Here’s a good starting point
For anyone getting into the video business, one of the most difficult problems you are going to face is how to ‘price’ yourself.
That is, how much can I / do I charge for my work?
It’s difficult for a number of reasons.
First, this is a relatively new business with few guidelines.
In the old days, pricing for video done by professional cameramen or production companies was pretty well established. So much per day, so much to rent the equipment, so much for editing, and so forth.
If you are fortunate enough to land a contract with a cable network, the production manager there is going to have a very standard forumla to work out how much they will pay per hour or half hour of programming, plus a 10% production fee tacked on the bottom for ‘your work’. The rest is budgeted out for shooting days, cameras, edits, tape (if you are still shooting on tape), travel, rental cars, even taxi fees and lunch. These people have been in the business for a long time and they know what it costs to make a show.
By the way, if you are in such a contract with a network and you come in under budget, you get to split the savings with the network, 50/50. If, on the other hand, you are unfortunate enough to go over budget, you eat the whole thing. That’s the Golden Rule: He who has the gold, rules.
But back to you.
Odds are, if you are getting started in the business you are not making deal with HGTV, but rather with your local butcher who wants a video for his website. You’ve sold him on the idea (a free demo of him at work, posted on Youtube is a good investment for you to make. People love to see themselves on screen, even if its just hacking up a veal chop!). He loves the idea of having a video of himself on his new website, likes what you are offering and wants a 2-3 minute video all about his butcher shop. He wants you to do it.
Great.
Now comes that critical moment when he asks you: “how much is this going to cost’?
Brain freeze!
Well, in all honesty, this is one of the hardest points in being in business for yourself. Setting the price – let alone asking for it.
Many years ago, I had a friend who founded Princeton Review, which he turned into a multi-billion dollar company. Genius! But he told me when he went to hire people and it came time to discuss salary, he always asked them what they thought they were worth. He said everyone undervalues themselves and people always quoted a number that was below what he was willing to pay. This is true.  When it comes to talking numbers, we all get very uncomfortable.
OK.
So how do we proceed?
When anyone asks you what the video will cost you are in a price spread: ask too little and you’ll hate yourself. You’ll end up working your tail off and feel resentment all the time. Plus, if they love what you have done (and why not?), they’ll come back and ask for more, and expect the same price. On the other hand, if you ask too much they’ll just say no and that is the end of that.
A friend from Sweden IM’d me yesterday asking how he should price a video he was doing for a corporate client. He had outlined so many hours for pre-pro, so many hours for shooting, so many hours for editing and so on. He had a number in his head of how long it would take him to create the video and how much work it would be. This is a very good first step. Figure out all the costs – your time, your travel, your gear and so on. Then he asked, should I share this with the client.
The anser to that, in my opinion, is no.
Like people who buy salami in the deli, they don’t care how it was made, so long as it tastes good.
When you go to buys a car, you don’t see a break-down from BMW of why that Beamer costs $50,000. ( 5 years of research (pre-pro) at our test grounds in Stutgaart, 56 hours on the test track at $4500 per hour.. and so on). You don’t care. You don’t even want to know.
What the sticker in the window does say is: $50,000
But (and this is an important but), it does list a few ‘options’. This is to give you the ‘feeing’ of flexibility.
OK, the Beamer could cost 50K or it could cost $60K.
Let’s learn from the best.
Ah, German cars – BMW, Porsche, Mercedes… what the hell is the matter with Detroit? (That’s another story).
OK, back to the butcher.
Once you have calculated what it is going to cost you to produce the piece, you now have to calculate ‘price sensitivity’ on the part of the butcher.
How much can he afford? How much does he want it? How much is he willing to pay?
Here’s he spread.  Your cost is the bottom. Now we have to figure out the top.
Remember, once you quote a price you can never go up, but you can always go down.
To make this easy, IÂ think it’s fair to figure out your real costs and then add 20% for profit.
You don’t want to end up working for free and you don’t want to lose the business.
Let’s say when all is said and done you have calculated that it is going to cost you $500 in your time to create a 2-minute video for the butcher. (I mean, how hard is this to do? It’s him in his shop chopping up veal, a little b-roll, some music and graphics). Another 20% for your profit and creative talent and you’re at $600.
Now comes the cold sweat moment. He says “and what will this cost me?”
The ball is in your court.
You have to be professional.
Don’t get all ‘well, I don’t know….’.
Be precise.
Say “$750”. Pause.
Watch his expression. He’ll lift an eyebrow. Everyone does.
Now comes your BMW moment.
“I tell you what Tom. “Let’s do the first one at $700” (you’re already giving him a bargain AND setting the groundwork for more), “And if you like it and want to do more, I can do two more later for $600. Does that sound reasonable?”
Well, yes it does.
