visa

[Mark Suszko]

Greg, this is only my own opinion now, and your complete honesty with the client is commendable, but there is such a thing as “too much information”. Some wags here will point to one (OK, any) of my posts and say “Amen to that!”.:-)

When you put literally every last item down on the bill in detail, I find that troublesome people or grinder wannabees will start to question these items point by point in an effort to whittle down your price. They’ll say things like: “Oh, I can get the blank DVD’s cheaper than that.” And then they will start to insist you switch out suppliers, or carve the equivalent savings out of your profit margin. This is a death by a thousand cuts. It can affect how you do the program, when they balk at a certain expense line for say a dolly, crane rental, special lens, whatever, that you built the bid with. Pull the expensive item because it “looks” extravagant or unnecessary to some bean-counter, and suddenly, your video looks different than what you promised initially: Instead of dolly moves, you have to pull zooms. Instead of a prompter, you use cue cards and get a bad eye line. Instead of a steadicam, you have to increase post time to motion-stabilize in post. Etc Etc. and pretty soon, your video and your reputation look…. bad. Aren’t they hiring you partly for your expertise and judgement? I’m just saying it can be counter-productive for the chef to reveal all the ingredients.

Sometimes you can counter these folks with statements like “Yes, the dvd blanks cost more: the Taiyo Yuden brand is highly regarded for a better quality level, we’ll get fewer reject disks. I figure that your program about six-sigma and chasing a Deming Prize might tend to be undermined if we publish on Medion spindles from the dollar store that won’t play on your customer’s machines”.

Sometimes you can’t give as good an answer, then you look foolish or incompetent, just for picking stuff you know works.

Moreover, when you break out the costs to this micro-level of detail, Greg, you’re giving away the recipe for your operation to competitors and to people at the client company that want to try and do it themselves. Free research everybody, have a copy! See exactly what my profit margin on this job is, and just where you can under-cut me to beat me out of the next gig, and judge me on my margin, not my results!

I don’t have an MBA but I think this may not be smart business.

You started doing it this way, and now you may be stuck with it, as far as this client. For other clients, new ones, I think I would try to use more general categories and not strip my business so naked. Then you have places to add in additional fees and such for things like paypal and fedex without calling so much attention to them. A place to add some padding to cover the unexpected, and a pad from which you can draw out a discount/ partial refund later if needed. You’ve got to have a couple percentage points of maneuvering room in there somewhere just to be safe, but who’s going to allow it to you if they can see that? Your other alternative is to just increase your personal hourly rate fee to reflect the added costs you’re incurring, but that could also make you look greedy…

Client relationships are like marriages; good communication and honesty is key, but sometimes you skip mentioning a few little things in the interest of day-to-day harmony, like noticing the pretty lady walking her dog. Mention what breed her dog is, you’re safe. Anything else, you’re sleeping on the couch tonight, buddy!:-)

[Todd Terry]

[Mark Suszko] “When you put literally every last item down on the bill in detail, I find that troublesome people or grinder wannabees will start to question these items point by point in an effort to whittle down your price.”

Exactly true, I completely concur with Mark.

We’ve had people do that, even though our bills aren’t super itemized. For example, we charge a certain amount for a Betacam dub or a DVD… and once or twice a client has said “Hey, that’s ok, we’ll just buy our own box of Betas and bring them to you.” We’ll explain that’s fine, if they wish to do that… but the cost per dub is still the same. The cost of a dub is not the tape stock, which is minimal… the actual cost is labor involved to make it and the use and wear on the expensive machine needed to do it.

I know of another company here that itemizes everything to death… hire them for a shoot and your invoice will even include the specific amount in feet of gaffer tape that was used. That’s just crazy, in my opinion. Not only does it give the client an opportunity to question everything and whittle down and nitpick items… but it’s got to be a massive billing headache.

Contrary to that, we have adopted very general and flat fees for almost everything. Need an edit? There’s a flat suite rate… doesn’t matter if you use all the NLE’s bells and whistles, or very few. Need a shoot?… we didn’t always do it this way but we have now evolved into a flat base rate there as well… it doesn’t matter if we are shooting DV video or 35mm film, the base rate is the same and almost all of the shoot toys that we own are included. That way there is no “I don’t think we need a jib” or “I don’t think we’ll need a dolly, how much less would that be?” conversations. The only equipment that we charge extra for are teleprompter and Steadicam. Otherwise the only itemized extras for a shoot are tape or film stock and mileage.

