest themselves once a few assumptions and specs get laid down. When you know your talent and their capabilities, you get some idea of how long they might take to nail a scene, times how many scenes, etc. and generate some time figures. Better actors cost more but save time and give a higher quality. A shorter number of shoot days reduces the studio and gear rental costs too. if you can nail six spots in one day’s rental, you’ve saved hundreds if not thousands right there. If the notice is short, or the actors are not as good and maybe need prompters, that’s another expense and more time to calculate.

On the back end, in editing, what can you anticipate for working on six variations of one basic template spot? Obviously, after the graphics for the first spot are made, subsequent variations might become super-fast to update. Same with music cues, etc. The first of a series is always a little longer getting done, you’re always learning and perfecting as you go. I once had to do a run of very simple PSA’s, all very templatized,( a simple stand-up, guy reading off a prompter for 28 seconds, fade up, drop a third for ten seconds, cover with a page of chyron at the 17 seconds mark, fade to black at end, add music on a second pass) with mostly changes to lower thirds and slates, but it was something like five spots each of twenty differnet guys in a weekend. I got to where by spot number 20, I could cut the whole thing in one continuous AB roll take, once I could find the right take of the actor, and create each spot in about three-four minutes, but it still took everything I had to make the Monday morning deadline. Were they great? Was I proud of the work? meh… it was exacly what the clients asked for and wanted and it was on time. But it was not art.

How well do you know yourself as the editor? If it’s kind of cut and dried work, mostly straightforwards cuts of the best takes of scripted stuff, and you’re mostly making fine adjustments to timing and the like, how fast can you throw things together? Not to scare you, but Walter Murch said that on Apocolypse Now, it was considered a good day if they make one single cut in a day. That is, going thru five or more camera angles of the same shot, and all the takes of that shot, cutting something together, then viewing it and viewing it in context of all the shots that came before it, then approving the cut or udoing the splice and trying something else… to wind up with one CUT per day that stayed and was approved, was considered amazing progress. I bet you’re going to be a little faster than that, but by how much? Do you build in x number of hours for experimentation when the script is not very specific, or the shots in the can don’t match the storyboards and you must improvise or repair? What if they throw changes at you in post? Are the compositing or other special effects tasks things you’re very comfortable with? What if they are farmed out to someone else? What’s the deadline for the project to air, and is there enough time to dot he thing right the firt time, is there some pad to use in perfecting the final 10 percent of the thing, or is the timetable sucha rush you’ll have to pull double shifts to make the fedex drop in time? For which you should be charging a higher rate…?

And I thought quadratric equations were tough in school!

I think the thing you can take away from my rant here is, anybody who can just drop a flat figure on you for a job as potentially complicated as this, without doing the homework, is foolish or crazy. or so experieced he/she probably doesn’t need the work anymore.

[Jiggy Gaton]

Love it. And I went to film school because I could not cut the math in rocket science. I hear what you are saying and understand it all. But I have to put in a bid, and I am bidding against very large advert agencies, and we are just a home studio. The spots are all on one theme, can be cookiecut after getting one done, need to be done on an insane schedule of about 3 weeks, will be done with non-actors, are subject to a review by committee from the client, and shot on location on a small island in middle of the Indian Ocean, and I am not much faster then Walter Murch. It’s starting to feel like Apocolypse Now, as this contract could bring our studio out of the backwaters of this asian jungle.
BS

“I watched a snail crawl along the edge of a straight razor. That’s my dream. That’s my nightmare. Crawling, slithering, along the edge of a straight… razor… and surviving.”
Kurtz, Anow, 1979

[Mark Suszko]

“subject to review by a committee of clients”. Well, there is probably the number-one problem you’ll face. If you use the treatment process as the guiding document, you will save a lot of trouble because you run the treatment past these people and get them up to speed before a dime is spent. If they are going to kill or change an idea for any reason, let it be there, on paper, where a change will not cost wasted time and money later. They cannot point to your finished work and claim to be surprised at anything about it, since they knew everything that was coming and had signed off on it first. To protect their interests and yours, insist on this step in pre-production. Go as far as making a photomatic prototype of the typical spot in the series to make sure it is understood.

(Even that step can be dangerous, some clients have been known to be so thick, they cancelled a spot at the photomatic stage becasue they believed they were looking at the final air cut of a finished spot, Conversely, some have been so stupid, they liked the photomatic rough cut so much they insisted on using it as the master.)

Some factors in your planning for the six spots:

Travel. Customs probs. Weather/humidity. Breakdowns with a delay in getting repaired or backup gear/supplies in. Talent that needs more coaching than planned. Over three weeks, somebody WILL get sick. If you could give more details about the project, we could make more detailed suggestions.

