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Quotations and contracts
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Thanks for the all the insight and advice… it is very helpful!
Some quick background… I was working solo but have been flooded with too much work so recently started collaborating with some talented friends in the industry and now have some great opportunities to do larger projects together… just about to re-brand, so it feels like the perfect opportunity to start fresh and set everything up right. There is a lot to learn!
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PS. I once requested a 50% deposit upfront and was told that it wasn’t normal practice… would you say 50% is normal practice?
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“Normal” is relative. It is whatever the side with all the power in the relationship decides it is. If they are a huge company that can take or leave you, and you want them desperately, you’ll take their 259-day waiting period to bill and like it. If you stand by your rates and never flinch, it is whatever you say it is, and they say ok or they walk.
I have heard plenty of guys over he years use half up front, but just as many will also do a third. Payment in thirds I think is the most popular, most flexible, and the best method to protect both sides. One third at start, one third at some agreed mid-point, and if they and you have a disagreement and cancel after that, neither side is out much money-for-services-rendered.
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Deposits depend om many factors. I usually require at least 50%. If I’m sub-contracting a crew, or a studio, I’ll ask for a deposit that covers my out of pocket costs.
If a client has us shooting footage and handing them the raw footage, we require 100% up front.
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[Daniel Peterson] “flooded with too much work “
CONGRATULATIONS!
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[Daniel Peterson] “flooded with too much work “
CONGRATULATIONS!
Highly consider to keep doing what you’re doing 🙂
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[Mark Suszko] “I have heard plenty of guys over he years use half up front, but just as many will also do a third. Payment in thirds I think is the most popular, most flexible, and the best method to protect both sides. One third at start, one third at some agreed mid-point, and if they and you have a disagreement and cancel after that, neither side is out much money-for-services-rendered.
“I practiced this for most of my career.
Half billed at start on smaller jobs. Thirds on larger ones. Both work fine protecting you from the danger of too much exposure of financial issues that can cripple a small firm.
Two things have caused me to re-think it in the past five years or so.
First, was seeing my start to finish timelines often collapse. Projects that would have been done over 90 days years ago, are today suddenly wanted start to finish in a month or less.
So for a while, I’d often FINISHED a job before the first third check (billed at net 30) had arrived from the client – pushing all the risk back on me!
The next thing that changed was electronic payments becoming common.
Look the larger the company, the more difficult it is to get them to do something outside their day to day paperwork flow – and I appreciate that. But at some point, if they’re asking me to produce and deliver over one third the production period I would have expected in the past, it’s a bit unreasonable for them to expect me to be a bank for them for the same amount of time they were accustomed to before the deadlines got so short.
So my billing terms are pegged to job conditions now.
If the deadline is short, so is the payment term. Want the files next week? No problem. Just pay me next week. You can use PayPal or Square or I’ll send you an invoice via credit card – but it’s not OK to ask me to drop everything to deliver ASAP and then ask me to sit on my hands for 90 days waiting for payment.
Got a project that truly needs a 90 day cycle of production, I’m totally cool billing in thirds just like always. Particularly if the first month is scripting and planning and I’m not paying out for the cast, catering and crew.
Progress payments are fair for both parties. You get the creativity up front. When actual production costs are incurred, the client has covered them and I won’t get burned. And I’m OK getting most of my profit when I’ve delivered most of the work.
Fair all around to my thinking.
My 2 cents anyway.
“Before speaking out ask yourself whether your words are true, whether they are respectful and whether they are needed in our civil discussions.”-Justice O’Connor
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I like the idea of “you want it fast, you pay me fast,” but I wonder how this has gone for you. Are people taking you up on electronic payment, or are they deciding to slow down? How are they talking about it to you?
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[Tim Wilson] “I like the idea of “you want it fast, you pay me fast,” but I wonder how this has gone for you. Are people taking you up on electronic payment, or are they deciding to slow down? How are they talking about it to you?”
Tim,
Best way to handle it is the classic “presumptive close.”
“Great, I can have your master files ready for download at 4pm Wednesday – be sure to take care of the invoice by PayPal or credit card before 4 so my system flags them as OK to release.”
Then it’s up to THEM to push back. And if they really need the work, they likely won’t.
Particularly today, everyone seems to be in the “I need it yesterday” mode. So it’s just acknowledging that if the client’s in a “take care of me fast” mode, – they should be held to the same standard.
If you disconnect billing from delivery – it’s WAY too easy for a client to move on to focusing on something else.
It also means you have to develop a billing system that lets you crank invoices out parallel to doing the work so that you can deliver the invoice BEFORE you actually deliver the work, and that’s not easy for a small operator.
But if cash flow is important. (And in small business it’s as critical as breathing!) I think it’s well worth the effort.
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