Customer says I don't charge enough!

[Eric Darling]

I know exactly what you mean. I can't imagine doing anything else for a living. But, I still gotta make a living!

[Steve House]

Originally Posted by George Tasick

Well can somone explain the philosophy behind the "day rate"?

If i where to hire a painter to paint somthing that took him 3 hours ... i'm not going to pay him for 10 hours.

Why does this change with video?

I could understand charging a full day if i could do no other work ... but the fact is i can do other work when i'm not shooting his video.

And the travel time is 2 hours and 10 minutes ... i wouldnt even charge for fuel if i was driving that distance. And in this situation he's paying for my travel.

I'm just having a hard time going up to somone and saying ... pay me for 10 hours even though i'm only going to give you 3 ... then the days that i take a two hour flight and am doing no work for you i want you to pay me for half a day?

I just don't see that as fair?

Your time is the inventory of your business and it's a perishable product. Video production is not like a painter or a plumber who can schedule his day in blocks of an hour or two. If the painter has a two hour job and gets a request from another client that day, the new job can be scheduled to start after the first one ends. But video production doesn't work like that - most gigs are in full day increments with the occasional half-day or less shoot. That means that for most offers, if you can't accept the booking for the full day starting when everyone else is starting you can't do it at all. Thus if a client books you for a 1 or 2 hour shoot on a given day, under most circumstances that booking effectively prevents you from accepting any other bookings that day and pulls the entire day from your 'inventory' of time saleable to clients. So whether he's going to use you for an hour or a full day, your "wholesale cost" of the product that the first client has purchased from your inventory is the same.

Travel time works the same way. A couple of weeks ago I had a 2-day job in Calgary, a 4 hour flight two timezones away, on a Wed and Thur. To get there in time for the Wed 8am start and be in any condition to work I needed to arrive at my hotel by 8 or so Tuesday evening. Working backwards I needed to leave home by about 9am Tue morning to get to the airport and make the flight, etc. That meant Tue was blocked up completely for being able to book the day with work for any other clients and so was fully billable at my regular day rate. (And in this case it's not just theoretical - I actually did have to decline an offer from another client for a job on that Tuesday because I was blocked up for the full day traveling to get the first client's job.) If the travel day had been a Sunday rather than a Tuesday it wouldn't be time that I might have been working for another client but at the same time it is my time being consumed on behalf of that client and as such deserves compensation, hence I would ask for a half-day charge for those sorts of travel days. This week I had work in Toronto for the same client Mon and Tue and in Montreal on Wed and Thur - that flight's only a 1 hour hop, adding in check in times and security makes the whole process about 3 hours or so. I could do that after a slightly early finish Tuesday and return home by a reasonable hour after finishing up on Thur, so in that case the client was just billed the 4 days at the regular rate and with no premium added on for the travel time at all since it really didn't pull any 'normal work-time' out of my 'inventory' at all. If you're a full-time employee on a salary you wouldn't quibble about travel time outside your normal work-week being uncompensated - the salary of an exempt professional is based on the assumption that you do whatever hours are required to do the job and if that involves giving up some of your personal time from time to time, so be it. But we're not on salary and so we need to charge our clients based on what it takes to complete the project.

Typical billing for remote production is often portal-to-portal, especially if you have a full crew. The clock starts ticking when the crew van leaves the studio enroute to the location and keeps running until it arrives back at the studio at the end of the day. Travel charges, mileage etc, apply if the travel is outside a 'local zone' that's typically a circle 10 or 25 miles in radius around the studio. Personally I wouldn't bill the client mileage for driving if it was less than a 1 hour drive each way from my home but if it was the 2 1/2 hour one way trip you mention, darned tootin' I'm going to bill mileage (but not travel time), especially at today's fuel proces.

[Shawn McCalip]

I think Steve House hit the nail on the head. Sure, you might only have to shoot for a couple of hours, but like someone else had mentioned, you need to factor in set-up and break down times. Most TV commercials I produce only take 1 to 3 hours of shooting, depending on the subject material, but my total time on location is usually a bit longer due to the fact that I have to get everything set up. In addition to the camera, set-up also includes lighting, microphones, moving props and/or furniture into place or out of the way, and coaching the actors that will be involved. Most people see the finished product and have no idea how much work goes on just outside of the frame. The point though, is that a simple "2-hour shoot" can easily take up a big chunk of your day that makes you unavailable to to other clients.

Also, keep in mind that these day rates and half day rates also need to take into account the uncertainty of the future. Many freelancers don't work every single day of the week. Also, there are lulls during certain times of the year where you may not be able to find work for a week or two. Maybe longer. As a freelancer, you need to keep hard times like this in mind and plan accordingly. It's not a pleasant feeling to be flat broke without any business prospects looming in the near future!

[Steve House]

Originally Posted by George Tasick

On the issue of rates vs. equipment and time away from "the office" ...

On a scale of 1-10 the fireworks industries advertising/media is about a -2.

