How do you set pricing?

[David Chandler-Gick]

Originally Posted by Tim Pierce

I just found it interesting that after paying myself a decent wage for approximately 50 hours of work and throwing a decent amount towards equipment and supplies, puts my pricing around $1500. Thanks for your input.

But what about the 100 hours you spend working on the business, but not being able to bill anyone for?

This is a passionate subject for me. And I see so many people NOT considering everything like they have it figured out. That ignoring the facts make them irrelevant... This is dangerous.

Why re-invent the wheel? Whups... Sorry. cliche.

Why make the same mistakes when you can learn from the mistakes made by others?

All I ask is that you consider EVERYTHING... Not just the feelgood stuff.

-DJ

P.S. to Martin: I don't imply. My apologies for you taking my post in a way that was not intended.

[Martin Mayer]

OK, David, I obviously took your post the wrong way.

I, like you, am passionate about pricing being one of the most important decisions for business survival - and I don't think that you should necessarily go as LOW as the lowest in the market, rather be aware of what others are charging when customers are making comparisons.

I have recently found that continually and gradually putting prices UP actually makes you more attractive to some customers...

[Devin Eskew]

Originally Posted by Martin Mayer

OK, David, I obviously took your post the wrong way.

I, like you, am passionate about pricing being one of the most important decisions for business survival - and I don't think that you should necessarily go as LOW as the lowest in the market, rather be aware of what others are charging when customers are making comparisons.

I have recently found that continually and gradually putting prices UP actually makes you more attractive to some customers...

I agree, it wasn't until I charged at least $1,200 and felt my skill set was worth the price, that I really started to book.

[Tim Pierce]

"But what about the 100 hours you spend working on the business, but not being able to bill anyone for?"

I'm sure I've spent more than 100 hours working on the business, but it takes time to actually build the business to the point that a pure profit is made. I am still in the process of paying for all my equipment. I just had business cards made. I plan on having lettering put on my car. I would like to buy another FX1, tripod, mic setup, lanc controller, mixer, and so on. I eventually want to purchase a web server so that I can host my own web page. I don't think I'll see pure profit for a couple years, but in the meanwhile I plan to acquire some new toys and atleast make "lunch money."

[Peter Jefferson]

and its that "lunch money" that sets a precedent for pricing in teh video production industry, being that as its not your primary income, your pricing really does not carry the $$ value of what it actually can..
So business hat on..

Heres a scenario..
For me who lives off the money i make doing this and relyingon the income to pay off a house, materials, a business etc etc and who charges $500 more than you, i have to compete with you for a job.. OK, fair enough.. we all have to compete..

however, if you charge $500 less, youve already got me on price.. simple, no brainer, ok..
But i get a potential client taking my demo to you, and says to you, i want you to do my video like this .. would you do it? Of course you would, as you want the job...

But then, my work is devalued, as not only have i lost the job to you coz your "cheaper' , but youre also copying my work.. so if you do this afew times, with afew different people, and the next newbie does the same thing.. Im not making any money, but you guys are... why??
Coz ur cheaper...
And when your cheap what happens? How much value is actually put INTO the product once recieved? Forget emotional value, but mentality value.. what mental picture are you drawing for the industry if your giving out a $3000 job for half that?
Are you valuing your skills, experience and equipment or are u just tryin to make a quick $1500??
Are u setting a precedent for the rest of the producers out there? Is it fair to give the public market a view that a $3000 job is actually only worth $1500 because YOURE offering that much? And what happens when youre the only one offering that for $1500? Are u busy dealing with good clients who respect your work or are u dealing with tightassed clients who have a champaigne diet on a lemonade budget?
OK, moving on..
So i drop my prices to get my potential clients back.. ok fair enough.. we all have to make sacrifices.. but considering the fact i live off the money i make, and you dont, this means that im not making as much for the same amount of work.. im working harder to compete with you, as my yearly quote of 40 jobs, needs to increase to 50 to make up the differences in loss because i must compete with you....
Now, Im forced to compete with an amateur or a newbie.. but i have my skill, experience and other goodies up my sleave, not to mention the fact that my product is probably very different to yours.. but in the end, people just want a decent DVD.. no amount of fluff will ever change that...

