(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)
This is the formula Ive been using for over a year. Its awesome and the clients love it. Hope you get some value out of this.
Is there a minimum you think a relative newcomer should be charging? I've made 4-5 videos for clients for free already. I know that I should charge my worth, but is there a ballpark for the very minimum I might want to charge for editing and shooting?
Thanks, I love the simplicity of this!
This is very helpful information, although I find that the difficult part is not in the pricing model -- it's accurately valuing your own work. When do I know I deserve a price increase?
Really appreciate this. Have been having some trouble finding a good way to explain to clients that a very short day doesn't mean they only get to pay for a small fraction of the day rate. I think the whole "show up with gear" cost really explains the baseline for service.
This was very helpful. Thank you for this!
Adam, you’ve been doing this for a while, and I completely appreciate what you do, so know that this is coming from someone that likes you... but I can’t get around the idea of charging someone per hour or by day.
I like this formula for coming up with a fixed price to quote the client though.
Like let’s say you tell the client editing will take 20-25 hours and they agree to the quote. If the editor takes 20 hours, is the work worth $500 less to the client? Is the quality $500 worse? Maybe or maybe not. It stands to reason the more time you put into something the more polished it will be but there is more than just the number of hours that determine that.
What if the editor gets really good and does it in 18 hours? Are you going to punish yourself because you’ve gotten really good at something and charge for 18 hours of work? It’s saying, “to the client, this work is worth up to $2,500, but because you’re so good at your job that put something great together, you’re only getting $1,800.”
Plus, what if you do the job quicker and the video can be deployed sooner, is that not worth more? Instead of waiting for 4 months to deploy a video, you’re able to work quickly and still do good work and do it in 2. Is that not more valuable?
I mean there are 4 or 5 things I don’t like about time based billing but that’s the biggest one for me.
But like I said, I do like the formula.
I got a lot of questions on social. Here's part 2 - Q&A https://youtu.be/4bYSzCNReio
We just used this pricing formula today! Thanks Adam!