View Full Version : What is this production worth?


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Richard Alvarez
February 29th, 2008, 01:33 PM
Jay, I'm not attempting to 'twist' what you said, and it IS a poor analogy because an automobile dealer is a retailer of identical wholesale products, while a video producer is custom making an item, and providing a service for a client that will NOT be identical to his competitors. It's an apples/oranges comparison which is why its not really that accurate.

My point is that this thread has evolved/devolved into a discussion of two basic points or questions.

"To what extent can/should one 'standardize' the cost of a video production?"

and

"What elements might cause one to deviate from such 'standardization'?"

The answer to the first is - to the extent that the product itself can be 'standardized', then one might 'standardize' or fix ones prices. A wedding videographer for instance, might state "We deliver a one hour wedding video that includes these standard elements, for this standard price." Because the elements are kept more or less strictly controlled, the price can be more or less strickly determined. Again, this is easier to do with some sort of standard, 'repeatable' product like a wedding video. If one were to apply the approach to say - 'how to' videos, or 'Testimonials' - again, you could standardize your rates by already knowing in preproduction how much time, and what elements will go into such a product. Even so -it helps to give oneself a bit of negotiating room to work with contingencies. In the wedding videographers marketing - "Basic wedding packages begin at X dollars" or in my case, "This sort of production runs between 1-2k per minute".

The answer to the second question - "What elements might cause a deviation" - most people can see the obvious. Extreme conditions, extra serrvices . You want me to fly to Costa Rica to shoot your wedding? THAT'S going to boost the price. You want to OWN the copyright, and use it in a documentary about marriage? THAT'S going to boost the price - You see how a different use for the same product, done legally can change the price of the services and product?. In terms of documentary/marketing videos - WHAT the client is going to do with the product CAN (doesn't always) AFFECT the price I charge. The USE of the product is just ONE of the mitigating factors that can alter a 'basline' or 'standard' rate.

At least, that's how I do business.

Glenn Chan
February 29th, 2008, 02:28 PM
Perhaps a slightly different way of looking at it:

1a- As a whole (you and all your potential clients), you'd make the most wealth by doing productions for organizations which find it the most helpful. If you are doing training videos, your video is worth more if the audience is larger, if the audience absorbs more of the video, etc.
So suppose video A is seen by 5000 people, video B by 500. They might take the same amount of work, but video A is worth more.

So in a sense, you are more helpful to society if you focus on adding the most value, focus on the bigger audiences, and focus on those who need your services the most.

1b- The more wealth/value that is generated, then there's money to go around. If you get some reasonable slice of the pie, then that's more money for you. And depending on your point of view, it would be ethical to add as much value as possible and charge more money.

2- The other issue is how much can you get away with charging (if you want to deviate from a flat rate). Sometimes people make irrational decisions here. In some cases, you can sell more product if you raise your price. People also fall for the extended warranty upsell (we're bad at calculating the value of the really small odds involved in warranties).

In other industries like selling cars, the salesperson will usually try to milk you. One thing they do is to upsell you on an overpriced warranty. They'll also try to size you up and figure out how cheap you are. If you look like you're poor, they'll probably be more aggressive with the discounts.
Whether or not these practices are ethical is up to you to decide.

3- Here's what I suggest:

A- Try to solve the biggest problems. If driving school chain A has 5000 students and driving school B has 500 students (these are arbitrary numbers), I'd preferably try to get driving school chain A as my client.
Try to add as much value as possible. (Though of course you should keep costs low.)

B- Charge a price that both you and the client find fair. You can(should?) even say, "I don't want to charge you a price that's not fair."
Business-wise, this might even make the most sense. You'll waste less time negotiating, it helps build trust, and you will be more likely to get repeat/referral business.

Bill Davis
March 3rd, 2008, 04:49 PM
Bill, that is pure speculation on your part. That's no way to budget a video project.

Would you buy your next car from a dealer who based the price on how much money you might make as a result of using the car he sells you?

Sure. Happens every day. If I needed a specific high load carrying truck, I'd expect to pay a whole bunch more than if I needed a standard F-150. And even THEN, I understand that the price I pay is going to be different than what the next buyer pays. Perhaps they have a different credit profile, or just better or worse negotiation skills. Maybe my purchase is the one that lets the sales person make their monthly numbers - so the sales manager lets them give me a few hundred MORE bucks off to close the sale that day.

Prices and margins and profits are ALWAYS in flux. It's the nature of business.

Are you trying to say that car dealers don't alter their price based on a WHOLE BUNCH of these kind of intangibles that have little to do with the ACTUAL cost of the car?

My original point is that there is a world of both perceived and ACTUAL value that anything as powerful and flexible as video communication can deliver.

The reason I work with very comfortable budgets today isn't that I'm a better shooter, or a better editor, or even necessarily a better videomaker than anyone else here.

It's the result of being very professional at *all* of that PLUS. And the PLUS is actually what the clients are paying me the MOST for these days.

I speak their language because I've studied their business needs. I can sit with the CEO as easily their administrative assistant and make each of them feel CONFIDENT that I can handle their work in an excellent and professional fashion with little of no hand-holding.

Then I do exactly that. With virtually no stress or excuses.

It's years of developing a "he won't let us down, we can depend on him" reputation - which (by the way) has NOTHING to do with what format I shoot in and what my gear costs.

When I was starting out, I thought I could only justify charging more money if I had higher time or equipment expenses.

I was dead wrong.

To stretch the automobile analogy's that cropped up here - nobody in their right mind thinks that the MATERIALS or the LABOR in a $500,000.00 exotic sports car cost that many times the materials in a family car.

What's different is the PERCEPTION of value - and understanding that there is always a part of the market that will pay premium prices for premium results and outstanding personal service.

THAT is why one video maker puts in 100 hours and gets $3000 - and another one puts in the same 100 hours and gets $30,000 (or even $300,000!)

And if you're stuck in a "time and materials" attitude, you're NOT gonna make the leap from $3k to $30k.

That takes re-defining what you do in your own head - followed closely by the ability to make the world believe you when you tell them you're worth more.

FWIW