Ok, so you do this for a year..
Then what??
You notice that your workload is gettin a lil full on and you cant keep up with the editing.. people are asking you to shoot, almost every weekend.. and the clients you thought were ok, are asking u to drop the price for cash payments, they also want preshoots, and interviews and fotoslideshows etc etc..
But your clients are on a lemonade budget arent they? Now they want to pay for more..? U mean to say they actually HAD money to pay full price.. ?? Of course they did... they just didnt tell you coz they were tryin to milk you.. and rip you off.. Mind you they wouldnt go to KMart and grab a hairdryer for 60bux, take it to the counter then offer to pay 40 coz they wanna pay cash.. So what makes this different?

Moving on..
ok... you quit your full time job and focus on this industry..
Alrighty then.. you have a load of gear, kick ass pcs and you know what works for you and what doesnt..
You have a website happening and you get 5 to 10 queries a day for 2 directory listings.. you send out demos, you drive out to see clients and potentials, and all that other stuff...

You have bills but no regular income... your income is now only from the wedding jobs you take...
As you used to be cheap, the money you made went towards new gear.. Your now not making enough money to survive, and as winter is coming theres not much left in the coffers..... but you spent most of your money on new gear... and now you have winter coming and bills to pay.. but no work

So what do you do.. naturally, youd increase your prices to survive..

where are you now??

Your in my shoes..

2 months later.. another dude starts his business down the road and is $500 cheaper than you...

What have you got now??
A friggin ugly circle of bad business practices which DO NOT EVOLVE. Youre left with an industry which CANNOT evolve if these practices continue...

Put it this way, the less "professionals" charge, the more and more precedents are set.
With this, each one of us must continuously justify what we do, when we shouldnt have to. Each one of us must continue to justify the DIFFERENCES as to WHY I deserve more than the next guy.
Now dont forget, the photographer is doing MUCH less work than me.. so why should he make more $$ ? His job is much easier, and doesnt require all the post production crap that i put up with.
But its ok, coz youre happy to take $1500 while the Photogrpaher scratches his ass and laughs all the way to the bank..

The reason the video market is seen as substandard is because WE have made it so. It evolved from a fairly decent living to this..
We offered cheap prices, We accepted the extended work, we took on impossible jobs for peanuts, we gave out freebies to score a job, we were lazy and used preset effects which cheapened the process, we didnt provide the client with what was promised, we offered a crap product and above all, we didnt EDUCATE the client as to how much work is involved.
(We as in, in the past by producers who are prolly no longer in business... )

We MUST change this.. if we want our careers to become a viable source of income, we must work smarter, not harder..

All i can say is that ive seen so many demos that ive increased my prices, why? coz i can, and if people want the cheap shit, they can have it. Teyre not gettin it from me, and im not gonna bust my arse for one more day simply coz im tryin to compete with anyone else.
I now tell my clients that if they want fancy home video, look elsewhere. If they want discounts, forget it. If they want me to price match, I'll offer a product match.
Sorry but people hire ME for ME and MY service, MY equipment and MY talent..
They want to pay for it, good, if they dont, theres the door.
They can see the work and judge for themselves...
They want to know more, read the contract and my website, i leave nothing to mystery.
Ive gotten so angry over the last few weeks about this, that its really pissing me off to a point of throwing the towel in coz of newbies who continue to devalue what we do WITHIN THE INDUSTRY. And from here on, i wont compete with that.
I tell my clients that people get what they pay for.
If they want experience, service and quality, they have to pay for it.

end of rant

[Tim Pierce]

Peter,

I remember seeing some of your posts in the past and I believe what you say adds value. I see your point, but I think it's all about experience. I understand your frustration, but the market here just won't pull $3K videographers consistently. This is not Boston, New York, or even Raleigh. Wilmington definitely isn't a major metropolitan area. Secondly, I am less seasoned. I have seen some $3K pieces of work and I'm not there yet, even if the market could support those prices. Before I book a client, I make sure to show them my work so that they know what they are getting for the price. Each time I do an event, my shooting style and editing get more technical. I become more proficient with each event, so that gives me time to add a little spice to the mix. I don't use alot of special effects, yet. But each product I deliver looks even more impressive than the last.

