How to price your video projects. EP #189 - Shorty

G', day, guys. Dan here. And it's Tuesday the 8th of June, and this is episode number 189 of the how to Scale a Video Business Podcast. Just come off our weekly coaching call with the vba and we just had the most incredible discussion on pricing, budgeting, and how to cope for projects that help you reduce anxiety of knowing how much you're making on a job, but also how to make sure you're maximizing your margin.

So that you know what you're making and you're actually making good profit. Because of course, you know, when you run a video business, most people are into it because they love making films, but as you mature from being just a kind of jobbing freelancer, when you want to create some predictability.

And some certainty in your business, then you've got to start looking at the way you price differently. We had a good probably an hour and a half to two hours conversation this morning, mostly focused around pricing. And of course, one of the huge advantages of the video business accelerator Mastermind is the hive. Some incredible business owners in the room today on the call, live, face to face in a virtual setting. And what we're doing is we're collectively sharing all of our knowledge on how we price, how we do things.

And it's really super valuable. So today we were talking about, one of the questions was, you know, do you just put a full price down for a project or do you go the extra mile and break everything down? And there's the two schools of thought which is, you know, here's a price for the video and it's a lump sum with some explanation or here's the breakdown. And the general consensus is that we typically break down the steps. And the reason for that is I liken it to a menu. You know, if you were to go into a restaurant, to an Italian restaurant and say, hey, how much to have dinner? And they say, well, you know, that kind of depends what you have. We're not really sure, so just order everything and at the end we'll give you a bill. It's unlikely that would work for you. That's why you have the menu. And we're all service businesses, so it makes sense to break down the entrees, the starters, the main courses, the desserts, the drinks, so you can make a choice about which you have. And so using that principle, I recommend that the most effective way of pricing is to, is to break down the process into pre production, production post. Because these are three very distinct services that you might offer and each of them has an elasticity in terms of the.

The scale, the number of personnel, the hard costs that might be attached to production or post production or pre. You know, maybe you're driving to location, you're maybe working with a location manager. Depends on the size of the project. But by having this all documented, two things happen. One is we use Xero, which is software x e r o dot com and that allows us to put all of our fixed costs in the coding software. And so you can just punch up pre production, production, camera crew, lighting, sound.

Prompters, hair and makeup, whatever you're using, and create a quote very quickly and then multiply the number of days and send that quote to a client. Now that is a very quick process. And then what you can say to the client is like, here's the estimate. And if they come back to you and say, look, you know, it's a bit more than we want to spend, then what you can do is simply say, well look, let's take a look at the quote together. Let's jump on a zoom call and go through it line by line. And if they say, well, we want to make this for a little less money, you can say, well look, we've got five days in post. If we took a day out of post, we might save 1500, but that's going to have an impact on the final product. So here's what that means. Or if they have a little less people on location for shooting, it's like, well, it might take us longer to shoot. Or if you don't have hair and makeup, well then the talent isn't going to look as good. We're going to have to spend more time in post. And so what you do is you break down why things cost what they do and where they're sitting in the budget.

So that you can work with the client to reach a point where they're happy with the budget. But you've also used your skills as a producer to adapt and identify appropriately so that they understand that you're working with them. Because we're always looking to build long.

Lifetime value relationships with clients. And so the advantage of having your pricing set internally is that there's a consistency to what you're doing. So when there's a three day shoot, it costs X, when there's a two day shoot, it costs Y number of days of post. It becomes this kind of accordion style of services that you can expand and contract depending on where you're sitting with the particular client. And it's also the opportunity to charge production fees and add in your fixed costs. Something that as a freelancer you tend not to think about, you tend to look at what you're earning. Any hard cost for software, computers, camera gear, etc. And then you keep what's left. But when you move into running a business, you have to remove that mentality from yourself and say, well, I've got to pay for office space or electricity or other subscriptions or insurance and you've got to factor that into, into the client's budget. Equipment is something that often gets overlooked. So when I worked at Pro Cam in London, we had a process whereby if we bought a camera package that was, let's see, a PD150 or one 160 or whatever it is called back then, and it cost us £5,000 to buy that camera kit completely, well, we would divide that by 100 and the rental day would be £50 per day. So, and we do a four for seven. So a weekly rental would be £200. Now what that meant is that that camera kit would be paid back in 100 days, which meant the other 200 days of the year, 250 days a year, it was rented. If it was, every day would be profit, pure profit. So I want to ask you, to encourage you to look at the amount of equipment you've bought and add it all up and separate production from post. And if you spent, you know, £60,000 euros, dollars on equipment, then you should be billing that equipment out every day as a line item for 600 pounds a day or euros and groats, whatever. If your post production facility costs you 30,000, then that should be 300 a day on every single job. And that means that you're getting 600 a day of equipment rental on every job, 300 a day on every edit day. And that is going to allow you to pay back that investment in 100 days and then have that as gravy. Now what you can then do is you could potentially put that aside and have it as an equipment reinvestment fund. Most people don't do that, but at least you know that you're making extra margin, which means when you do come to upgrade, and let's face, equipment always needs to be upgraded at some point, you've actually got the money there sitting to do that. So that's, that's one thing I'd recommend. And the second thing is to make sure that you're charging a production fee, which is a fee that really covers off on, on those incidental additional expenses, things like light, power, insurance, bank fees. You know, when you, when you hire a freelancer or contractor and you're paying a fee to the bank to, to process that payment, it might only be a few dollars, few cents, few pence, a few euro, but you are going to be paying for it nonetheless. And so the mindset shift from freelancer to business owner is about factoring in those costs and making sure they're not coming out of your day rates. Because when we go from freelancer to business owner, what we typically do is just charge a day rate that we were used to charging. And the final thing I'll say about this is be very careful not to have a bias towards what you think is or what you feel a production company or someone might be willing to pay. Set your rates. 1. You know, the benefits of being in the VBA is that we have discussions and we share, communicate with each other on what rates are in different places. And that helps everyone who's a member to understand where they're sitting. In fact, on the call today, you know, Carlos shared his his rate card with the group. Ben shared a quote, a quoting sheet, and there was a discussion around various project management software. And five or six people share different options. So the power of the hive is what makes it so incredibly efficient to be a part of a group like this. Anyway, guys, I hope that's helpful. Have an awesome week and I've got a really exciting show for you on Thursday. I've got Chuck Fishbean from New York City who is making six figures a year selling stock video footage. And Chuck's going to reveal to us exactly how he does that. So I will catch you then. You've been listening to the how to Scale a Video Business podcast with me, your host, Dan Lenny. If you're a video business owner who's hit a ceiling and we benefit from mentorship, support and coaching, then check out how you can work with me over@denleny.com don't forget to subscribe and rate the show over on itunes. And we'd really appreciate you taking a few minutes to leave a review. And don't forget to share if you feel you've gotten value from this episode and you think it was would be useful for other filmmakers, you know, then please do me a massive favor and share it on social media and in groups that you might be in. So thanks for listening. See you in the next episode.