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Videographer invoice example for Operations

so the more and more i work with people and try to help them grow their video production company i notice a very common problem around pricing in fact there's three really common mistakes that almost everyone i talk to makes at least one of those mistakes when pricing their video services and because i came up as a freelancer just like a lot of the people that i've talked to we make the mistake of pricing our video production services the same exact way as we priced our freelance services where we're just basically billing or sending an invoice for ourselves not a full production service so i want to make this video to point out those three mistakes that i've commonly seen why you should avoid them and exactly how to fix those mistakes how to actually do it right and i want to show you a real life example here on my accounting software and i'll make a real estimate so i'm here inside of quickbooks and we'll use quickbooks here as this example and the very first thing people typically do especially again if you came up as a freelancer is you put your rate so whatever your day rate is your half day rate your hourly rate plus you add whoever else you're hiring their rates plus you usually add whatever equipment that you're bringing onto the shoot or you're renting and that gets your total cost so let me show you that first i'll hide myself here so i'm director of photography so i'm going to put myself there let's say my rate is 800 for the day and that day is 10 hours so that's your day rate for 10 hours of work that's about 80 an hour around chicago is a pretty standard rate for a director of photography now any rate i'm mentioning is just based on an average of where i work around chicago but i've worked in lots of different states in the us and it's typically around this rate then let's say i need to hire a gaffer so i will bring a gaffer with me and let's say i could hire a day rate gaffer for 10 hours at 650 and let's say we need a sound mixer so i'll put in sound mixer or audio tech again the same day rate applies to an audio tech and usually audio tech come with a bundle so they come with their gear and let's say that's 900 dollars with gear so right now i'm at 2350 but you're not going to stop here because i'm showing up with a camera and maybe some lighting or the gaffer is showing up with some lighting so i'm gonna put in some camera equipment so that's a 4k camera package with lenses let's say and let's say that's about 400 dollars with all the lenses on tripod and everything else i need and let's say we have some lighting equipment and we're just bringing a couple of simple lights here let's just say that's going to be 350 dollars worth of lighting and grip gear so lighting and grip gear okay and the sound guy we already decided the sound guy is bringing his own gear so we don't need to bring it as a production company let's say i work at the production company this is my production company and i hired myself as director photography i chose not to hire someone else but i did hire a freelance gaffer i hired audio tech and this equipment i own but you have to charge for what you own even if it's fully paid off because you need to basically have these on a line item so you could eventually upgrade your equipment even though you have it it shouldn't be part of your labor rate this 10 hours is my labor this is my equipment that's how i could buy more equipment every couple years when it gets outdated so we're at 3100 so usually after talking to people some people didn't even include their gear which wasn't even one of the mistakes i'm covering so definitely always include your gear you don't have to itemize it this way by the way for the client you could just say production services including labor and gear 3 100 as one line you don't have to break this down in fact usually i tell people not to break it down because people will be like well why do we need two lights or three lights if you really line item it so i usually don't even approach it that way but i'm just showing you the breakdown of what i would keep to myself internally okay so why wouldn't i build a client thirty one hundred dollars what happens if i build the client thirty one hundred dollars well this is what happens if you just build a client thirty one hundred dollars we just basically created a job a total freelance job for ourselves where we're giving away our time and we're giving away our equipment again for a freelance rate basically if you do this you don't have a company you will never have a company you just created a freelance job for yourself where you can maybe hire your friends as a gaffer as a grip as an audio tech or find other freelancers to help you right and this is just a production and by the way i'm not talking about the editing which i've covered in different videos so what do we do instead what's the first mistake so the very first mistake is that we don't have anything built in for actually managing this project how about all the time that we went back and forth emailing the clients how about the time we took to basically book everybody how about the time for packing gear for invoicing for paperwork for the contract a lot of people forget that but if it's not built into this cost you're basically just giving the people their rate you're keeping the rate for yourself and you're losing all the hours it's taken to set all this up and you actually can't ever hire someone to take care of project management this way right you have to do it basically for free so what do we do there well let's go ahead and add another item to solve problem one which is project management so i'll put production manager and let's say a production manager gets paid hourly let's say they get 50 an hour to take care of this for you if you're doing this yourself put in what you think your hour is worth so i'm going to put 50 an hour again i'm not showing the client this information i'm just typing this out for you and typically i know between putting together the emails for the crew for the client the back and forth even the managing the editor this may be up to like six hours of work okay so six hours times fifty dollars that's an extra three hundred dollars now this again could be a huge range right sometimes a project management could be an entire week's worth of work it really depends on the project just for the sake of this this is 300 that we were just gonna lose out on or basically do this for free if i didn't include it as part of this budget so that's mistake number one it's not building some sort of pre-production if there is creativity involved in this project and just not a crew going out right so sometimes what's called a full service production you're doing the creative you're doing the production you're doing the editing well i didn't build in anything for pre-production as far as like hey are we putting together a script what about the idea what about the concept all of that is pre-production so make sure between project management and pre-production you always built that in if it's required for the job pre-production is sometimes required for a full service production and a pro production manager is always required regardless of size of the job even if you're doing the job you're sending emails you're doing work you're invoicing make sure you account for that if you think like a freelancer we used to do all that stuff basically for free in exchange for a day rate don't do that if you're trying to make an actual video service that could grow beyond just you all right let's get to mistake number two which if we just build the client thirty four hundred dollars we are making no money as a company this is basically just me making money for myself maybe if i'm the