[Jiggy Gaton]

Mike, this is all great stuff. I am sure this thread can now be used as a sticky reference for working with any client on video projects. But I still do need a pointer to table of fees for producing 30-second PSAs. Or for folks to reveal Xxx dollars for Y project. I can handle all the rest – your point on treatment/script/storyboards is a great one – I don’t start anything shooting-wise until that is signed off – been burned without before. Through a mistake in the bidding process, I even know who i am bidding against, one of the largest agencies in north america. There must be a median or range in that genre, after all, a PSA is not a feature film like SpiderMan3. We know how much those cost. I know how much a 3.5 minute music video costs to make. I have done enough 15-minute promos/fundraisers to know how much those cost to make. There might even be a goverment database somewhere that shows the costs of Nancy Reagans Just Say No campaign. I wish I could find it. How much would you charge for one PSA on say “Ride Sharing” or on “Not Using the N-word.” I need numbers.
thx,
BS

[Mark Suszko]

Free type answers:
“It costs what it costs.”
“How much you got?”
“How long is a ball of string?”
“How much should a house cost?”
“What should you pay for a car?”

This whole thing is madness. I can’t give you a figure because I don’t work the same way as you. Where I work, most costs are comped because of the setup; clients only pay for expendables, the dubs, postage, any out of the ordinary expenses for travel, props, hotel or per diem for overnights, etc. The most expensive 30 second TV spot I shot this year, with a rented grip truck with Matthewrs dolly, jib, HMI’s and a P2 camera rental, and a full crew of seven and cast of six, shooting seven setups for 4 hours, ran the clients in the neighborhood of 900-1200 bucks, but I average between twenty dollars and fifty or so for most of my spots in terms of billables, and that’s mostly for tape, to generate spots that a comparable outside outfit in Chicago would charge roughly $2K-$3k for. I once won a local award for a no-shoot all graphics and sound design spot that cost me five dollars to make, beating five others and one by a friend that cost him over a grand. The facility and staff run off revolving funds and inter-departmental fund transfers… Monopoly money, if you will. In this way we make the entire enterprise affordable to our client agencies where it would otherwise be impractical. This is of course useless to your calculations.

Don’t base your bid on what the Famous Big Agency who’s name sounds like someone falling down a flight of stairs will charge. That’s a ridiculous mismatch. Instead:

Ask yourself, after factoring all the operating costs info you have on the project, do you think you can shoot the raw takes in two, four, six hours? Days? How many days do you figure you’ll take to edit the first one, including the time spent logging and digitizing and otherwise prepping the footage first? We already discussed how you calculate your rate way earlier. Rate times hours, baby, and depending how confident you are, a pad on top of that for safety or extra profit. You generate a figure YOU can live with, THEN hope the guy with the checkbook goes for it. If the Big Guys are still billing on a cost-plus system, you are going to spank them every time. Cost-plus offers no incentive to economize anywhere, and it typically jacks up the price of a comparable spot by twenty percent or more. The more the spot costs, the more an agency using cost-plus charges on top of that higher cost, in an unending spiral.

Sometimes, you can get the client to plain tell you what he can afford, and if it is at all congruent with some version of reality, then you conform the production to the available budget and most everyone is happy or at least equally UNhappy. Explain the Golden Triangle: you can have it FAST, CHEAP, and GOOD, but you only get to pick TWO of those three…. any two, but ONLY two. Anyone promising all three is a liar. When you get a response from the client on which two legs of that triangle they are wanting, you adjust the quality level or the delivery date (I’m saying it that way because 99 percent of the time, they will say low cost is important, leaving you only the other two dimensions to work with).

A rule of thumb my old boss has used since the 80’s, and that some people hold to today, is to charge a grand per finished minute for something pedestrian and uncomplicated. I feel the fact that this rule may still work at times is that it’s purely a coincidence. An ABC-roll Beta-SP to 1-inch edit bay in 1982 costing 3/4 of a million can be beaten today in most respects of time, quality, and sophistication by a NLE system costing under two grand in somebody’s second bedroom, or even on a #$%@#% laptop in his car… If we’re still charging the same grand a finished minute today, where is the difference going, into the editor’s pocket? Or is it reflected in the shorter time to completion or higher quality or sohistication of effects? I don’t have an answer, only more questions.

It costs what it costs.

Calculate the costs best as you can, and pitch them your numbers. Be ready to defend or explain each line item, have alternative suggestions ready for anything that is questioned, use the Treatment document and boards as the guide for why each choice has been made.

There is NO secret decoder ring, every spot is hand-wrought by an artisan(s) and they charge what they are worth for their time.

And who is this “Mike” guy!?!?!

[Jiggy Gaton]

Ha! Mike is a caffine hallucination. Thanks Mark for all of your great info and expierence specifics. I know deep down what u say is true. A ball of string is as long as a line of string. But like with a ball of string, I wish there was a price sticker on the wrapper of all the PSAs I’ve seen out there. But now moving on, I am going to do as you suggest and calculate MY rate as u descibed. I will also try the triangle angle, but based on my knowledge of client and the time in the fiscal year, the pocket is deep…hence the bid going out to the big boys.

I love what your 80’s boss said. I think we may have had the same boss back then. I was in IBM internal affairs. He said something like “I’m not paying more then 10 grand for that.” It was a 10 minute internal promo for something called a PC XT. So he must have been using the same rule:)

Okay, back to the calculator.
BS