Obviously if we have to pay more ourselves for equipment or personnel that we don’t already have (say they need a specific makeup artist, or the shoot will require 10 HMIs and we have to rent some) then those items are charged appropriately and itemized.

I just wouldn’t itemize a credit card charge… it just looks kind of sleazy and nickle-and-dimeish. It’s certainly easy enough to hide 3% in a bill… just charge a little more per hour on an item or two, or pad it into something like props, meals, or craft services. There’s nothing dishonest about it. And do that for every project, even if you don’t know how they are going to pay. If they don’t end up paying by credit card, just consider it interest on however long they do take to send you a check. If they hand you cash as the job is completed (when’s the last time that happened?), consider it your little bonus for a job well done.

T2

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

[Greg Ball]

Thanks Mark and Todd. Just this week I started giving just the total price without a breakdown.
I hear you loud and clear. Have a great holiday.

[Steve Wargo]

Just to throw something more into the fire, it’s a policy of all of the credit card firms that a vendor (us) is not allowed to bill the card holder for the fee. You can offer a cash discount but you cant say “Credit Card Charges 2.5%” on the invoice.

We cover it under an “administrative” charge. At first, I was really shy about this but not one single person has complained. Several have asked and my reply is “That’s for the time we spent in planning and cleanup”. They usually just want to know what it’s for. Man, I should have been doing that the last 20 years. Too many of us make the mistake of billing for what we’d want to pay instead of what we should be charging.

Steve Wargo
Tempe, Arizona
It’s a dry heat!

Sony HDCAM F-900 & HDW-2000/1 deck
5 Final Cut (not quite PRO) systems
Sony HVR-M25 HDV deck
2-Sony EX-1 HD .

[Bill Davis]

Just to amplify Steve’s idea…

Decades ago I adopted a modified version of Production Estimating that I modeled on the “Above the line/Below the line – motion picture standards back in the day.

I actually mostly use it for my own estimating and most clients just want my simple single-page QUOTE sheet, but sometimes on larger bids, I’ll include the Estimate forms.

The very FIRST line-item on my estimate is the Production Fee. It’s bold, it’s clear and it typically falls between 25-40% of the estimate total.

When I go over the estimate with the client, it’s the FIRST line I point out to discuss.

“This is what you’re paying ME for my knowledge and experience, to run my business and create your video.” (they typically nod and we go on to the specifics)

What has surprise me, however, is that even when budgets are squeezed and we’ve had to cut line-items to meet budgets, no client has EVER asked me to CUT my production fee! Weird. I think it’s too hard for them to imply to my face that I’m worth less than I’m asking.

That clearly makes the discussion of business overhead stuff like credit card fees irrelevant. Those kind of costs are insignificant in the face of the sizable up front production fee.

I also adopted and still use another motion picture billing practice from those days that a couple of you might find interesting.

When I fill out the line items in my Filemaker Pro Estimating form adds “contingency fees” to both the Production group costs total and the Post Production costs total (6% and 10% respectively)

Then a little asterisk right below the “TOTAL” field at the bottom notes what I’m doing in kinda small type.

A few times over the years, accounting departments have called me to discuss invoice specifics and they all started by noting something like “We checked – as is our routine – your invoice math and were at first confused, then we noticed the contingencies and when we re-calculated, confirmed your totals are accurate…”

It’s weird, but I think the accounting types actually ENJOYED having something mathematically unusual to do in their parade of numbers…

I think that for numbers people – it gives them the impression (hopefully accurate) that I understand how my business should operate and that my numbers aren’t derived from thin air.

Keep it simple for the clients – also give the accounting types enough to chew on so they can run some more interesting numbers and earn their living as well?

I’m not sure it makes any difference, but I also know that in the larger companies I work with, I’ve come to know the names of the people in accounting and they’re happy to take our calls and let us know what’s been processed and what’s stuck on someone’s desk – and PERHAPS those silly calls about our contingency numbers were the initial excuse to talk to the back room folks and start to form relationships where the checks (now the direct electionic payment transfers) are born.

Or maybe nobody really cares. But, if not actual food, it’s at least, perhaps, a few small snacks for thought.

FWIW.