I don't promise the moon and the stars because there's the risk not being able to deliver. My work speaks for itself and my clients know what they are getting. As my experience grows, my skill and my clientel will grow as well. Maybe at that point I can quit my day job and then I'll be in your shoes. In the meanwhile, it's up to the couple to decide whether they are willing to pay for the experience (which likely will result in slightly higher quality). I think there's a market for videographers like both of us. Your experience level gets the big jobs and the people with deep pockets. If your work is reflected in your price, then that's all you. My experience level gets me less deep pockets, but enough to help me get established. That takes the more modest budgets off your hands.

[Jeremy Rochefort]

Originally Posted by Peter Jefferson

What have you got now??
A friggin ugly circle of bad business practices which DO NOT EVOLVE. Youre left with an industry which CANNOT evolve if these practices continue...

Phew - one can clearly see the passion - and the point.

I must agree with Peter. Its the new people screwing it for the older hands. My first two weddings were for FREE - with the clear understanding that my equipment was new and I had to gain the experience with the cameras and made no promises as to what would happen if something went wrong - that I made VERY clear - there were no promises as to what I would deliver (what I did say was that I promised to do the very best I could).

After delivering both those first two dvd's, I have been referred by these same two couples - its become like a family tree from there. I can mostly trace a referral customer back to these first two couples.

Once I had done these two - I set my pricing and didn't budge one iota on pricing - and I still don't and will not! In fact, I have done pricing comparisons in our industry and would say that I am a wee bit more expensive than others - but then I get the jobs which I WANT to do - not those that I am forced to because I need the money - and yes, this business and the other video work I do pays my bills and keeps me eating.

Do the practice for free with a clear understanding and THEN set and stick with your pricing - if you know your work is good, charge for it. If you offer cheap prices, people must be happy with cheap quality - and it DOES irk me that a photographer gets the best end of the stick, we do do a damn side more work than they do and mostly get the hind t*% when it comes to payment!

just my .02

Cheers

[Peter Jefferson]

hey tim, i didnt mean that post to be directed at you, but i was showing teh circle in which we "evolve' or dont evolve actually..

I see where your coming from, and my first solo job i scored i charged 400AUD ... now the edit itself was far more valued than the shooting, as i knew what shots i wanted, but i didnt know how to get it..
This was more for learning than anything else..

but until then.. in my early days i was charging like 800AU JUST to get a portfolio..
once these pissy jobs came out, people started digging deeper..
this went on for like 6 months..
the cheap jobs got EVERYTHING... but in teh end i had a product to show for it..

people then moved to the larger packages as within these smaller packages i offered what the larger packages had..

then i slowly killled off the smaller packages..

from there it just blew and pretty much all the work is now anything between 1700 and 3grand AUD sometimes we hit 4 and even 5grand.. but on average were looking at about 1500 to 2500USD

Now the more of these i do, the more of these i show.. in the meantime, i slowly cut out elements from the smaller packages.. such as highlights etc .. and offer that as an extra OR these "come standard with the larger packages" .. see where im going with this?

Slowly migrating the product to a higher value and ADDING value to a product by forcing a sale or by selling a larger package altogether.
Also, with the smaller package ($1400AUD nothign to sneaze at) I have a disclaimer saying that it may not be available during peak season. Reason that is is that i dont wnat to make peanuts at a time when i can be shooting a job which will give me 3 times that much money. very simple concept. If they want us in peak season, theyre not gonna get us unless theyre happy to pay for a FULL package...
Eventually that final small package wil be killed off also. but i use it as a marketing tool to get people in at least.. so having somethgn realtively cheap can work, if to only get peoples attention.

Anyways, Id rather go without that job and focus on editing if thats the case.
Take advantage of the seasons.. everybody else does..

now it took me1 yr planning, 2 years with open business and one FULL advertised season to get to this, full season i mean November through to March (summertime here in AUS) Now thats not a long time.
I learnt the hard way and im still sufferng from it.. i worked my ass off.. but it paid off and im still working on jobs from the last season.
My coming season has alrady started.. so ive evolved those prices.. and ive also set DIFFERENT prices for people gettin married NEXT YEAR.. why should they pay this years rates??

see what i mean??
Theres alot more to think about than just doing the job.. charge what your value is worth and evovle it with each job.
Also being so cheap people may not take you seriously..

but we all gotta start somewhere..

