Billing advice for corporate video at DVinfo.net

Mark Stuart · January 19th, 2008, 03:24 PM

Hi everyone,

I have an opportunity to shoot and edit a small(?) corporate project soon, and am looking to get advice and compare notes on billing.

I have hourly set rates determined. I think I really want to charge an hourly rate for scripting (if any), shooting and editing as I know how much longer projects can become than originally anticipated. Not so much from my end, but the client's. Recently, at my day job, we estimated a client $800, and they ended up with $2K in production! This was due to their many revisions and wasting shoot time. I also would like to give my corporate client some type of estimate in total costs, even though I want to charge hourly. I do not have much info about the project yet, but want to be prepared to write a proposal, as they are very interested in my services at this stage.

How do you all do this? What is your process? What do you put in your proposal? Do you charge hourly or flat rate per project? Do you get a retainer payment? How do you do an estimate if charging hourly?

I know I have much more info to get from them before writing a proposal, but I want to decide on a general process as I haven't done much corporate production on my own until now. (I'm a full time producer at a network affiliate tv station, and also have my own video company part time).

I'd appreciate your insights.

Thanks much,

Mark

p.s. my "determined" hourly rates are half of what the station charges for production services. Also wouldn't mind some feedback on that plan.

Chris Davis · January 19th, 2008, 05:10 PM

I would answer all of your questions with "it depends"...

I have some clients that are comfortable (and even prefer) paying a straight hourly rate. Other clients (typically the smaller businesses) want a package price.

You are right that almost every project will grow beyond its original scope, and for that reason you need to be honest with your client. If my client wants a package price, I make sure they understand what is included, and what type of changes will increase the price. I'll be honest, I've lost jobs because the client was afraid of paying $65 per hour for "extras" that were beyond the original estimate. I figure I'm better off, because that's the type of client that can nickel and dime you out of business.

Since you're a one-man shop, you need to charge less than an outfit that maintains a staff (whether it's a tv station or not.) By hiring a small production company, the client is taking more risk (what if you get debilitated mid-project) and settling for less service (if you're working on another client's project, you might not have time to work with them) so they should get a better rate.

Carl Middleton · January 19th, 2008, 06:30 PM

Quote:

Originally Posted by Chris Davis

Since you're a one-man shop, you need to charge less than an outfit that maintains a staff (whether it's a tv station or not.) By hiring a small production company, the client is taking more risk (what if you get debilitated mid-project) and settling for less service (if you're working on another client's project, you might not have time to work with them) so they should get a better rate.

I would say I have to agree, but with one exception. In this neck of the woods, the area cable company is great for selling people craptastic commercials for dirt cheap. They make their money off of the airtime, production income be damned. I charge a heck of a lot more than they do - but actually care about how the commercial comes out, and return business, since the production is all I do.

I just have to say that in some cases, the 1 man shop can provide better service, and charge more for the same project, as a successful business model.

Carl

Steve House · January 20th, 2008, 07:38 AM

There is a way to have some of the best of both worlds in the hourly versus fixed package price dilemma and that is to draw up a contract that calls for an hourly rate up to a max total of $XX, subject to a +10% or +15% variation without prior authorization. That way the client has the predictability of a fixed fee and doesn't have to worry about getting dinged if you dawdle. For this to work, of course, a detailed spec document needs to be drawn up first describing exactly what the project entails so that time and material requirements can be accurately estimated. Any subsequent changes to the spec must be in writing with client signoff. That way a client's change request can be clearly recognized as within scope and acceptable without changing the budget versus out-of-scope and requiring a revision to the estimated costs with signoff before adoption.

Mark Stuart · January 20th, 2008, 09:07 AM

That's a good idea, Steve, thanks. That's what I'm trying to make up my mind about now... how to charge hourly, but give an accurate estimate.

Carl, your line "In this neck of the woods, the area cable company is great for selling people craptastic commercials for dirt cheap." I must say, in this neck of the woods, too! The air time value and production be damned is exactly the philosophy I've also worked with at my network station for many years, but it's actually been better the last couple as the new higher ups actually see production as a value. All that to the side, however, I'm striving to produce a high quality product at a reasonable price, less than the same product from a major company for the reasons described in Chris' post.

Thanks for the great advice... I'm open to much more, so anybody else please feel free to chime in!

Benjamin Hill · January 20th, 2008, 06:19 PM

I've done a variety of corporate video work and learned many of the business lessons the hard way...so now I try to be very clear and up-front about costs and expectations, whether it is hourly or fixed-bid.