All of my equipment cost me less than $40,000 and the result of that equipment is astonishing to my customers. I will NEVER need an F900 for ANY project for a fireworks company ... and even if I did the rental cost would get tacked on to the bill.

...

Remember to include amortization of your equipment into your rates. Your basic cost of doing business includes paying for the maintainance and depreciation on the equipment you presently own plus a reserve for replacement just as if you were a rental house. With a 40 kilobuck investment you need to be billing your clients around $12000 a year just to cover the depreciation on your current equipment package and that doesn't take into account any of the other costs - cost-of-capital (ie, purchase credit interest), maintainance, insurance, or replacement reserve - or expensable items like computer software, expendables, etc associated with your gear. So your rates need to reflect the cost of your time and talent PLUS the effective 'rental' of your equipment whether you detail it as a separate charge or not.

[Bill Davis]

And Steve didn't even go into stuff like insurance or the opportunity cost of the money you have sitting in your gear.

Really, if you just enjoy it, have fun.

But if you REALLY want to enjoy it. Like someday becoming the fireworks shooter the bigger fish call FIRST - you MUST treat it like a business.

Not because you want to be all fancy, but because some day they're going to want to let you get coverage backstage and some bean-counter will pop up at the last minute asking for your insurance certificate showing you're properly covered in case your camera falls over and smashes the switch box and sets off a row of mortars prematurely. And you're gonna want to be ready to call your insurance agent and have them fax proof of proper coverage it to that person without breaking stride.

Fun is fun. Business is business. The BIG fun is growing your business so when the bigger clients come calling, you're not flailing around trying to get this kind of basic business stuff ready.

And that means taking your business seriously.

My advice is buy some time with a CPA and let him or her TELL YOU what you need to charge in order to create a sustainable, growable business.

It'll surprise and probably scare you. But it's the only sensible path if you want to move from Hobbiest to Pro and keep doing what you love.

FWIW

[Tim Polster]

Another great thread in the business forum!

My two cents is to think about rates in a negative fashion.

What is it worth for you to not be able to do other things for the time this job will take up?

Three days out of town is three days out of town, no matter what you are doing for the job.

If you have nothing better to do, then you are charging what it is worth for you.

As you get busier, you might have other things to accomplish, then the rate will go up naturally.

This topic is the crossroads of the digital work world.

It is a lot less expensive to operate a video business than in the past.

Equipment does more for less which lowers prices due to competition.

There is no set rate, only percieved value.

And this will get worse every year

[George Tasick]

OK, just to give everyone an update on my situation.

I called my customer back and told him that from a business perspective I’m still very new to the game. He already knew this and understood because he's not that old of a company either.

I renegotiated my fees for the job to something that's a bit more in line with what everyone says. Ultimately I increased my fee by about $800 and brought the total shoot cost up to about $1900 total.

I took everyone’s advise and then mixed that with the inside knowledge that I have of my scenario and the fireworks industry. Ultimately I am happy with the rate I am getting although I feel I’ll still have to continue to refine my pricing scheme to where it will cover all the various costs that where talked about in this thread.

I modified some of what was suggested such as, a day is 8 hours (not 10) and a half day is 4 hours (not 75% of a full day). Any time spent over 4 hours instantly becomes a full day rate with overtime (more than 8 hours in a day) being billed at $150 per hour.

My per diem travel rate is now $280 per day (rather than a half day) for domestic travel and international travel days are $560 per day.

I did this because when traveling domestically I have phone and internet service anywhere I go and can still conduct business. From time to time my customers need me to go to China, Spain, Italy and/or Japan for various competitions, symposiums and factory tours. In those scenarios travel can take up 2 or 3 days and I’m completely cut off due to the lack of telecommunications services and the remote nature of fireworks factories/events.

[George Tasick]

Oh, also ...

After I raised my rates my customer said he couldn’t pay me all up front because he had to write about $500,000 worth of checks to pay for his fireworks for the 2008 season.

I've worked with this customer before and told him to just pay the expenses up front and pay the rest later. We've done this before and he has always paid as promised.

I have a feeling that this will happen frequently because fireworks companies often have very little expendable cash early in the season. When they're working mostly with municipalities, payments often come in after the 4th of July and after the municipalities cut checks.

I'm positive that I’ll handle payment like this in the future. I'll just make sure I get a third to a half of the payment up front and then hold out on the final product until I’m paid in full.

I've been warned by some about fireworks companies and how they pay but I have not yet had any bad experiences.

[George Tasick]

Finally, I just wanted to thank everyone that responded to this post.

I've been a lurker in this forum for a long time but never actually posted a significant question.

Most forums on the internet are all about technical questions or gossip, usually when you get into business questions you never get any responses.

So, it's an absolute thrill to have a forum that not only responded to my business question, but actually resulted in me getting more money for a project.

Just goes to show that you never know what you can get until you ask!

Thanks to everyone!

[George Tasick]

Originally Posted by Bill Davis

But if you REALLY want to enjoy it. Like someday becoming the fireworks shooter the bigger fish call FIRST - you MUST treat it like a business.

It's all in the works! I'm just taking it one bite at a time and learning as I go.

