How to put a dollar sign on your freelance work (and come out on top!) August 29 2014
Deciding on what to charge clients for your freelance video editing work can be pretty intimidating.
You may have an idea on what you want to charge based on the industry average, but sometimes that little voice in your head starts to pipe up and you become embarrassed that you are going to overcharge, and end up charging peanuts for gold quality work.
Or on the other hand, ambitiously set a rate that may not reflect your quality of work (no offence!) and you stifle future business.
If this sounds like a problem that’s currently plaguing you, whether you’re just starting out in the industry, or looking to review your pricing, we’ve created these helpful hints that should make your decision process a whole lot easier and comfortable.
We’ll take you through the pro’s and cons of how to charge for your services (day rate / project rate / alternative pay / no pay), and also discuss how to price yourself!
So grab a coffee and get comfortable. Hopefully by the end of this article you'll have a better idea of what to charge and whether what you are currently charging is appropriate.
Lets start with...DAY RATE
One of the most popular payment arrangements is charging a day rate. This happens when you get hired to complete a job, and get paid a set amount each day you are on the job. It’s an easy method to go by, as even if a project runs behind schedule, if you work an additional day on the job you will receive the same set rate for the additional day. Day rates can be confusing if projects run over/under, or your roles aren’t clearly defined, so check out these hints when determining your rate.
Hint 1: Define your role – Day rates are typically used when there are clearly defined roles for an employee. For example, if you are hired as a video editor, then when you get to work, that is exactly what you do for the entire time. This doesn’t really work well when roles have multi tasks or requirements, as it makes it difficult to put a price on a particular skillset if it is only being used 20%-30% of the time.
Hint 2: Define your “day” - Though typically a “day” refers to an 8-10 hour shift, sometimes you can encounter circumstances where a “day” in the eyes of your employer can be up to 18 hours or more. If you charge a day rate, consider discussing overtime with your client prior to agreeing on the contract or rate.
On the other hand, breaching the topic of overtime and quantifying “day” rates may work in reverse – it’s not unheard of for some video editors who finish early to knock off after only a couple hours work and still get paid the full day’s rate.
However in some instances, you will be asked to provide a half day rate if you work a short day. In these scenarios, it is acceptable to charge between 50-70% of your full day rate.
Hint 3 - Offer mutli-days with a bulk buy discount The concept of bulk-buying (or in this case, bulk selling), is another pricing method you can adapt when quoting for a job. Many production jobs run over schedule, so your original days work may extend into a week or so. If this happens, it’s wise to consider offering a discounted weekly rate.
This discounted rate is less than the cost of hiring you separately every day of the week, however keep in mind that it can be offset by making you more competitively priced, as well as guaranteeing work for your entire week as opposed to a single day.
So to summarise, daily rates are best for job contracts where you are hired to carry out a particular task, within the confines of your role. However, if you find that the position is much more complex, is project work, or one where you define and set the schedule rather than follow it, perhaps daily-rate isn’t for you – you might need to look into project rate.
Next up...Project Rate
If you’re thinking about choosing a project rate pricing strategy, you will need to do a bit of work calculating all of your expected expenses (from time on the job, resources required etc) into one total price.
This should be all encompassing, and works wonderfully whether you have your own production company, or doing a bit of freelance work on the side.
There are a couple of factors that you need to keep in mind if using a project rate though, so read the below hints if you are considering this pricing strategy.
Hint 4 - Make it accurate
When looking at your price quote, you need to ensure that it is as accurate as possible.
If expenses blow out multiple times throughout the project, you’re either looking at a very frustrated customer if you revise your quote multiple times, or very empty pockets if you don’t!
Before calculating your quote, get as much information as possible; what are their expectations; how long will the project take; what will the client supply and what do you need to supply. If a clients answer is vague, don’t be hesitant to ask for more clarification. For example, consider a client requesting a few “different props” in their shots. Exactly how many “props” are we talking about? Will the client supply these props or are you expected to? Will you need additional resources (lighting etc) to accommodate and shoot these?
Nut out as much information you can and see whether you will incur costs against these little details, and add them to your total quote.
Hint 5 - Be careful about ballpark quotes
Some of the time, clients will ask you to give them a ballpark price for a job. Be careful about what you quote, as without full details, your quote might be far under what it will actually cost.
In these circumstances, we suggest providing a price range that explains what sorts of inclusions/exclusions sit within each price.
This will give them an idea of how low/high you go for a typical job, and also leaves room for negotiation if their requirements are more than what is outlined in your quote.
Hint 6 - Adjust your quote when necessary – Anyone who thinks that once they provide a quote and start a job that they are in the clear, has either had a one in the one-in-a-million experience, or is lying!
There are almost always instances when requirements and expectations change during a project, and you need to know when and how to adjust your quote when this happens. Take, for example, if a client suddenly decides that they need to have their presenter wearing a hat in their interview.
This is a cheap cost, and you could probably wear it in your costs. However, there is a line between acceptable and minor tweaks in a project, and a change in direction of the project. If the same client suddenly changes the location, hires an entirely new cast, or makes large changes in the concept of the project, it may be time to address the rising and unaccounted for costs of the production.
