Ah, the least fun part of video production – making sure you can pay the bills. As you get rolling with your own video business, whether that is just as a freelancer or setting up your own production company, you’ll need to ensure you are pricing yourself appropriately. If you don’t, well, you might not be able to keep things going for very long. Pricing things well is for everyone’s benefit.
You might need some help if you are new to this, which is where Saj Adibs comes in as he has been putting together some great videos with advice on how to operate the business side of video production.
Sam walks through a real-world example using his accounting software, in this case QuickBooks.
1. Not Billing for Production Services
Where people start, especially coming from independent freelancing to a production company, is that you lay out all your rates and costs. This means you’ll put each person’s role and their rate all together plus any equipment costs. He throws together an example invoice using this method.
One thing not even on the list of mistakes is that you need to include your gear as their own item. It is not part of your labor. Gear gets used and eventually will need to be replaced so that’s why it should be expensed as its own item.
You don’t even need to show this breakdown to the client, otherwise they might get into things that they shouldn’t be involved with in order to save a buck. Like why do we need X or Y on set if we have this other thing already. Not a great thing for anyone.
So where’s the problem? Essentially you are just still working a regular freelance job for yourself with some other freelancers or friends helping out. Sure, your labor to do some cinematographer is good, but it doesn’t account for your managing and organizing the production overall.
The time you spent organizing all the crew and even talking to clients and sending emails is time spent working. You need to charge for that work. Build it in to the cost otherwise, you will lose some hours of work.
Add a line item for production management. If you need help you might want to consider hourly rates based on how much time you spent on this job. This could be a whole day or week of work, so make sure your hourly rate works for you. Pre-production too if it is required.
2. Having No Profit
With an itemized list of everything you needed to do the job and charging only that you aren’t making any money. Yea, you are making money on the day rate and some gear charges, but if you are trying to grow a company you need to make actual profit. You’ll never grow if all you are doing is breaking even on each job.
To make profit you can take that basic itemized list total and add a charge on top of it. A good example is 20% on top. You need to make money if you want a future for your company, especially if you are not “hiring” yourself to work on the gig with your own day rate.
You are working and need to make money for the work. Plus, some capital will help if you have business needs you want to invest in or to cover overhead. Overhead can cover the general costs, like having insurance or a website, which you absolutely should have.
3. Overhead Cutting into Profit
Speaking of profit and overhead, over time you will realize that your profit is being eaten away by those overhead costs. They add up over time. But, at the end of the day even covering those expenses isn’t your ideal world. You want to spend time and money for advertising to capture new clients.
Client acquisition has costs. Paid promotions and ads cost money and it doesn’t directly get paid for by clients. Make sure you are accounting for these costs in your billing. It could be as simple as going for a greater profit margin.
I’m going to reiterate that the client doesn’t need to see all these line items. It’s useful for you, but it doesn’t always help the client. Simplified invoices are best for all a lot of the time.
Don’t worry about hitting these rates or methods today. This is long-term planing. Today you might not be able to get a guaranteed 20% profit, but you should be working towards that plan.
What did you think of these tips?
[source: Saj Adibs – Filmmaking Mentor]