Sometimes clients want one price for everything ("How much does a video cost?"), and sometimes they want to nickel-and-dime and micromanage every step and that's fine too. If you do fixed-bid, just make sure the price and service terms are very clear. If you bid it hourly, make it competitive enough that they will feel good about hiring you repeatedly.

Chris Davis · January 20th, 2008, 06:53 PM

Quote:

Originally Posted by Carl Middleton

I would say I have to agree, but with one exception. In this neck of the woods, the area cable company is great for selling people craptastic commercials for dirt cheap.

But that's kind of an apples-to-oranges comparison. Your cable company (and our local cable) are hardly production companies. I don't do much commercial production, but the first thing I do it make sure my prospective client understands the difference between me and the cable company.

Bill Davis · January 21st, 2008, 09:30 PM

Just to be a curmudgeon...

Lots of sources can provide equipment - and there's ALWAYS someone who can provide (often crappy) equipment cheaper than you.

Lots of humans can point a camera - and there will ALWAYS be someone who can shoot cheaper than you.

Lots of people want to talk people out of money - and don't really understand how to provide value for that money - especially in something as complex and variable as video production.

What nobody else but you CAN do is to take the time with a specific client you personally meet and get to know - to really figure out what they NEED to communicate and to come up with a realistic plan for creating something that can actually help them solve their financial problems through video.

Because video for money is ALWAYS about solving financial problems!

ALWAYS.

Your video MUST make or save them a lot more than it's costing them or there's NO REASON to do it in the first place.

If you can do that - you should charge them based on the VALUE you create for them. Which represents the difference between what it costs them to hire you - and the positive results they get from your efforts.

This is equally true if you shoot for a month with a crew of 10 - OR come up with an insanely brilliant idea that can be executed in 5 minutes with a 1970 era VHS camcorder.

If the VHS thing MAKES them more - it's worth more. And you should get paid more. Period.

Equipment doesn't matter.
Effort doesn't matter.
Time doesn't matter.

RESULTS matter.

This is the central change in thinking that may eventually cause you to make REAL money in this business.

Maybe. ; )

FWIW.

Daniel Browning · January 21st, 2008, 10:32 PM

Quote:

Originally Posted by Bill Davis

Because video for money is ALWAYS about solving financial problems!

ALWAYS.

What financial problem does a wedding video solve? Having too much money? Or did you mean that it solves the producer's financial problems and not the client's? ;)

Jay Gladwell · January 22nd, 2008, 06:35 AM

Quote:

Originally Posted by Daniel Browning

What financial problem does a wedding video solve?

Daniel, this thread is discussing "corporate video."

Mark Stuart · January 22nd, 2008, 08:11 PM

You're right, Bill, the client's results is the value to them. Same with the TV commercials I make... doesn't really matter how beautiful my video art is (and it is! hehehehe), or what equipment we use to make it. What matters to them is does it sell what product or service they are advertising. Of course, there's also the air time factor involved. Need to reach your audience when their watching. But, like mentioned above, we're talking mainly corporate video here.

I now have a good grip on what to charge; now I could use some pointers on writing a proposal/estimate. I've seen a few from other businesses and they seem to vary quite a bit in structure and length. I was thinking of structuring mine as:
1. Cover letter
2. My company info
3. The video production process (what happens, i.e., write, shoot, edit, etc.)
4. The rates
5. The terms

A few questions I have so far as I'm now in the midst of writing this:

1. Contract vs. Proposal. Should they be one in the same? If not, do you send them together or send the contract after the proposal is accepted? How does a client accept your proposal? Sign it?

2. Do you spell out your actual hourly rates (I definitely want to charge on an hourly basis) or just give per project estimates?

3. What is your general project process? For me, I'm thinking:

1. prospect (network, advertise, i.e., find the potential client)

2. qualify (find out if the client and I can help each other)

3. Send proposal (and contract? or)

4. Send contract

5. Contract signed, down payment is received

6. Production begins

7. First cut (draft) shown to client

8. Revisions (revise as requested and negotiate price)

9. Approval of Final Cut

10. Full payment (balance) received/Final cut master delivered.

I'd be very interested to hear how you all conduct your production process with these matters. I'm new on my own (part time side business for now) and would really appreciate your insights/advice.

Thanks!

