Pricing Formula for Video Production

Pricing Formula for Video Production


(light music) – Hey everybody, it’s Adam Forgione, and I’m gonna share my pricing
formula for video production. It’s much better than full
day rate and half day rate and we do this for everything, corporate, commercial,
weddings, you name it. So here’s how we do it. First thing you gotta
ask yourself is this. What is your full day rate? If you don’t know your full day rate, you’re gonna have to
start thinking about it. But most people know what
their full day rate is. The next thing is what kinda crew size are we talking about? For me, we generally use two
person and three person crews. That’s very common for us. Yes, we do smaller and larger, but for the sake of this example, I’m gonna use these two sizes. Let’s start with a two person crew. So, my full day rate
for a two person crew, I already know the answer to this. It’s $3700. Don’t ask me how I got that
number, it’s just my number. Now, we take that number and
we know that that’s 10 hours. Now, we go backwards and we say, “What is it worth it for
me to show up with gear “and do nothing? “Or what is it worth for my
crew to show up and do nothing?” Then go home. For me, ballpark, 1,000 bucks. Ya know, so the crew
shows up, they go home, they get $1,000. The crew shows up, they work 10 hours, they get $3700. Now we’re talking here, right? Now, you take your 3700
or your full day rate and you minus it by your
minimum, you will show up. My example, it’s $1,000. We have approximately
$2700 left, approximately. If you do the math,
you’ll start to realize not exactly, but about the amount of money it cost me to show up is
about 25% of the total fee. Then the remainder 75% approximately is what gets split up to
create my hourly rate. So the idea is base plus hourly rate. Base, for us, now that we did our math and we did our formula, our base for a two-person crew is 950 to show up. Our hourly rate is 275. How did we get that? Well, we took our full
day rate and we minused the minimum we’d show up, which is $2700, and we divided that by 10. And that 270 is our hourly rate. We roughly rounded it down to 275 an hour and it’s a 950 base rate. So, 950 to show up and
for one hour of work, we get 275. You add those two numbers up. What is that? 1225. So, we know that for one hour of work, we’re gonna get 1225. The numbers just keep going up. So the formula for us is
actually 25% to show up and then 75% divided by 10,
which is our hourly rate, and we count how many hours we’re there. From portal to portal,
from entrance to exit. Now, after 10 hours, we
do charge time and a half and that’s up to you as well. That’s how we do our pricing formula. For a three camera shoot,
here’s our formula. 1300 base rate and 375 an hour. If you add it up to 10
hours, a full day rate is $5,050 and that’s our full day rate for a three person crew. That’s our formula. The formula is simple. That’s production. What do you do about editing? Editing post production. For us, our studio is very reasonable. It’s $100 an hour. So, we usually look at
the scope of the work and we estimate how much time. We give a range. This is going to take
20 to 30 hours to edit. Well, we know our $100 an hour,
we let the client know that, so they know it’s gonna cost
about 2,000 to 3,000 dollars to edit this piece. They also know we’re there for five hours. So, we take the five hours
with a two person crew and we know that that’s $2,325. Another one, pre production, right? This is everything that
happens before the shoot even takes place, or sometimes,
before the edit takes place. Pre production, it’s not
editing and it’s not shooting. What is our hourly rate? Our hourly rate is $100 an
hour, just like post production. That could be script writing,
that could be planning and logistics, that
could be casting actors, or casting voiceover
talent or brainstorming for storytelling, whatever that may be. Everything that’s going
on before the actual shoot or before the actual
edit is pre production and it’s billed at $100 an hour. The client knows this and again,
we do give a guesstimation, a range of it’s gonna take this many hours to that many hours to do that kinda work. So they know that and
that goes in the invoice. So, when I give quotes, they’re very fast, they’re very efficient
and the best part is this. I’m not working extra time. Neither is my crew. We’re getting paid for the work we do. The client is not paying extra. Let’s say they had us
for eight hours and they got charged a full day rate. They don’t like this and they
will be onto you eventually. So, if you charge the client
exactly what they’re getting, you’ll be happy, they’ll be happy, continued work, long term relationships. This is really big. Now, how do you figure
out what your number is? Well, I shared my number. But that’s because I believe
that we’re worth that. That’s what I value our work at. You have to figure it out for yourself. What do you value your work at? If you don’t think your work is up to par with another studio who’s
charging a certain amount or you know the going rate in your market is a certain amount and
you think you’re not up to par with it, well what do you do? Ya gotta get better. Just learn. Education, practice, get your game up. Once you get your game up, you charge what you think you’re worth. If you’re not worth what that is, you have to charge less. But be honest with yourself
and make what you’re worth. Value your work and understand that. I can’t tell you how many
times I’ve heard great feedback from the clients, the potential clients when we give em pricing right away. First phone call, “Hey, we need a video. “It’s got this, it’s got that.” I gather some information
and I’m able to figure out how many hours am I gonna be there, how big is the crew size? About how many hours are we gonna edit? Maybe it’s a range, 10 to 20 hours, 20 to 30 hours, but I can
give em a ballpark number right on that first phone call. It sets me apart from everyone else and they usually compliment me and say, “Man, this is really easy to understand. “I get it.” Not only that, it puts them in control. If they wanna dial the budget down, they have full control. If they wanna dial the budget
up, they have full control. It’s great. You’re always getting what you’re worth. Anyway, that’s my formula. It’s awesome. We’ve been doing it for about
a year and a half this way. And I hope you guys were
able to pick up some gold nuggets from that
and apply that to the way you guys price. Anyway. Did I just do the thumbs up? Wait a minute, I can’t do that. (upbeat music)

