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Transparency of pricing
Hi all – this is a question inspired by a recent article in the UK magazine Digit, about the way in which designers show how their prices are made up when bidding for work. The majority opinion was very strongly towards a high level of transparency, including quoting hourly rates and estimated numbers of hours
I wondered what approach Business Cows take to this, particularly those involved in video production. If asked to price a piece of work, where you know you are one of a number of companies asked to bid, do you quote one total figure? Do you divide it up between pre-production, production and post-production? Do you show some costs more clearly than others (eg the cost of hired-in or subcontracted elements, with any mark-up)? Do you quote for your preferred option and show the costs of ‘optional extras’ separately? Or do you give away as little information as possible and wait for the client to ask? Or does it all depend?
I’ve searched previous posts, and while there’s quite a lot of discussion about how to work out what rate to charge, I haven’t seen a lot of discussion about how to present costs to a potential client in a competitive environment.
I look forward to hearing your views,
Stuart Reid
London, UK -
3 Replies
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Most producers, especially those dealing with ad agencies, use a AICP bid form. This is the standard and all ad agencies know how to read it. This is also becoming the standard overseas. We bid for projects from Israel, Italy, Lebanon, and Spain, and all want us to use an AICP for so that they can more accurately compare bids.
Now for small projects, we use a simple estimate form and include as much detail as we can. Our experience is that clients will see the details and the final number equally. Hope this helps. Nestor.
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Nestor L. Lopez
Executive Vice-President
Explorart Films
http://www.explorart.com——
Statements presented in the message are statements of opinion only and should not be considered legal advice. Please contact a qualified entertainment attorney. -
https://www.aicp.com/doingbusiness/guidelines.html
AICP Business Guidelines. An informative read.
Jamey C. Shafer
Inkling Productions
NYC -
Hi Stuart.
I’d guess that it depends a lot on the client, and the kind of project. From your post, I’m guessing you may have been asked to submit a competitive tender in the UK, for a video / not for broadcast project. And you have reason to believe that you are one of many bidders.
Your response could depend a lot on how much you want the work, and what you know / believe about the client. UK broadcasters and ad agencies may be more inclined to pick you, or not, based on what they know of you, your reel and background, as well as your on ideas / proposals submitted, and then negotiate hard on costs. So they’ll want to see your costings, and will have their own ideas about what resources are needed and what they are willing to pay for them.
Corporate buyers asking for quotes from several companies: how to approach?
If you think cost detail will help you sell, then go for it. For the buyer, though, the bottom line may incorporate good-enough quality at the best total price.
Have they offered you a script to budget, or are you developing a treatment + costings pitch? Your post suggests the latter: in which case, you’ll need to decide whether / how much effort to put into a pitch.
If they’re inviting multiple bids, then your chances are correspondingly small.
Have they asked to see showreel, or do you have other reason to think they know about the quality of your work?
If they seen your reel / met you and are inviting you as one of a small group, then it could be well worth the time to develop a really strong creative idea, and cost it.
If they haven’t asked for showreel and you don’t know them, then it may be fair to guess cost is a big criterion for them. In this situation, I’d guess that often it’s the all-in cost that counts. To protect yourself, you might want to specify exactly what you think is needed, and provide an all-in cost for that as a total, with a proviso that varying the spec and requirement varies the cost.
I guess your aim here could be to get into a negotiation: once they’re discussing a total cost with you, and what they get for it, you may be close to contract.
As an aside, a buyer once volunteered me the gem that he could have had his project done better and cheaper, but why should he pass on the trip to the Caribbean that was on offer, when he had the budget? I guess buyers are varied …!
All best !
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