Do you know how to quote your projects and make a good profit? This is very important especially if you want to step up your game and create predictability in your business.
Episode Transcription
Den Lennie (3s):
G’day, guys! Den here, and it’s a Tuesday, 8th of June. And this is episode number 189 of the How to Scale a Video Business podcast. Just come off our weekly coaching call with the VBA. And we just had the most incredible discussion on pricing, budgeting, and how to court for projects that help you reduce anxiety of knowing how much you’re making on a job. But also to make sure you’re maximizing your margin so that you know, what your making and your actually making good prophet, because of course, you know, when you run the video business and most people are into it, ’cause he loved making films.
Den Lennie (53s):
But as you mature from being this, the kind of job and freelancer, or when you want to create some predictability and some certainty around your business, then you’ve gotta start looking at it the way you price differently. We had a good, probably an hour and a half to two hours conversation this morning, mostly focused around and pricing. And, and of course, one of the huge advantages of their video business and sell it to mastermind. If the hive, some incredible business owners in the room today on the call live, face-to-face in a virtual setting. And what we’re doing is where we collectively sharing all of our knowledge on how we price, how we do things and, and, and it’s really super valuable.
Den Lennie (1m 40s):
So today we were talking about one of the questions was, you know, do you, do you just put out a full price dine for the project or do you go the extra mile and break everything down? And I’m, and there’s the two schools of thought which has, you know, here’s a prize for the video and it is a lump some with some explanation or he is the breakdown. And the general consensus is that we typically break down the steps. And, and the reason for that is I liken it to the menu. And if you were to go into a restaurant, add to an Italian restaurant is to say, Hey, how much to have dinner. And they say, well, you know, when that kind of the pans, what you have, and they’re not really sure.
Den Lennie (2m 22s):
So just order everything. And at the end, we’ll give you a bill it’s unlikely that would work for you. That’s why you have to menu. And we were all service businesses. So it makes sense to break down the entrees. The starters is the main courses. The design is the drink’s, so you could make a choice of it, which you have. And so using that principle, I recommend that the most effective way of pricing is to, is to break down in the process into pre production, production post, because these are three distinct services that you might offer. And each them has an elasticity in terms of the, the scale, the number of personnel that the, the, the hard cost that might be attached too production, or post production of pre, you know, maybe a driving to a location here, maybe walking in with a location managers.
Den Lennie (3m 22s):
It depends on the side of the projects, but, but I have in the soul documented, two things happen. One is UN we use Xero, which is a software X, E R, or.com. And that allows us to put all of our fixed costs In, in the quoting software. And so you can just punch up preproduction production, camera, crew, lighting, sound, prompters, hair, and makeup, whatever you’re using and create a court very quickly and, and multiply the number of days and, and send that cause it to a client.
Den Lennie (4m 3s):
Now that that is a very quick process. And then what you can see that the client is that here’s a, here’s the estimate and, and their thinking back to her and say, look you, no, it’s a bit more that we want to spend. And what you can do is simply say, well, look, let’s take a look at the court together, lets jump on a zoom call and go through it line by line. And if they say, well, we want to make the server a little less money. You can say, well, look, we’ve got, we’ve got five days in post that we took a day or so of course we might save 1500, but that’s going to have an impact on the final product. So here’s what that means. Our F V S to have a lot less people on location shooting. It is that while it might take us longer to shoot our, if you don’t have hair and makeup, well, then the talent is going to look as good.
Den Lennie (4m 45s):
We don’t have to spend more time in post. And what you do is to break down why things cost, what they do and where they’re sitting in the budget so that you can work with the client to reach a point where they’re happy with the budget, but you’ve also used your skills as a producer to adapt and identify appropriately so that they understand that your working with them, because we were always looking to build a long laugh, you know, the lifetime value relationships with clients. And so the, the advantage of having your pricing set in terms of the, is that this is a consistency to what your doing. So when, when there’s the three-day shit, it costs X is a two day shoot costs.
