hourly rate

[Mark Suszko]

While you massage the keys of your Bowmar Brain, two little bits more, and I swear, I’m done:

If the 1982 rule of thumb still holds for the rate being a thousand per finished minute, why don’t all 30-second spots cost $500?:-)

And, one more argument to make during the budget meeting, after you ask them outright what they can afford for this, and they say they don’t want to commit to a figure, or say something really impractical an unrealistic. If this was a commercial 30-second ad, or a training video or a promo of some sort, ask them this:

“On this new doodad you’re advertising, how much are you forecasting or planning to make on it this fiscal year? A million? Five? What percentage of that amount are you willing to spend to insure that you make that sales figure? One perent? Two? Would you invest five percent of the ultimate value of this account to make sure we sell all of it? And how much IS five percent of five million dollars? So why are we quibbling about the gorram cost of the #$#% tape stock?” (or insert whatever line item they are giving you a hard time about)

Hm?

Since it’s a PSA, you generally cannot point to a sales profit like in that “percentage of the Big Nut” argument. But you CAN point to things like: “this spot should drive 50x more people to the xyz web site each week”, or “This spot should result in x number of new donors or volunteers or voters calling the toll-free number”. Those are quantifiable results, a metric you can get a grip on. You can say that the effective spot will generate x number of new site visitors at a cost per thousand of Y, measured by site logs after the first day of the spots airing. Is that CPM in the ballpark or not? While you can never guarantee viewer response to that level of exactitude, you can certainly hit a range, and with that, compare the cost of the spot to other media like print ads, radio, etc.

“Oh, you wanted to RECORD that?”

[Jiggy Gaton]

again, all good stuff, thx! but this client won’t quibble. I am more worried about underbidding the big boys but not bidding as much as i could have gotten. i know that sounds crazy, but in the world of bilaterals and ingos, this is what happens: contracts are usually awarded to lowest bidders unless one of the following:
1. they want hi-quality results from a big name (or friend of a friend), or they just want a big name.
2. they think the lowest bid is TOO low to produce anything resembling quality, either hi or low, and don’t know the bidder well enough to make a judgement.
I am dealing with both variables…hence my request for the database of PSA production costs that appears no where on the planet.

I can figure out how much it will cost us. fine. I have no idea what the big names will bid, but it’s gotta be higher. fine. The range inbetween what it will cost us, and what the big names bid is an area of let’s call it “profit oppurtunity.”

See where I am going with this? Is that shady or what! But heck, this is business. I want to get my people as much money as they can possibly get from a job. Is that not reasonable?

So if I knew what the high-end of the range was, I could predict something lower but above what it takes for us, in order to make a profit while at the same time giving the client a good deal. Ha! how to do that?

BS

[Nick Griffin]

Bluestupa –

Mark, as usual, is dead-on in what he writes. I don’t know the answer either, but I’m probably a little closer to the world of your competitor.

Some basic facts:

Big agencies work on big budgets.

Most of the big agencies sub-contract production to outside companies and mark it up. Some, generally not the biggest, own their own production companies so that they can show an invoice from a supposedly outside entity. (Which they ALSO mark-up.)

The big agency is going to show a reel that will blow away the client’s review committee. It doesn’t matter that the job being bid / pitched is supposed to be location shot using a three person video crew. The big agency reel is going to have spots shot on a soundstage, using a crew of 60, shot on 35mm, color corrected after a carefully managed flying spot transfer, with Flame CGI elements added… (you get the idea). And here’s the rub: the client committee won’t understand the difference because they’re looking at it on the same screen (presumably) that they’ll be using to view your stuff. The big agency stuff simply looks phenomenal – big time, glamorous stuff. The big agency spots will also have crisp and clever writing and sparkling design. (That you can counter. See below)

Your reel, in contrast, will be a reflection of what you actually do, not what you’ve hired others to do.

So how do you effectively go to battle against this? First you make it clear that you and your company are the ones actually DOING the work. Point out that you are often hired by ad agencies, but in this case, they are speaking with the source of the work – you.

Second, and here’s the hard part, you have to form a relationship with the people making the choice and coach them through the process of understanding what you will actually be doing and what their options are. What, for example, will it cost to shoot the spots in HD… on Super 16… on 35mm. You have to get them understanding the process enough to compare apples to apples. It’s your best defense against the mind boggling big agency reel. Perhaps your most effective argument could be that you can do so many MORE spots (or more takes, more shoot days, more on-camera talents to select from) for the same amount of money as another provider might charge.

One other thought on being competitive: big agencies generally have extremely talented writers and art directors. Add at least one of each to your budget as freelancers. Consider adding one or more examples of their work to your pitch, IDENTIFYING it as such. Again, this is part of the coaching process.

