Hourly Rate VS Flat Fees

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    • #43249
      AvatarEarlC
      Member

      Do you conduct any or all of your video production business on an hourly rate, or flat fees? Why?

      Did you ever do one, then convert to the other. Why?

      How has one, or the other, or a combination of both worked for you?

      I use a combination, usually but not always charging flat fees for certain event productions, and mostly charging hourly rates for any kind of commercial production. Primarily I use an hourly-rate-based figure even when I do quote for an event or popular “flat rate” type of production. After having been in this business for so long I am fairly accurate when it comes to estimating the time it will take, so basing my hourly rate on that I can provide a flat rate price for clients/customers who ask for it.

    • #181302
      AvatarRob
      Participant

      Do you conduct any or all of your video production business on an hourly rate, or flat fees? Why?

      My full-time editing position pays me with a salary, and I work a lot of “over time.” That’s just the nature of the business. If I’d be getting an hourly rate, i’d probably make more money, but then again, I have health insurance and benefits.

      If you’re a sub contractor, i’d advise to always go with an hourly rate. Unexpected things always happen, and in the end someone will get screwed when a flat rate is established – either you worked longer than you should have for that amount of money, of you did work corresponded to the payment and the client is unsatisfied.

      Did you ever do one, then convert to the other. Why?

      I doubt any client would be psyched. So no.

    • #181303
      AvatarGrinner Hester
      Participant

      I base my flat rates on my hourly rate. My biggest client has always been Anheuser-Busch so 175/hour was just not a problem. Now that they are fading away, I’m having to entertian lots of mom and pop level gigs and they don’t want to hear rates like that. They don’t know how long it takes so it scares them away before we even get into it. However, if I just tell them I’ll make their video for 5 grand, they can sink their teeth into that. I work fast so it’s easy to come out better than my hourly rate in most cases.

      So in a nutshell, if a client that ubnderstands post-production wants me to edit for them, od course it’s by the hour. No reason for it not to be. If someone wants a turn-key video, I simply give them a price, ensuring the gig doesn’t go elsewhere. There is much power in the flat bid. Everyone digs knowing what it’ll cost vs hoping to keep the budget in a general area.

    • #181304
      Avatarcomposite1
      Member

      My setup’s similar to Grinner’s. For my larger clients that understand how this stuff works, it’s hourly. However, my proposals usually come out on point with estimated costs. Where things start going over is when clients ask for stuff that wasn’t in the proposal. If it’s not in the proposal, what I do is just treat it as a sub-project with its own separate costs. That way they can clearly see what went where and how much extra it cost to do it.

      Lately, for projects going straight to the ‘net I’ve been quoting flat prices based on the hours needed to do the work. Again when clients want extras, I apply the same pricing setup. Net projects are much shorter and I can make the pricing much more attractive, but you still get people who’s eyes screw together when you mention even those reduced rates.

    • #181305
      AvatarEarlC
      Member

      Rob, What I meant by doing one, then changing over to the other (I was perhaps not clear) was did a video business person start out with one style of billing philosophy, then change to the other style, not changing billing approaches on a given project.

    • #181306
      AvatarEarlC
      Member

      True, Grinner, Wolfgang. Most of us who have been in the business for a good while are using similar approaches and philosophies in our billing/bidding approach.

    • #181307
      Avatarcomposite1
      Member

      “Clients aren’t as trigger happy when it comes to revisions
      orre-shootswhen you charge an hourly rate.”

      ‘That’s going to cost how much?! Jeez, I just want you to redo all the title graphic in Red instead of Blue like I originally asked….’

      On the other hand, you gotta’ love those clients who don’t blink (or their wallets shrink) at the prospect.

    • #181308
      AvatarAnonymous
      Inactive

      I have to agree with most of the comments here! I think the RULE is to justify your numbers, and if you offer a service justify a “Value”. In the case of the professional world, by that I mean wherein your clients are broadcasters, distributors, agencies, etc. They are very aware of the costs, and the hourly rates, and because in the case of an Agency for example, they are working from the AICP standard bid form, and so everyone is talking HOURS, DAYS, Overtime after 8 or 10, etc. I don’t believe you are allowed to submit any other way, so everyone is on the same page.

      If you are dealing with “civilian” clients (mom & Pop, weddings, local commercials where you are dealing with the business owner and not the “agency”) you are dealing in RETAIL world. This is were I really stress building value! Unfortunately you are dealing with someone who knows NOTHING about what we do. That said, you have to sell it the way a salesman at Sears sells a fridge. No one that walks into Sears (or at least most) to by a fridge knows how it works, nor do they really care. Its is typically going to be VALUE – what they get for their $$$, and of course getting the best DEAL!

      Terrible news if you are in the creative business, but none-the-less, the sad fact! So I would NEVER use hours to bill a person who cannot understand the hours it takes. You are simply shooting yourself in the foot! They cannot appreciate nor understand what it takes, and I am quiet sure you do not want to become the “unpaid- Teacher”. I did that for too many years, which eventually inspired ‘The Production Doctor”. Yes, I will pause for blatant self promotion! http://www.vgctv.com/PRODUCTION_DOCTOR.html

      For example, back when there was money in it and we all shot 35mm or Super 16mm film, I did many major label music videos. Every now and then a smaller independent label would come to us with a small low-budget video (by low budget I mean $20k-$40k) , and if we liked the track we might do it. I would always tell the client, “you do not want to be in the edit room!” In those days it was an edit room! I am talking before Non-linear, or early Avid days still in a post-house. An Avid was still $100k for a Media Composer, so they were only in post houses. I would tell the client, we would show them the completed “off-line” and we would make changes up to three times for the agreed budget. Any changes over that were billable by the hour. They would ask why they could not be in the edit, and I would say, because you are going to ask questions and cause interruptions in the creative flow, that will slow us down, in a process that is billed hourly. I would tell them they were more than welcome to “sit in” on the edit. but they would be billed an hourly rate for the edit, that would include the room, editor, director and producer and meals etc. Then they would say, “what is the hourly rate?” I would reply $800 an hour plus meals in a daytime session and $450, if we work vampire hours”. That usually ended the request to “sit-in”.

      In conclusion I suggest making the bidding process as simple as possible for a layman. Tell them what it will cost them, and what they will get. It will be your professionalism and experience, that will determine your success. As only you know what it will really cost you to do the job you quoted If you are good and you can do it for significantly less, then you are making a profit!

      Its that simple! We don’t walk into the grocery store and ask how much it cost to make Rice Crispies! We want want ’em, if we can afford ’em we buy em!

      Sell the value, sell the product (which to a great degree is YOU) and give them what they can afford!~

      Good Luck!

      Best

      The Doc!

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