Honestly I have never had more fun in my life than trying to build my own company with a focus on the industry that I love.

Personally I walk into all of this with little or no fear because there is no chance of failure. I'm right where I want to be, doing what I want to do and I can be as successful as I want ... it's all up to me! Even if I technically fail, I just start right back up again on the exact same path.

And I can protect myself from failing by simply making smart choices, being flexible and trusting my judgment.

It's like a video game ... if you die; you just keep running back into the same obstacle until you solve that problem. There's only so many obstacles that you have to face so if you just "keep on, keeping on", eventually you win!

Sometimes things are a little uncertain but that's usually short lived and I’ve never been confronted with a problem that I could not solve. So I’m pretty confident in that respect.

And if I really want to put things in perspective, I just consider the challenges of having a wife and kids ... then any business problem pales in comparison! Talk about an unsolvable problem!

PS – I’ve already got a few “big fish” calling … then again, I know some of the big fish personally so that helps!

[Bill Davis]

Good for you George!

Keep us posted on how things go.

And if you ever do a show near Phoenix, drop me a line.

I LOVE fireworks! and if I'm not booked on something else, I'll probably provide second camera coverage for you just for the fun of it.

Take care.

[George Tasick]

Well, aside from humidity and the resulting smoke the shoot went perfectly! But the smoke adds a lot of drama so it's not really that big of a deal. I only wish I had 2 more cameras and an extra operator so I could get a few more angles to cut to/from.

Ultimately this particular show was not that significant, just 12 minutes but the fireworks where really high end stuff from the USA, Italy, Spain, Japan and China. The retail value of the show was $20,000 and the audience was only about 122 people so my customer wanted the video so he could extend the audience to those on the internet.

I'm going to edit the footage from my one camera with some stock close-ups that I have and post it to You Tube tonight. I'll post a link when it's up there.

Thanks again for everything!

[Trey Dillen]

Hey George,

Nice to see another guy from the area on here! I'm a senior at Pine-Richland. I'm shooting with a V1U and editing on my Power Mac G5 with final cut studio 2. You should have had me come with you to get those other angles! haha Feel free to e-mail (treydillen@mac.com) me if you need any help on any projects. I'd love the experience and I'm looking for some stuff to work on this summer.

Zeli is the Seneca Valley school district right? Not too far down the road from me. Anyways, I'm interested to see your footage of the fireworks!

[Annie Haycock]

Hey George

I've just read through this thread, and found it very interesting, so thanks for asking the initial question.

While I don't (at present) hire out my video skills, I did have the same problem of trying to work out what to charge customers in another field. I found it difficult to justify charging £150 ($300) for what might be only a couple of hours work, but people were telling me I wasn't charging enough. So I made enquiries, and put my rate up. I've just put it up again, because now more work is required of me from a legal point of view.

Once you've settled on a specific rate, it's much easier to keep applying it. And a daily rate is easier to deal with than an hourly one.

I did a work/time analysis over a couple of months and found I was over my quote on a few jobs, and under on a few. But on average, it worked out ok. And having worked out what it actually cost, I just applied the same daily rate to everything - unless there were circumstances that suggested I do otherwise, like extra travel.

For the initial situation that you wrote about, I would charge for one day's work if it would take one day to cover the time of travelling, setting up equipment, getting the shots, and editing them. The fact that you spend another two days doing things basically for your own benefit is nothing to do with the client, so long as you deliver what he expects on time.

And while it's fine making a bit of money doing something you enjoy, you'll be changing your tune when you find you are in such demand that you don't have time to enjoy life any more. I was told that if I had too much work, I should just put up my prices again - but that won't work in my situation because people need the service, and also I have no competition in the immediate area. I wish somebody else would set up here, then I'd have time to enjoy using the photography and video equipment that I've been able to afford to upgrade!

[Mark Aardsma]

It's already been said, but I believe fun is a lot more fun when you run it like a business and make a profit. It takes confidence to set prices and actually take someone's money from them. If you do a good job and your prices are too low, you will be in demand and that should help build confidence to charge a little more. I'm glad you had the confidence to raise prices in this case.

I had the experience of being employed full-time for a research organization that in my opinion was confused about what kind of organization it was. It acted a lot like a non-profit, but did not want to be setup to legally accept donations. It wanted to pay it's expenses through selling products (mostly printed literature) but wasn't really comfortable acting like a business and charging enough to make a profit. In the end they ran out of funding and I became self-employed. I came away from that experience resolved to never be on the fence about business vs. hobby vs. not-for-profit identity questions.

I've found in my own business that making a healthy profit opens up a lot of opportunities to expand, help people, and enjoy the process.

Something that helps me when I think about pricing -- my pricing needs to be competitive, and it really doesn't need to be justified on any other basis. By competitive I mean we are the customers best option, or close to it. I don't have to justify pricing based on my costs or the specifics of what I have to put into a job, I just need to be the customers best option, based on the free market out there. I tell my sales people when we are debating whether to discount a big quote or not, I want to be the customers best option, but not by a lot.

Mark