Den Lennie (5m 26s):
Why number of days of posts and it becomes this kind of accordion style of, of services that you can expand and contract depending on where you were at, where your sitting with a particular client. And, and it’s also the opportunity to, to, to charge the production fees and, and add in your fixed cost. Something that as a freelance, you tend not to think about it. You tend to look at what you’re out running any hard cost for software. Computer is camera gear or et cetera. And, and you keep what’s laughed. But when move in to running a business, you have to remove that mentality from yourself and say, well, I’ve got to pay for office space or just the, to your other subscriptions, AR insurance.
Den Lennie (6m 8s):
And you’ve gotta factor that into, into the clients budget equipment. It’s something that the often gets overlooked. So what I want it all came in London. We had a PR process whereby if we bought a camera package that <inaudible> one on 60 or whatever it is called back then. And, and it costs us 5,000 pounds to, by that camera Kitt completely well, we were divide that by 100 and the rental day would be 50 pounds per day. So, and we do a four for seven. So a weekly rent would be 200 pounds. Now what that man is that that camera kit would be paid back in a hundred days, which meant the other 200 days of the year, 250 as the year that was rented.
Den Lennie (6m 53s):
If it was that every day, we would be prophet Q that clip to your profits. So I wanted to ask you to, to, to encourage you to look at the amount of equipment you’ve bought an ad it all up M separate production from post it. And if you spend, you know, 60,000 pounds euros dollars on equipment than you should be building that equipment. And every day as a line item for 600 pounds a day, or a uterus in gross, whatever, if you push to production facility costs you 30,000, then that should be 300 of them on every single job. And that means that you’re getting 608 of equipment rental and in the job 300 a day on every edit di. And that is going to allow you to, to back that investment on a hundred days, and then have that as gravy.
Den Lennie (7m 39s):
Now, what you can then do is you could potentially put that aside and have it at an equipment re-investment fund. Most people don’t do that, but at least, you know, that your making extra margin, which means when you do come to upgrade and let’s face it, it could be in always needed to be upgraded. At some point, you’ve actually got the money they’re setting and to do that. So that that’s one thing I’d recommend. The second thing is to make sure that you’re charging a production fee, which is a fee that really covers off on, on those incidental, additional expenses, things like late power insurance, M bank fees. You know, when you, when you hire a freelancer or contractor and your paying a feat of the bank to, to process that payment, that may only be a few dollars, few cents if you pens, if you year-old, but, but your going to be paying for it, nonetheless.
Den Lennie (8m 28s):
And so the mindset shift from freelance to the business owner is about factoring in those costs and making sure they’re not coming out of your day rates because ah, when we go from freelance to the business owner, but we typically do is to chart the day, right? That we were not used to charging. And, and the final thing I’ll say about this is be very careful not to have a bias towards what you think is fair or what you feel it production company, or someone might be willing to pay, set your rates. One of you know, the, the, the benefits of being in the VBA is that we have discussions and we share to communicate with each other on what rates are in different places. And that helps everyone. Who’s a member to understand where they’re sitting in fact on the call today, you know, Carlos shared his, his rate card with the group.
Den Lennie (9m 16s):
Ben shared a quote, a quoting sheet, and there was some discussion around various project management softwares and, and five people share at different options. So the power of the hive is what makes it so incredibly efficient to be a part of the group like this. How do you guys, I hope that’s helpful at have an awesome week. And I’ve got a really exciting shore for you on Thursday. I’ve got Chuck fish being from New York city who is making six figures a year selling stock video footage. And Chuck’s going to reveal to us exactly how he does that. So I will catch it. You’ve been listening to the How to Scale a Video Business podcast with me at your host Den Lennie, if your, a video of a business owner, it’s the hits a ceiling, and we benefit from mentorship support and coaching and checkout how you can walk with me over at denlennie.com.
Den Lennie (10m 8s):
Don’t forget to subscribe and rate the show over on iTunes. And we really appreciate your taking a few minutes to leave a review. And don’t forget to share if you feel you’ve gotten value from this episode that you think it would be useful for other filmmakers, you know, and please do me a massive favor and share it on social media and in-groups that you might not be in. So thanks for listening. See you in the next episode.
