Videography Business: Making Money With Video (page 2)

Cash flow. When you buy video equipment, you're likely to shell out a substantial amount of money. You may have pockets that are deep enough to pay for that in a lump, but it's more likely that you'll put your purchase on a payment plan. That means that you have to pay for your equipment every month, rain or shine. If you have a business slowdown, that payment still comes due. You may have to dip into your savings to cover it. And if you want to take a vacation for a couple of weeks, you have to think about the fact that your equipment is sitting back at your office, costing you money and making you none.

When you wait to book a job before you secure the equipment, you know in advance that the client is paying for the rental. Your profit margin may not seem to be as wide on the job as a project where you use equipment you own yourself, but you need to take other costs into account.

When you own equipment, you have to insure it. Actually, you don't have to, but it's wise to do so. If you have a long-term lease, the lease company will probably require you to carry insurance on that leased equipment.

Also, there's wear and tear to consider. When your equipment breaks down, you have to fix it. If you can do it yourself, that's great (although repairs take time and your time is worth money), and if you can't fix it yourself, you will have to pay someone else to do it for you.

So the difference between the costs of renting and owning may not be as great as they first appear. And if you live in an area where there are several rental houses (any large city, for example), you may be able to find some bargains.

Some rental houses offer "producer discounts," which could be as much as 20 percent. You can then turn around and charge the client the rental house's book rate and still make money.

Remember, you're charging them for the time it takes to go to the rental house and pick up the equipment as well. And if the client calls the rental house to see what the equipment rents for, it's the same price that you're charging.

Upgrades. Have you been working in the video field for a while? Have you noticed that it's a little tricky to pick a format that will still be considered state-of-the-art seven years (or even five years) from now? And yet that may be how long it takes you to pay off a large investment in equipment. People run into the same thing with computers. It's kinda crazy.

Let's say you buy all Hi8 or S-VHS equipment. You get a shooter's package with camcorder, lights, microphones, etc. and a three-deck editing system with A/B-roll capabilities. You dropped some money, but you're feeling good.

Suddenly, two weeks after you sign the check, a Japanese manufacturer introduces a camcorder that captures High Definition TV images digitally onto a molecular memory array. It's amazing, it's incredible, it's the only format that your clients want to use. It's totally incompatible with the gear that you own.

Obviously, this is a worst-case scenario. Manufacturers are not likely to do this to you. They want you to succeed so that later you'll buy more equipment from them. But until everybody uses the same format and this format cannot be improved upon, you will always have to play a little catch-up when it comes to equipment.

Now let's say that business is booming and it makes the most sense for you to have equipment on hand all the time. You can either buy or lease, but you want to know where you should acquire the equipment.

You'll have to choose between buying through mail order or buying locally. As with every other option that we've looked at, I can't tell you which path you should choose. But I can help you with your thinking process so you can become even more confused. (No need to thank me.)

Mail Order. If you want to buy equipment through the mail, you should do your homework. Get on the Internet, or call other videomakers you know to try and find out which companies have the best reputation. Look through old copies of video magazines to see which companies have been in business for a long time. These aspects of a business can be more important than who is offering the lowest price.

Once you decide on the company, you still have some questions to ask the sales representative. See if the piece of equipment that you want to buy is in stock and available at the time of your order. Otherwise, you could be on a waiting list of people who will have the order filled when the next shipment comes in. Most likely, if you are ready to buy, you want your gear now.

What is the company's policy on returned merchandise? Is there a 30-day free trial period or will they not take it back under any circumstances? Is there a restocking fee? Ask for a written copy of their return policy and read the fine print before you sign.

Did you know that manufacturers put warranties on equipment for their own protection? If they didn't, they might be responsible for repairing your gear for as long as you own it. But check to see how warranty work is handled. Are you responsible for shipping a defective piece back to Japan? How long will that take?

If you get most of the right answers, you shouldn't be afraid of mail order. I've bought several expensive pieces of equipment this way over the years and I've had good luck with all of them. But I did my homework--thoroughly.

Local vendors. If the equipment you want is available locally, there are some advantages to going this route. The vendor might have a working piece of gear out on display. You could "test drive" an editor or a camcorder to see how you like it before you shell out the cash. But if you take a salesman's time walking you through a system, please be serious about buying from that vendor. I've heard stories of people doing this in one store and then going down the street to the discount chain to actually make their purchase. Not nice.

Find out if your local vendor offers service contracts on the equipment sold. If you will have the gear for a while, this can be a good deal. At first, when the equipment is new, it won't have any problems, so the contract will seem to cost more than it's worth. But if you continue to pay until your equipment begins to fail, that service contract will start to feel like a return on investment.

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