So what will the big agency charge? Hard to say with PSAs. They may even designate this as a “pro bono” project, meaning that they will donate their time and only ask for “out of pocket” expenses. With that in mind, here’s some perspective on what they may view as expenses:

Several years ago I asked one of my big agency friends, “How is it that your agency can take even the simplest of spots and have it cost $200,000? I can add up all of the elements and can’t for the life of me see how even the most ‘creative’ account manager could have this simple spot cost more than $60,000 to maybe $80,000.” His answer stuck: “Spots cost that much because EVERYONE in the process WANTS them to cost that much.”

The ageny has a mark-up on all costs so they don’t think having two sushi chefs at the craft services table is excessive, nor are the bowls of extra large macadamia nuts and imported waters that are costing $8 a bottle. And of course all of that is needed because the agency is going to have a dozen or more people on the set: a writer (or two), a couple of art directors, a creative director, the account manager, the account exec, his assistant, the odd vice president or two to schmooze the client, his department heads, their assistants, etc., etc., etc. And notice that we haven’t even begun to discuss the crew.

But what ABOUT the people in the client organization? Wouldn’t THEY want the spot to cost less? Which sounds better on the golf course: a)”Wait until you see the new TV spot I had the agency do this month, we really pulled out all the stops.” or b)”Even though we used to pay $200,000 for our TV spots, I figured out how to get a spot for less than $38,000. Want to see my bargain spot?”

Let me repeat so it can sink in: “Spots cost that much because EVERYONE in the process WANTS them to cost that much.”

Given this mentality your actual cost of production may be far lower than the big agency’s “out of pocket” expenses. So don’t be shy. Budget for everything, add a contingency line item of (pick a number) 7% of the total costs and, above all else, do whatever you can to form a relationship with the client to insulate yourself against the glamor projected by the big agency.

Or… the fix could already be in and the big agency already has the gig locked up. That’s why we have more than one pitch going all the time.

Oh, and the “hourly rate?” Develop the day rate discussed above. Charge half price for travel days. Then take your costs and apply a mark-up to them. Think of everything and then add in the contingency percentage.

[Jiggy Gaton]

Nick, that one made me laugh! So true. They want it to cost that much. Even for reasons other then vanity. To clear a fiscal year end budget is one that I see alot. But the saving grace for us is that we work with poverty-alleviation agencies and all of us are natives of one of the poorest countries in the world. So it’s even understood that $$$ spent with us is in line with the UN’s millenium goals…somewhere in there…But that’s a tough one for moral. Pay me ’cause I’m poor. The thought usually ends with “and ur stupid too.” Well, anyway, I think I have enough info now to do what i need to do. I’d ask about radio psa fees vs. video psa fees, but that would just return to madness as Mark would think.
THANKS SO MUCH U TWO FOR ALL THE TIME SPENT WRITING HERE!!!
BS in Nepal

[Vito Defilippo]

This is one of the best threads I’ve ever read on the cow. Holy moo….

[Bill Davis]

Now that everyone else has weighed in, I guess I’m gonnna come along and fly in the face of a lot of the fine advice given so far.

FIrst, I think the other posters have given fine advice for someone who wants to do traditional work in a traditional fashion.

Personally, I think concentrating on working “traditionally” in an era where all the traditions are breaking down is suspect.

So here’s a different approach.

NEVER charge by the hour for anything. Ever.

The metrics generated by hourly thinking are patently false.

This deck, or this camera, or this many hours in the “A” suite is ancient history.

Why? Because if you execute a GREAT cut in 1 hour of editing, that’s worth MORE than executing a mediocre cut in 10 hours. And the reality is that the client’ won’t CARE how long you take to do things. They will care, however if the end result is GREAT rather than GOOD.

So screw hourly billing. If you can do GREAT work fast, Hurray! You should get MORE than the beginners who have to struggle 5 hours to set decent looking titles.

Here’s my definition of time based (hourly, daily, whatever) charges – “If i’m good and fast, my work will end up generating LESS money than will the work of someone who is crappy and slow” Think about that. It’s patently stupid.

Personally I only quote a single number for the whole project. And I make sure that number MUST have enough RAW PROFIT to make the time spent a minor consideration.

Yes, you will be pretty expensive. But if you’re really good, you SHOULD be expensive. Undercharging is a HUGE problem in the production world today, because there are so many equipment rich but expreience poor people in the business.

My advice, separate yourself from them AS FAST AS POSSIBLE – provided you’ve got the skills to do so.

And you can only get there by concentrating on your SKILLS AND REPUTATION – not on your hourly rates or gear.