Mark

Bill Davis · January 23rd, 2008, 12:21 AM

Quote:

Originally Posted by Daniel Browning

What financial problem does a wedding video solve? Having too much money? Or did you mean that it solves the producer's financial problems and not the client's? ;)

I just meant that the first rule of BUSINESS that I formulated for myself decades ago is that the ONLY reason that PERSON A gives money to PERSON B is that PERSON A becomes convinced that PERSON B can help them solve a problem worth MORE than the money they're spending.

Hopefully, a LOT more. Because if you can do that - there's an ECONOMIC incentive for them to come back to you to do MORE business with you.

Without a problem (or at the VERY least the perception of one) - money doesn't change hands - and it shouldn't. Because if the video (or any other purchase) doesn't help the business thrive, it's wasting a critical resource - capital.

What keeps everyone in the video business working is the happy reality that many (if not most) problems in business are actually COMMUNICATIONS PROBLEMS - and video happens to be an AMAZING communications tool.

Aren't we lucky!

Mike Cavanaugh · January 24th, 2008, 03:02 PM

When a client wants a fixed bid, I handle it the same way a contractor will build you a house for a fixed amount of money. He gives you allowances in the bid. You are allowed (he has figured into his budget) $2,500 for kitchen cabinets, which will buy nice wood veneer cabinets - you want the solid walnut with the rotating wine rack and the gold handles? You pay the difference! You are allowed a 200 amp electrical service with 12 circuits - you want 300A and 20 circuits? - You pay the difference!

In an agreement, I try to give a good estimate of what I think it will take to do the job (ex. 3 hours set-up/tear down, 2 hours taping, 4 hours editing, 1 hour revisions) - allowing for some screw-up time. I then attach a rate card and state that time/materials beyond the allowances will be billed at the prevaling rate. Client wants 5 or 6 different versions of the edit - no problem, you pay my hourly rate for everything above the 4 hours allotted for editing. His "talent" gets tongue-tied and takes 4 hours to get his bit on tape, the client pays for the extra two hours. Of course, if the extra time is my fault (can't get the lighting just right, camera or mic problems) I don't charge.

This is a good way to avoid the extra, picky little edits and "what would it look like if we did this" type changes. The client thinks about the cost/benefit of changes.

Mark Stuart · January 24th, 2008, 06:08 PM

Quote:

Originally Posted by Mike Cavanaugh

When a client wants a fixed bid, I handle it the same way a contractor will build you a house for a fixed amount of money. He gives you allowances in the bid. You are allowed (he has figured into his budget) $2,500 for kitchen cabinets, which will buy nice wood veneer cabinets - you want the solid walnut with the rotating wine rack and the gold handles? You pay the difference! You are allowed a 200 amp electrical service with 12 circuits - you want 300A and 20 circuits? - You pay the difference!

In an agreement, I try to give a good estimate of what I think it will take to do the job (ex. 3 hours set-up/tear down, 2 hours taping, 4 hours editing, 1 hour revisions) - allowing for some screw-up time. I then attach a rate card and state that time/materials beyond the allowances will be billed at the prevaling rate. Client wants 5 or 6 different versions of the edit - no problem, you pay my hourly rate for everything above the 4 hours allotted for editing. His "talent" gets tongue-tied and takes 4 hours to get his bit on tape, the client pays for the extra two hours. Of course, if the extra time is my fault (can't get the lighting just right, camera or mic problems) I don't charge.

This is a good way to avoid the extra, picky little edits and "what would it look like if we did this" type changes. The client thinks about the cost/benefit of changes.

thank you, Mike. Do you ever get clients that "freak out" over your hourly rate card? Just wondering... I'm still debating with myself if I should do that or not, but I for sure want to avoid the type of revisions you mentioned.

Peter Wiley · January 24th, 2008, 10:37 PM

There is a good article "Taking Control of Your Billings" here:

http://magazine.creativecow.net/pdf_...ad_version.pdf

(page 15 in the PDF).