production manager as well making money there and i've also made some decent money towards my gear but you know in this case maybe that's over ten thousand dollars worth of gear i'm bringing along so i do have to make sure i paid that gear off or save money for upgrading later that's what this is so what about profit without profit we don't really have a business we basically created a freelance job for ourselves so how do we figure out profit okay let me just give you the common way where people do profit so a very common way that video production companies calculate profit and this is just the most basic way of pricing is they usually think of profit as 20 of the total cost of the project so in this case the cost of the project so far is thirty four hundred dollars right so if we just do a little simple math times point two that's twenty percent that's 680 more dollars worth of profit this is what the company is making right so you got to take yourself out of the equation here and think of the company if i wasn't available i would still take on this job and i would hire another director of photography they would go do the job maybe they want to work with their own gear and if i did that i will make zero dollars right so that's where the profit comes in so if i put the profit margin here i'll put it under production services let's say this is your profit of 20 which is very reasonable and very common so you would put that in and that was 680 dollars based on the math so far so this is now you're getting a four thousand dollar shoot right this is a three-person shoot with equipment plus profit with some production management time no editing right but we're already at four thousand dollars right so if you're doing jobs less than that just know this is very very common for production companies you may be competing with and you may be underpricing yourself so mistake number two is having no type of profit built in and you're just creating a freelancer work for yourself which is not what we want to do we want to build a real successful company that could have a profit margin built in just like any other company out there so what about the third mistake well so far if we fix mistake number one and two we still come across a problem we have no money for the actual business outside of the profit the profit means the money that the business needs to keep but there are some overhead costs that a business is going to have there is no way around those overhead costs if i'm doing a shoot like this i have a bunch of insurance policies that i have to have right so if you don't have those there is one called general liability insurance if you don't have a general liability insurance for your production services you already are putting yourself at a risky position and that could be thousands of dollars a year there is like besides just the liability insurance there there is worker comp they have automobile insurance for commercial auto even if you're driving your personal auto but it's the work vehicle right so there's ton of different insurance policies that's part of the overhead if you have an office that's overhead if you have an email provider if you have a website hosting there's just random overheads that you're not accounting for so how do we actually calculate for that well usually if you do a 20 profit margin your overhead is getting cut into that profit margin so if your overhead is 20 even if you're working from home basically over time you're cutting into that production or that profit margin so you got to improve your profit margin and the biggest problem i've seen when people work off of this even with these issues fixed how do you get new clients there is no marketing budget whatsoever you would have to take that 20 profit and keep trying to get new clients this is why i could give my existing clients better pricing because i don't have to build in the cost to acquire that client they're already my client i could give them a good deal but when i'm running ads when i'm doing paid promotions when i'm doing marketing to get clients i have no way basically to have any money built into the cost of that where am i exactly getting the money like let's look back in here how can i take money out of this four thousand well there's a few ways i could hire someone that's not eight hundred dollars right i could hire someone much newer at 400 a day but then i'm gonna come across quality problems where i can't deliver the client this type of work i could hire a like a non-union gaffer right and someone maybe is coming up maybe 300 400 right i could cut all this down but then i can't provide the quality of service that i've been providing i could use a hundred dollar camera i could use no lights i could basically try to do sound myself and shoot the video right i could basically just take everything back to how i was doing it 15 years ago but we're building a business so i'm showing you where i want you to be in a few years so it's okay if you start with lower rates than what i'm showing you here these are chicago rates based on having a lot of experience in production but this is just for one day of shooting what i'm showing you so it adds up right if i got a weak shoot at this rate it could be 20 000 plus another 20 000 in edit that's how you get the bigger projects right so my whole point with this video was solve those three problems first of all make sure you're always building gear into the cost so you could actually upgrade even if you own the gear make sure then the second thing we talked about make sure in your pricing model that you actually include profit again don't show that to the client that's something you built in and you decide that for yourself comment 20 25 is very reasonable profit you'll see sometimes when you look at uh companies balance sheets like public company like disney their profit margin is way bigger than that even before they get to the operating cost of the business then once you do all of this you basically want to make sure there is even more money for acquiring customers overhead insurance basically everything that is costing you to do business again this is not going to go here you could basically just change your profit margin so if you think of profit margin as 20 if you did it at 30 that other 10 percent could go towards your operating cost of running a business and the last thing i'll mention is sometimes i've seen people just the example i'm showing you they basically line itemize everything and then they put another line called production services profit and they put their profit to show the client the profit margin don't do that nobody does that that's just not how you put together a pricing package so the profit you will build it into the cost so you would add 20 per line item rather than having a line on them that says 20 and i do recommend if you are a little bit more advanced don't even break this down because let's say you had two cameras for this shoot because you know this shoot requires two camera some clients may come back like no no we should cut what one camera and then it ruins your day because that's the type of day and type of job that requires two cameras and then you're gonna kind of be stuck with that in the editing process so hopefully this was valuable to you again this is from me working with people as i'm putting together a full course on this topic again that is only a few weeks away at this point if you haven't signed up for the email notification for that i will link it below in the description it's going to be a full course for taking people from freelancers to running a successful video production company learning exactly things like this that could be very tactical and very useful i hope you found this useful i will see you next time

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