Really, NEVER charge for time. You should relentlessly, obsessively, build and charge for your EXPERTISE. Period. Be paid to be smarter, more creative, more business-savvy, more talented or more WHATEVER. And I work your ass off to try and be precisely THAT on every project.

I want to find the flaws in their script, and fix them. I want to be the one to realize when a jib is a better solution than track and dolly. Or when the teleprompter result is too stiff, so I need to shut it down and just sit down and have a conversation with the executive.

I want to learn about my client’s business so relentlessly that they STOP COMIING to my shoots at all. Because they know I’ll fix what needs being fixed and do what they’d do in the same situation so they can keep runinng their business while I make their videos.

THAT, is the only kind of job security I think still exists today.

Skills trump gear. Particularly today when anyone with a credit card can get all the gear they need.

If you want to use booked days or hours as a metric for efficiency, fine. I guess. But wouldn’t it be better if you could get to a place where a SINGLE job generated enough to the bottom line that you didn’t have to even DO another project for nice long time?

There are folks out there doing just that.

And they didn’t get to that place by doing things like the TV stations of yesterday. (Lets’ see, that 1 hour of “online” plus 2 hours of “offline” plus 1.25 hours of ADO – so your bill is…)

Good luck.

[Vito Defilippo]

Dammit! Just when I was starting to believe the other guys….

But seriously, Bill, you must have some way of coming up with the number, even if you are not charging the client by the hour. For your purposes, do you still calculate in some fashion the time you will spend, along with all the expenses of the pre- prod -post?

[Jiggy Gaton]

Bill, I am glad that you brought that up. No one in 7 years has asked me what my hourly rate is. I think they could give a rat’s butt. The only way that I use “hour rate” is to pick an arbitrary high number for my hourly rate when calculating an estimate. That number is added into all the factors mentioned in this great post + profit. But never have I had to give that number to a client. And this is what got me here in the first place: I think we, as creatives, should share those numbers, if not just internally, for the help of each other. Jim in Australia gets xxxx for 30 second Soap commercial. Jane in Tiawan gets xxxx for 30 second Noodle commercial. If there was a database, that would help others, I think, when someone is branching out to a new area of production. One could look at the productions and then judge quality vs.money, and make some determination on their own number (all things considered). In other words, to answer Mark’s question “how long is a ball of string” – if there was an informative extensive database on balls of string, one could figure it out..to some useful degree. Just a thought.
BS

[Bill Davis]

OK, here’s how I do it.

I have an ancient Filemaker Pro worksheet that I’ve been using for developing quotes for about 15 years now. It roughly follows the ancient “above the line, below the line” movie budgeting format I learned back in the dark ages. When someone I don’t typically work with asks me to quote on a project, I spend 15 minutes or so filling in all the little boxes with numbers. The form generates a number.

HOWEVER, this number has only a small part to do with with what I actually charge them.

For example, the very first line is a “production fee” which is what I feel they should pay ME for making their video. That line goes up or down based on what kind of client I think they will be and the general scope of the project. It might be 0 for a pro bono project, or tens of thousands of dollars.

All the little boxes just get me thinking about the scope of the project.

Below the line, in the post production section – there are calculations for how many cameras, camera ops, hours of editing, etc. I think it will take. The edit rate I use is about three times what you can get from some other “lowball” cutters in my market – but the point is I’m not trying to charge them this hourly rate at all. I’m just getting a general idea of the value of the time.

At the end of the estimating process, I just look at the bottom line number, know that it totally comfortably protects me if the project “goes long” and I quote a number somewhere in the ballpark of the total – telling them “this is what you’ll pay me to make your video, and it’s a – not to exceed – number unless we agree the scope of work has changed.

If you want to look at the form, I have it in a download bin on my dot.mac account from a year or so ago when I talked about it on a podcast apperance. Feel free to grab a copy if you think it will help you figure out something similar for yourself.

For what it’s worth.

the url is https://homepage.mac.com/davisbill/clientdropbox/FileSharing9.html

[Jkm777]

I am not seeing many rates here. I think that is what we would like to see. For my church, I charge $100 a completed delivered minute with a $250 minimum. These are interviews, etc., nothing special. Most are 3 to 5 minutes. For the company I work for, I charged the same rate for 38 minutes of interviews & historical video combination, along with a few cool graphics. I was on company time for the video shooting, but all editing was offsite so I didn’t double dip. (I am an IT guy). I used my XLH1. Ok, I know I am a little cheap..but how much? It’s hard to get a full time video shop to give “me” a real answer. Note, as a person doing this part time, I would like to get something rather than nothing. Meaning: my church would probably do about 1/4 the video if I charged more. Now my employer, they are a different story.