Hint 7 - Stage your payments - If you’re working on a job that runs over a couple days / weeks, you may feel uncomfortable waiting until the end of your contract to get paid. This is totally ok – and it is completely acceptable to ask for staged payments in these circumstances.
Consider cutting your payment invoices into quarters - with an initial payment upfront (consider it a deposit for all the hard work you’re about to do!), then a second payment after you complete the principal photography, a third payment after you complete the rough cut, and finally the remaining sum when you deliver the finished product.
So in summary – Project rates work well for larger and more complex project work that spans over a couple of days / weeks, and sits outside the scope of a specific role. More time and energy needs to go into getting all the details when providing an accurate quote for a job, however you may encounter difficulties if your job runs over time or over budget.
Alternative Pay or No Pay
Not everyone produces videos for money – sometimes you might have other motivators that make working for free (or alternative pay) worthwhile.
Some of these reasons include favors for friends and family, however tread carefully if agreeing to this – people who aren’t in the industry are usually not aware of the time and effort that goes into producing a video. Think about the below alternatives if accepting a no-pay agreement for video creation.
Hint 8 - Bartering
The age-old system of exchanging goods and services for other goods and services is still alive in today’s world – and for good reason!
Bartering can work well if a potential client does not have the funds to pay you, but you can benefit out of a good or service they can provide. For example, agreeing to video and edit your cousins wedding, in return for your cousin agreeing to helping you with your home renovations for a week.
You both come out on top, and don’t jeopardise the family Christmas!
Hint 9 - Deferred pay – It’s an option that may sound fine at the time, however can be risky if your clients campaign goes up the shoot. Deferred payment means that you agree to take on a project, while the client promises to pay at a later date.
Be careful when going with these arrangements, as there is a high chance of your client either making it (meaning you get paid!) or breaking it (meaning empty pockets for you!) depending on how their campaign goes.
Take, for example, a client who asks you to create a trailer for their pilot tv series. If all goes well and the show gets picked up, you get to share in the glory, however if the show is a spectacular flop – well, you can guess what happens to your pay.
In any case, ensure if you take on these payment arrangements that the experience alone is worth your time and effort.
Choosing your pricing strategy is the easy part – however putting a dollar figure on that amount is often the part we most struggle with.
Before you ask yourself a few key questions guaranteed to make your ego squirm in its seat, do yourself a favour and find out what the competition charges for similar work.
Be careful if planning to ask peers on what they get paid – it’s an uncomfortable question in the same vein as asking what someone’s salary is. Luckily, a quick online search can help you avoid those awkward conversations. Finding the average rate of competitors of similar standard / quality and reputation as yourself can help you get your starting price, and it’s at this point you tweak it to your worth by asking yourself a series of questions such as the below. And be honest with yourself when you answer them!
How do your skills compare to the competitions skills?
What is the distribution of the video? Typically, the wider the distribution, the bigger the budget. Consider whether it is internal use within the company / for the web / for broadcast etc
What’s your niche? Are you the competitively priced discount service that turns a profit on quantity, or do you dedicate more time and resources to your projects and charge a premium for quality?
If you charge a premium price, will you be comfortable turning away potential jobs?
Are there any added perks to the job that would make it worthwhile compromising your rate? For example, if the client is well known and would add a lot to your reel, it may benefit you in the long run to secure the job with a lower rate.
Finally, what is the clients budget? Getting an idea of how much your client is able to spend on the project can be very worthwhile. Understanding their situation, needs and resources can assist in providing an accurate quote to their requirements.
So, in summary...
If you have any difficulty, confusion and uneasiness when choosing your payment strategy and price, take relief in that it is probably the hardest part about starting your own video editing business, and it only gets easier from that point onwards.
Always remember that whatever you are paid, you are making money doing something that you love, which is more than a lot of workers can say about their jobs!
Additional costs to keep in mind
Some of the most commonly forgotten expenses are also the most obvious. Weird! Keep the below expenses in mind when calculating your quotes - it will help keep your expenses accurately budgeted and help you avoid under-budgeting.
Delivery Format – Different delivery formats have different price tags. The cheapest delivery formats are sending via FTP or putting the content on a hard drive, whereas tape layoffs can be more expensive.
Miscellaneous items – It’s hard to think about all the little things you’ll need on shoot – but give it a go. Seven rolls of gaffer tape can add a couple of unaccounted for dollars on your expenses list, not to mention things like black wrap, storage stock and flash cards etc.
Food – People expect to be fed if they’re working a day’s shift on set. Make sure you’ve catered for your crew, talent, and extras.
Equipment – Consider what equipment and gear you will need to rent to get the shots your client requires (think as small as dolly tracks, and as big as cranes!)
Insurance – This is a must if you want to cover your behind. It’s not always legally required, but is always recommended.
Lost jobs – You may have landed this job – but what have you lost by doing so? If you could have made a bucked more in earnings by completing several smaller jobs, you’ve lost money by taking this large one.
Transport – Any equipment, gear, persons or food needs to be transported to the set, and it’s likely you won’t fit it all in your moms station wagon. Renting vans and trucks can raise your costs by a couple hundred, especially when you include gas, parking and tolls.
There you have it, a long read I know, but hopefully for you and your business a worthwhile one!
One last thing. If you liked the article and got a little value from it, please share :)
Thanks in advance!
Charlie @ LightLeakLove