Author:

41 thoughts on “Pricing Formula for Video Production”

  • 4:38 – Nailed it! I usually like to quote day/half day rates and can easily explain how no project is really just 2 hours…
    But when you explain your rates in an easy way like that – it's awesome.

  • Nice! (Another Adam here, and I did a video on determining your rates as a freelancer recently: https://youtu.be/EEn9Ls_8_SI – and I'm working on another about rethinking rates and the issues with day rates and with hourly rates – you guys mind if I mention this video and formula in that video?)

  • This is excellent! I am curious as to how you got your $1,000 base rate. Does that factor in a certain percentage of the value of your gear?

  • What about taxes? I was always told to charge what you think to make a profit and then double it to pay uncle Sam. Great video!!

  • TriMotion Media says:

    Very helpful! As a beginner one man guy, Rn I'm charging $35/hour for travel, filming and editing and an average job totals around 8-10 hours or so. I've done jobs that took 6 hours and jobs that have taken 18 hours TOTAL.
    That being said I'm thinking about adding a Base rate of $125 for Small-medium jobs, and $250 base rate for medium – large jobs and then charge $40/hr from there on.
    Any advice? or adjustments you think I should take? Feel free to check out some of my work.

  • One of the best pricing strategies I've found anywhere. I've simplified it as "first hour at $XXX, additional hours at $XX." with first hour including local travel time, setup time, administration fees, insurance, file archiving, equipment upgrades, and so on, based on an expected number of jobs during the year. Since I'm just starting out, and still have more to learn regarding camera movements, B-roll, and motion graphics, I'm basing my rates on generic professional rates (i.e. – graphic design, web design, etc.), which in my area are roughly $50 to $75 per hour.

  • Man! Kudos to you and your team for putting out content like this. Im starting a media company and film work is part of the services we offer, and this video couldnt have come at a more perfect time. Great delivery and content brother.

  • Can you explain this statement, it doesn't make sense: "They also know we're there for 5 hours. So we take the 5 hours, with a 2 person crew, and we know that's $2,325."
    Thanks!

  • I have just found this channel and this company – my god this was super useful even though I'm in the beginning stages of learning right now… THank you so much for the great content – you've gained a sub! Keep up the amazing work!

  • Adam how long do your corporate videos usually run? I'm trying to corelate your pricing with the length of a typical video. Also, do you ever price per minute or 30 seconds for video? Great info by the way!

  • Estanislao Allende Galluccio says:

    Wow, great content. Thanks for sharing.
    I have one question though, you say your base price is say $950, and you have a shoot that it's more than one day. Do you charge this base price every day? or charge it only once for the whole shoot and then only charge the working hours?

  • Interesting, but I think it only really works if you're charging top end. Myself for example, I wouldn't bother taking a job for less than £600 (just not worth the effort of kit prep and organising getting there and potentially losing other work that day etc) so I guess you could call that my base rate. But if I then started charging extra by the hour on top of that people who employ me now, wouldn't! I'm comfortable earning £600 for a days work, so to me it makes sense to have this as my day rate (8 hours), so in a sense it's £600 base rate and then 8 hours free. I wouldn't want to lower my base rate just so I can then divide a portion of that £600 into an hourly rate, as it would be a very low hourly rate and devalue me. A quick question as well, is your cancellation fee the same as your base rate?

  • What would you pay a production asst. Someone to get releases, be a gopher etc. Speaking of releases can I get some releases online? Or do I need to go through an attorney? Your thoughts? Thanks for the info. This is a great video for neophytes starting a 2nd career also!

  • Oops forgot something. Insurance! Do you carry it and what kind. Me? I worked news so I never had to deal with it. Once again thanks, you’re a God send! This is exactly what I needed to see and hear!

  • The Visualist's Guide says:

    Fantastic formula. How do you go about invoicing? Do you invoice for the guesstimation and adjust at project completion or just invoice once it’s all said and done? We do 50% up front and final 50% before delivery. Curious how you handle payment with new clients with this type of formula.

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