[Jeremy Rochefort]

Peter - you should be asleep already - it must be WAY past midnight in Oz :)

Cheers

[Tim Pierce]

Peter,

I completely agree with your sentiment. I also plan to expand my packages and phase out the smaller packages in the future. At that point, the smaller packages may not be available during peak season. I don't want to spend the peak months doing smaller jobs when I can be doing larger jobs. Once again, I'm not there yet. IMHO, $1200 to $1500 US is reasonable for doing rehearsal dinner, ceremony, bridal prep, and reception for a less seasoned videographer like me. My product is professional, but it may not be award winning just yet. As my product is polished, I will start charging around $1500 for bridal prep, ceremony, and reception only. I will have larger packages for that plus rehearsal dinner, highlight clip, and other miscellaneous items. Maybe one day I'll be able to hit $3K US, but for now I want to get my name out there. I want my clients to feel that they got their moneys worth and then some. If they feel that way, they'll surely refer my services to others. As my experience grows, so will my prices. You won't see me doing anymore $500 weddings for sure. I have already taken off those training wheels. The $500 wedding was for the son of a family friend, coworker, and WEDDING DIRECTOR. She has offered to promote me to her clients. She has convinced her wedding director friends to promote me. Her best friends own a bridal boutique and she has them excited about promoting me. And finally, she has already booked me two jobs for September. It's nowhere but up from here. Thanks for your guidance.

[Kevin Shaw]

I've seen conversations like this before, and it always seems to boil down to established people trying to convince newcomers to charge more so they won't have to cut their prices to compete. But we all know that the best way to get started in this business is to offer modest prices, because no one's going to hire an inexperienced person if they're charging as much as a company that's been doing videos for 20 years.

So it's inevitable that the newcomers are going to charge low prices because they have to to get started, and that means it's up to more established folks to command the price they feel they deserve through superior quality and salesmanship. If you can't convince a customer to pay you $3000 for a wedding video because there are several other companies willing to do it for $1500 and the customer likes their work, then it's up to you to improve your presentation to the customer to change that. If everyone reading this raises their prices to $3000 today, there will be another crop of $1500 videographers tomorrow, so there's no point losing sleep over this.

Like it or not, it's the free market that ultimately sets prices, not what any of us think is fair. If supply versus demand of videographers means the average going price for a wedding video is (say) $1500, then that's what it's going to be. Either figure out a way to rise above the average, find a way to work with the average, or find something else to do that pays you what you think your time is worth.

P.S. Everyone who charges less than *I* do should raise their prices. :-)

[Tim Pierce]

Well said Kevin! I don't plan to stay with those rates long though. Supply versus demand is key here. As clientel increases, experience increases, and quality increases, thus so will rates.

[A.J. Briones]

wow, this is turning into quite a passionate topic.

imho, this is actually the same in wedding photography. the inexperienced guys charge around $500, the middle-of-the-road guys charge about $1500 and there are guys that charge $3k and beyond. the difference is in experience and quality (which are not mutually exclusive). add to that the guys that have no porfolios that do weddings for free. heck, it's the same in any business in the creative industry (print, web, animation, direction, post production, etc.): charge less at first or do some free gigs to get the word out, build a portfolio and recoup some startup cost, then adjust to the market as you get established. eventually, you get to step 3, which is quit your day job and live off of the profits.

do you think an inexperienced film director with a limited reel should charge as much as stephen speilberg? even if they do, will any studio be stupid enough to bite?

an inexperienced or low-quality videographer charging $3k for a wedding is not going to get any business. therefore, they charge less so they can gain experience and get better. we've all been there. it's part of the two year business plan. imo, this does not hurt me, because i am not in the market of doing budget weddings. to the guys that undercut me by $500 bucks, i can tell brides with confidence that my work is better. i can show it to them by showing them my work. they can choose to save $500 or spend it to get a better quality product and service.

i'm in southern california. starting out, i did 2 weddings for free and one for $200 (answering a craigslist ad). after that (and now armed with a portfolio with varied examples of my work), my packages were from $1500- $2500, where they stay today. next year, prices are going to go up because i'm getting really good at this, and my 2005 reel will show it.

in this market, i compete against guys that charge anywhere from $800 to $7k. i don't worry about their prices. what i worry about is competing on quality. i see some of the great work on this board and i try to do better while keeping my distinctive style. that said, you have to look at other people's prices to make sure you are in sync with the market. not being sensitive to market trends in your industry is simply not taking care of your business.