January 19th, 2008, 03:24 PM	#1
Mark Stuart Regular Crew Join Date: Jun 2006 Location: madison, wisconsin Posts: 31	Billing advice for corporate video Hi everyone, I have an opportunity to shoot and edit a small(?) corporate project soon, and am looking to get advice and compare notes on billing. I have hourly set rates determined. I think I really want to charge an hourly rate for scripting (if any), shooting and editing as I know how much longer projects can become than originally anticipated. Not so much from my end, but the client's. Recently, at my day job, we estimated a client $800, and they ended up with $2K in production! This was due to their many revisions and wasting shoot time. I also would like to give my corporate client some type of estimate in total costs, even though I want to charge hourly. I do not have much info about the project yet, but want to be prepared to write a proposal, as they are very interested in my services at this stage. How do you all do this? What is your process? What do you put in your proposal? Do you charge hourly or flat rate per project? Do you get a retainer payment? How do you do an estimate if charging hourly? I know I have much more info to get from them before writing a proposal, but I want to decide on a general process as I haven't done much corporate production on my own until now. (I'm a full time producer at a network affiliate tv station, and also have my own video company part time). I'd appreciate your insights. Thanks much, Mark p.s. my "determined" hourly rates are half of what the station charges for production services. Also wouldn't mind some feedback on that plan.

January 20th, 2008, 07:38 AM	#4
Steve House Inner Circle Join Date: Mar 2005 Location: Hamilton, Ontario, Canada Posts: 5,742	There is a way to have some of the best of both worlds in the hourly versus fixed package price dilemma and that is to draw up a contract that calls for an hourly rate up to a max total of $XX, subject to a +10% or +15% variation without prior authorization. That way the client has the predictability of a fixed fee and doesn't have to worry about getting dinged if you dawdle. For this to work, of course, a detailed spec document needs to be drawn up first describing exactly what the project entails so that time and material requirements can be accurately estimated. Any subsequent changes to the spec must be in writing with client signoff. That way a client's change request can be clearly recognized as within scope and acceptable without changing the budget versus out-of-scope and requiring a revision to the estimated costs with signoff before adoption. __________________ Good news, Cousins! This week's chocolate ration is 15 grams!

January 20th, 2008, 09:07 AM	#5
Mark Stuart Regular Crew Join Date: Jun 2006 Location: madison, wisconsin Posts: 31	Billing advice for corporate video That's a good idea, Steve, thanks. That's what I'm trying to make up my mind about now... how to charge hourly, but give an accurate estimate. Carl, your line "In this neck of the woods, the area cable company is great for selling people craptastic commercials for dirt cheap." I must say, in this neck of the woods, too! The air time value and production be damned is exactly the philosophy I've also worked with at my network station for many years, but it's actually been better the last couple as the new higher ups actually see production as a value. All that to the side, however, I'm striving to produce a high quality product at a reasonable price, less than the same product from a major company for the reasons described in Chris' post. Thanks for the great advice... I'm open to much more, so anybody else please feel free to chime in!

January 20th, 2008, 06:19 PM	#6
Benjamin Hill Major Player Join Date: Nov 2005 Location: Iowa City, Iowa Posts: 670	I've done a variety of corporate video work and learned many of the business lessons the hard way...so now I try to be very clear and up-front about costs and expectations, whether it is hourly or fixed-bid. Sometimes clients want one price for everything ("How much does a video cost?"), and sometimes they want to nickel-and-dime and micromanage every step and that's fine too. If you do fixed-bid, just make sure the price and service terms are very clear. If you bid it hourly, make it competitive enough that they will feel good about hiring you repeatedly. __________________ youtube.com/benhillmedia linkedin.com/in/benhillmedia

January 22nd, 2008, 08:11 PM	#11
Mark Stuart Regular Crew Join Date: Jun 2006 Location: madison, wisconsin Posts: 31	The Corporate Production Process You're right, Bill, the client's results is the value to them. Same with the TV commercials I make... doesn't really matter how beautiful my video art is (and it is! hehehehe), or what equipment we use to make it. What matters to them is does it sell what product or service they are advertising. Of course, there's also the air time factor involved. Need to reach your audience when their watching. But, like mentioned above, we're talking mainly corporate video here. I now have a good grip on what to charge; now I could use some pointers on writing a proposal/estimate. I've seen a few from other businesses and they seem to vary quite a bit in structure and length. I was thinking of structuring mine as: 1. Cover letter 2. My company info 3. The video production process (what happens, i.e., write, shoot, edit, etc.) 4. The rates 5. The terms A few questions I have so far as I'm now in the midst of writing this: 1. Contract vs. Proposal. Should they be one in the same? If not, do you send them together or send the contract after the proposal is accepted? How does a client accept your proposal? Sign it? 2. Do you spell out your actual hourly rates (I definitely want to charge on an hourly basis) or just give per project estimates? 3. What is your general project process? For me, I'm thinking: 1. prospect (network, advertise, i.e., find the potential client) 2. qualify (find out if the client and I can help each other) 3. Send proposal (and contract? or) 4. Send contract 5. Contract signed, down payment is received 6. Production begins 7. First cut (draft) shown to client 8. Revisions (revise as requested and negotiate price) 9. Approval of Final Cut 10. Full payment (balance) received/Final cut master delivered. I'd be very interested to hear how you all conduct your production process with these matters. I'm new on my own (part time side business for now) and would really appreciate your insights/advice. Thanks! Mark

