I was asked recently about how I determine pricing for my projects. The three most important factors I consider when pricing a video production job are time on location, time editing, and overhead costs.
Time on location is fairly straightforward: I charge a dayrate for myself and my “crew of one” gear package that is comparable to what other professionals at my level in my area charge. You don’t want to work for nothing, but you don’t want to price yourself out of the market either!
Time editing is always an estimate, because you never really know how long something will take to edit until you get into it (especially if the client has a lot of revisions). I used to track my hours and adjust my final bill accordingly, but clients hated the uncertainty, and I hated having to watch the clock all the time, so I switched to a project rate for editing. Now, I tell the client how much I would charge to deliver what they want, and that’s what they pay. If it takes me less time, great for me; if it takes me more time, great for them.
Overhead costs are things like crew costs, studio fees, meals, travel & hotel costs, equipment rental, etc. Basically, anything that I’m going to have to write a check for. While my dayrate covers my gear and me, larger productions might require me to hire a dozen other people, rent gear that I don’t own, and incur other expenses. Not only does that need to be added to the client’s bill, but it’s a good idea to “mark up” these costs a little bit (usually about 10%), because things usually come up that you didn’t anticipate, and it’s not fun to pay for it out of your own pocket!
It’s also extremely important to understand exactly what your costs are going to be, when you work with outside vendors like talent agencies and voiceover studios. For example, I bid one project based on the commercial airing regionally. Later, the client mentioned that the spot would be airing nationally. Great, right? Except that the fee from the voiceover studio went up by almost $8,000 because of national usage, and I was the guy who had to pay them! I was able to get the client to pay for some of the overage, but since it was really my mistake for not getting an accurate number in the first place, I still wound up losing money on that project.
When in doubt, remember one thing: you never want to have to go back and ask for more money!