What We Are Worth and Why We Are Worth It

Today’s drastically lower barrier to entry for video production means
every dude with a camcorder is a Director of Photography, every
computer jockey with a purloined NLE is an editor and every loud mouth
with a cell phone is a producer. Or so they say.

How can a potential client distinguish between people like them and
people like us? And how can we convince clients that our experience and
skill are worth a higher rate? And what should that rate be?

Once upon a time, the high cost of video equipment limited the pool of
users mostly to trained and experienced professionals. But with HDV
cameras and complete NLEs available for under $5,000, and with people
willing to work those cameras and NLEs for almost nothing, what
justifies charging what we charge?

I occasionally answer such questions with a favorite aphorism: "Good
judgment comes from experience. Experience comes from bad judgment."
They can pay more for our good judgment, or they can pay less to let a
beginner get experience.

I also occasionally inherit projects that got those beginners
experienced. Two weeks ago I was asked to re-edit a training video with
sync, color, pacing and other issues. There is neither budget nor time
to reshoot anything and I’m far from the world’s greatest editor, but I
can deliver something that won’t embarrass the company or confuse its
viewers. However, the company’s overall monetary hit would have been
less and the final project better if the company had started the job
with someone who possessed the good judgment to avoid creating the
technical and aesthetic problems I’m being paid to fix.

Fixing problems that the client can see and describe isn’t the key
judgment that separates professionals from beginners. We work as
interpretive guides for our client’s safari through the jungle of video
production. We know the surest paths through that jungle; they don’t.
What’s more, they can’t always describe their destination.

Our job is to figure out what the client really wants, and that’s not
always the same as what he or she asks for. My clients range from small
nonprofits to multi-national corporations, all staffed by smart but
busy people. The main source of confusion isn’t ignorance; it’s
third-hand descriptions of an executive’s partially formed desires,
notes forwarded from someone else’s committee meeting or just not
enough time to think things through.

Clients don’t always know what they want, but they’ll know it when they
see it. Our job is to help them see it as quickly and cheaply as
possible. Clear memos, proposals, and storyboards give the clients a
low-cost means of critiquing and redirecting a project. The
pre-production give-and-take lets us maintain control of a project’s
scope and gives the client peace of mind that delivery will be on time,
on budget, and on target. This may all seem obvious, but in these
tight-budget high-stress days, it often gets lost in the chaos.

For example, another firm hired me to revise a project that didn’t
deliver quite what its client now says he wants. The other firm
produced a sound piece, but it didn’t strike the tone and hits that the
client deemed necessary. The other firm has several pressing deadlines,
and I happen to be a good fit for this particular client and project.
The issue here isn’t craft, but communication and intuition. The firm
I’m working for will eat some profit, but it is striving to make sure
its client’s unarticulated needs and desires are met. That’s what
professionals do.

But, unfortunately, not everyone is willing to pay a living wage.

There’s a guy in my market (I’ll be generous and call him a producer)
who constantly asks camera operators and editors to work for extremely
low wages. For example, he recently offered $300 for a 10-hour Saturday
shoot. Not a great rate, but not ridiculous. Until, that is, he says
the shooter needs to provide the camera, and he wants one that rents
for $200 to $250 a day. After accounting for either rental or payments
on the camera, what’s the operator’s net hourly? The same or less than
the guy offers editors to cut on their own system.

These are not resumà©-enhancing or good-for-the-soul projects. Out here
in the land of $600,000 starter huts, who besides hobbyists or
trust-funders can afford sporadic 10-dollar-an-hour gigs?

I have nothing against hobbyists, but 10 bucks an hour won’t support my
modest lifestyle and family. I need to cover office expenses, equipment
costs, insurance, taxes and still have enough left for food and
clothing. I have different rates for different work and I do some pro
bono and discounted work that’s good for my resumà© or my soul. But
crappy productions with crappy pay help neither. And the more hours I
work for little or no money, the more I need to earn during my other
hours.

I know how much I need to charge to stay in business (see sidebar).
Most clients don’t balk at my rate. They know they get what they pay
for. In general, clients spending other people’s money are willing to
pay more than clients spending their own money.

If your market, skills and clients let you command a rate higher than
what you need to survive, go for it. If they won’t support your minimum
required hourly, then it’s time for some difficult decisions. But
taking 10 dollars an hour won’t solve anything.

As challenging and rewarding as video production can be, if we’re
making no more than bike messengers or baristas, perhaps it’s time to
find another career and join the hobbyists. I, however, would rather be
a compensated craftsman than a starving artist. Rather, I need to be a
compensated craftsman for most of the week so I can be an artist for
the rest.

Whether you bill by the day or project, you still need to know how much
you must earn per hour to stay afloat. Determining an hourly rate
sufficient to make a decent living is a nuanced task. But the basic
formula is (labor + overhead + profit) divided by billable hours.

For a single-person firm, labor is the salary you need, can or want to
make in a year. Overhead includes the yearly total for monthly costs
(such as studio/office rent and utilities, phones, travel and
entertainment) together with annual costs (new equipment, maintenance,
legal and accounting services, taxes, and insurance). There’s no
standard profit margin, but 10 to 20 percent of total costs is common;
you need that profit if you want to grow your business.

Setting billable hours is tricky. Yes, 50 weeks x 40 hours = 2,000
billable hours. But bookkeeping, reading
Studio/monthly and conducting other research,
generating new business, and answering e-mail can consume 25 to 35
percent of our of time. Unless you are a lawyer you can’t bill clients
for those tasks.

If you think you can bill 26 to 30 hours a week and you want a two-week
vacation, figure you’ll have 1,300 to 1,500 billable hours a year.

Let’s Try Out The Formula With Some Numbers:
(Labor + Overhead + Profit)/Billable hours = Hourly Rate

($10,000 + $5,000 + $0) / 1,500 = $10/hour

($50,000 + $30,000 + $8,000) / 1,500 = $59/hour

($80,000 + $50,000 + $18,000) / 1,300 = $114/hour

($150,000 + $70,000 + $22,000) / 1,500 = $161/hour

I know how my numbers work out, and they’re somewhat north of $10/hour.