January 19th, 2008, 05:10 PM	#2
Chris Davis Trustee Join Date: Jul 2005 Location: Willmar, MN Posts: 1,400	I would answer all of your questions with "it depends"... I have some clients that are comfortable (and even prefer) paying a straight hourly rate. Other clients (typically the smaller businesses) want a package price. You are right that almost every project will grow beyond its original scope, and for that reason you need to be honest with your client. If my client wants a package price, I make sure they understand what is included, and what type of changes will increase the price. I'll be honest, I've lost jobs because the client was afraid of paying $65 per hour for "extras" that were beyond the original estimate. I figure I'm better off, because that's the type of client that can nickel and dime you out of business. Since you're a one-man shop, you need to charge less than an outfit that maintains a staff (whether it's a tv station or not.) By hiring a small production company, the client is taking more risk (what if you get debilitated mid-project) and settling for less service (if you're working on another client's project, you might not have time to work with them) so they should get a better rate.

January 21st, 2008, 09:30 PM	#8
Bill Davis Trustee Join Date: Jan 2004 Location: Scottsdale, AZ 85260 Posts: 1,538	Just to be a curmudgeon... Lots of sources can provide equipment - and there's ALWAYS someone who can provide (often crappy) equipment cheaper than you. Lots of humans can point a camera - and there will ALWAYS be someone who can shoot cheaper than you. Lots of people want to talk people out of money - and don't really understand how to provide value for that money - especially in something as complex and variable as video production. What nobody else but you CAN do is to take the time with a specific client you personally meet and get to know - to really figure out what they NEED to communicate and to come up with a realistic plan for creating something that can actually help them solve their financial problems through video. Because video for money is ALWAYS about solving financial problems! ALWAYS. Your video MUST make or save them a lot more than it's costing them or there's NO REASON to do it in the first place. If you can do that - you should charge them based on the VALUE you create for them. Which represents the difference between what it costs them to hire you - and the positive results they get from your efforts. This is equally true if you shoot for a month with a crew of 10 - OR come up with an insanely brilliant idea that can be executed in 5 minutes with a 1970 era VHS camcorder. If the VHS thing MAKES them more - it's worth more. And you should get paid more. Period. Equipment doesn't matter. Effort doesn't matter. Time doesn't matter. RESULTS matter. This is the central change in thinking that may eventually cause you to make REAL money in this business. Maybe. ; ) FWIW.

January 24th, 2008, 03:02 PM	#13
Mike Cavanaugh Major Player Join Date: Dec 2003 Location: Albany NY Posts: 311	When a client wants a fixed bid, I handle it the same way a contractor will build you a house for a fixed amount of money. He gives you allowances in the bid. You are allowed (he has figured into his budget) $2,500 for kitchen cabinets, which will buy nice wood veneer cabinets - you want the solid walnut with the rotating wine rack and the gold handles? You pay the difference! You are allowed a 200 amp electrical service with 12 circuits - you want 300A and 20 circuits? - You pay the difference! In an agreement, I try to give a good estimate of what I think it will take to do the job (ex. 3 hours set-up/tear down, 2 hours taping, 4 hours editing, 1 hour revisions) - allowing for some screw-up time. I then attach a rate card and state that time/materials beyond the allowances will be billed at the prevaling rate. Client wants 5 or 6 different versions of the edit - no problem, you pay my hourly rate for everything above the 4 hours allotted for editing. His "talent" gets tongue-tied and takes 4 hours to get his bit on tape, the client pays for the extra two hours. Of course, if the extra time is my fault (can't get the lighting just right, camera or mic problems) I don't charge. This is a good way to avoid the extra, picky little edits and "what would it look like if we did this" type changes. The client thinks about the cost/benefit of changes.

January 24th, 2008, 10:37 PM	#15
Peter Wiley Major Player Join Date: Apr 2002 Location: Lewisburg PA Posts: 752	There is a good article "Taking Control of Your Billings" here: http://magazine.creativecow.net/pdf_...ad_version.pdf (page 15 in the PDF).