am i doing this for lunch money? i guess you can call it that because i make videogames in the daytime. but no matter how lucrative my wedding business gets (i'm doing pretty darn well, actually), i love making videogames and i will probably continue to do so for a very long time. i like the fact that from monday to friday i can work on creative ways of killing people and then get a break to do the romantic stuff on the weekends. it keeps me grounded, and gives me and my projects variety. i love both jobs, why do i have to choose just one?

when videogames cease to be fun to make, i will quit. when wedding videos cease to be fun to make, i will quit. i've worked with some jaded vendors, and that's not going to be me. i'm not going to be the guy complaining about why i have to use the same etta james song day in and day out. if that ever happens, i will evolve and find another way to make money while remaining creatively challenged. for now, i love what i do and i bring that joy to every project i work on, bloody or bridal. ;-)

[David Chandler-Gick]

Originally Posted by Tim Pierce

IMHO, $1200 to $1500 US is reasonable for doing rehearsal dinner, ceremony, bridal prep, and reception for a less seasoned videographer like me.

10 years ago BETA SP single camera setup with audio package would get $750-$1500 day rate - JUST FOR PRODUCTION! No editing.

Let's see, 10 years later, gas goes up.

Milk goes up.

Newspaper goes up.

Housing goes up.

Professional Video goes down...

[Peter Jefferson]

"I've seen conversations like this before, and it always seems to boil down to established people trying to convince newcomers to charge more so they won't have to cut their prices to compete. "

see this is where my point is missunderstood .. to a certain extent......
Its not JUST about competing with a newbie.... as a whole, its about CREATING a market and manipulating it in a way to increase its true value for what its really worth..
We cant do that if this circle continues..
TO me, if a newbie wants to get into the industry I HIRE THEM. I let them shoot, and they can keep a copy. From there they create a portfolio with MY clients. THEN when they get afew jobs under their belts, they charge the approximate industry rate (but not stupidly cheap), AND i still have another camera guy who i can call on when i need them.
It works wel for everyone, and the value remains at a decent level.

Newbies can charge less, hell you gotta start somewhere, BUT theres gotta be a point where one says to himself.. what PRECEDENT am i setting for this industry 5 years down the line?
Where will i be 5 years from now?
What other gear will i need in 5 years? How much more work is required?
Think about HDV as an example, not only are you needing to aqcuire a HDV cam, but you need to adjust your workflow to suit... this takes time and money and if you DONT charge whats appropriate, theres no point in upgrading... why? to make another $5?? TO be better than the next guy??

If your in this game to have fun, then its a pretty expensive hobby if you ask me.. but if your in it for the love of it, and for the fact that you can enjoy what you do while making money, then do it properly and think ahead.
Be cheaper if you have to, but dont join the bandwagon and be stupidly cheap.. not only does it make it hard to justify higher prices, but it also stuffs around with peoples mentalities as to the VALUE of what we do...
If we can VALUE what we do, we can charge accordingly.
Its convincing people that there IS value in video.... and you cant do that by looking at the production as a game...

With my system of taking on a newbie, it works well, ive done it for 4 guys in one season, now i have 4 camera rigs of my own, and their own 3, i can easily take 7 jobs on for the same day.... now not only does this give me an exceess of work which is ridiculous, but $$ worthy, but it taks business away from the other video producers, whod be able to focus more on the client than the numbers...
BUT these guys also being newbies, are now running theyre own business' but theyre not charging LOW LOW prices.. Thyeve got the experience coz i gave them the opprtunity to gain it... theyve got the portfolio coz i give them copies of their work.... So all that is established BEFORE they go public with their business..
Yes, theyre cheaper than me, but theres a reason for it, but at least theyre not slitting their own throats 5 yrs from now..
Then when ANOTHER newbie starts and approaches them for work, they will do the same for this guy, and when this guy is ready to spread his wings, he WONT NEED to be CHEAP CHEAP...

So if this system is used over and over again, with different crews and companies, even newbies can start charging reasonable rates on the outset... but not screw up the $$ value or the way the industry is seen...
Eventually the value of video will increase and continue to increase...
Photographers have been doing this for years... im just baffled as to why video hasnt followed..