Training videos billing

[Todd Terry]

Well, usually the people who are better and faster at something charge more per hour.

I know our rates today are substantially higher for the work we do than they were when I started out as a one-person company in my house 15 years ago. Our results are much better now as our skill levels, facility, and personnel have increased (and they’re faster, too), and as we have collected many more production toys…. but we charge a heckuva lot more for it now.

But you’re right, you don’t want to price yourself out of profit because you get so good and fast at delivering something that your hourly rate now means you are making no money. That’s when it’s time to re-think what you are charging.

There’s the old axiom that if your company is always (or most always) fully booked, then it’s time to double your rates. You will immediately lose 40% of your clients… but in the end you will work less but make more. I’m not sure if anyone has actually tried the instant 200% rate hike or not… I think that’s more of a theory than something many people are brave enough to try. Then again, our own rates have gone up about 250% since we first started. We still try to be a bargain though and give people more than they pay for… with rates lower than our clients can get at other higher-end post houses in the region.

T2

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Todd Terry
Creative Director
Fantastic Plastic Entertainment, Inc.
fantasticplastic.com

[Sam Cornelis]

Thanks for sharing that Todd, that’s interesting to know.
How did you raise your rates? Was it only for new customers, or for the existing ones as well ? If so, any tips about how to communicate that are welcome.

Actually, we are drifting to a topic about which you don’t find much information on the forums. There are a lot of posts that deal with beginner’s questions, but not so many that deal with growth.

For instance: raising rates vs. loosing customers, hiring the first employee vs. collaborating with other freelancers. You can find all information about the legal and HR consequences (eg accountants are a good startes) – but how do you deal with that in your business. For me there are 3 mayor concerns at this time (I guess you already figured out the phase I am in right now):

1. Working freelance = focus on what you like the most: be creative and being able to take whatever may come and looks interesting. Being responsible only for yourself and your family.
2. Growing into a bigger company = great part of your time dealing with personnel stuff, being responsible for other peoples job (is also a good thing: you create jobs), on the plus side: more continuity and maybe bigger projects.
3. Growing = bigger overhead cost, so you have to raise your rates.

Any thoughts about this are welcome,

Sam

– I have read the entire internet, and I am feeling a little bit bored, so I started to reply to interesting forum topics.

[Todd Terry]

[Sam Cornelis] “How did you raise your rates? Was it only for new customers, or for the existing ones as well ?”

Well we never did a huge rate hike all at one time… our present rates are the result of several gradual hikes through the last decade and a half.

When we knew a rate increase was needed, that was immediately applicable for all new clients. We had some long-term existing clients that we told that we had new rates, but that since they were such good clients we would be happy to keep working for them at the present rate for a certain period (like the next six months or so).

That helped soften the blow for them, and maybe even feel like they were getting a bit of special treatment.

I think we ever only lost one client due to a rate increase… and frankly it was one that we were glad to see go. They were doing the very lowest-of-the-low end production, paying a pittance and expecting work of far far greater value than they were getting charged for. I haven’t missed them a bit. Everyone else has stuck with us.

The only time anyone has even raised any eyebrows is a couple of times when a client we had worked for only once or twice many years before came back with a request for a new job that was similar to their old one, only to find that it was now going to cost them twice as much, or more. They still booked the jobs, though.

T2

__________________________________
Todd Terry
Creative Director
Fantastic Plastic Entertainment, Inc.
fantasticplastic.com

[Sam Cornelis]

Thanks, that’s very helpful.
Sam

– I have read the entire internet, and I am feeling a little bit bored, so I started to reply to interesting forum topics.

[Steve Martin]

Lots of very good info on this post… and i agree with most of it. I’ll a few additional thoughts (not entirely on topic, but close) in case some might find it helpful.

Like others here, we’re a small shop (6 people including me) and we’ve been in business for over 20 years. So when we do a good job of determining the scope of work (SOW) before hand, we can usually estimate how long something will take within about 10%.

One of the tool we use is Quick Books for estimating. For everything we do and every piece of equipment we have, there’s an “item code” with a client friendly description and a unit price. So for example, an AF-100 camera package w/Manual Nikon Primes is $500/day. An ARRI Fresnel Combo kit is $75/day and so one. We have about 150 different item codes in all broken down into categories: pre-pro & creative development, equipment, crew, post production and expendables.

On the estimate, we simply select items codes & quantities and we generate a reasonable accurate estimate. In many (most) cases, we send the estimate to the client in a “blind” format – it strips out all the unit prices and quantities and only prints the a description for each line item along with the total cost at the bottom of the estimate. So while we see all the details on the screen, on the client print out (or PDF) it just looks like a detailed outline of the project and a flat fee.

At the top of the estimate, we write a custom paragraph project description (SOW) that out lines the deliverable(s) and production variables (i.e based on a 2 day shoot at such-and-such location with a post production that includes xyz revision cycles and a yada yada yada… This helps eliminate a common client thought that the project is an all-you-can-eat approach to our time and resources. If the they start pushing past the SOW, we gently (or not so gently in some cases) remind them that while “we can certainly do that for you” it’s not included in the SOW that we all agreed to and will cost $x.

Like I mentioned, this is a bit off topic, but this approach has worked pretty well for us over the years.

Production is fun – but lets not forget: Nobody ever died on the video table!

[Greg Ball]

Great information from everyone here. I have to agree with Todd on the fact that it appears no rates were discussed or agreed on prior to the work. That’s where all issues usually lie.

Once you have a written agreement that the client initials and signs, you can let the client know if things are going to cost more. They can decide if they want that or not.

Without an agreement, you’re going to lose money, and most likely lose a client due to sticker shock.

Yes a highly experienced professional should charge more than someone with less experience. But the challenge is does the client recognize the difference in quality they’ll get from someone with more experience? If not, just charge your competitive rates, and work less hours, then just hit the Golf links or catch some rays
and deliver the project in the “normal” timeframe.

Greg Ball, President
Ball Media Innovations, Inc.
https://www.ballmediainnovations.com