Ian Servin is a passionate freelance video producer and director who's worked with brands such as Ford and Nike on everything from small projects to complex campaigns. He is a guest writer on the Wistia Blog.
Hi, we heard you make videos. We want a video. How much does it cost?
At some point, we've all received an email like this. And crappy cold emails aside, it's a question even qualified clients will bring up eventually. The answer, of course, is that it depends. I'm going to run through my approach to pricing and packaging video marketing services, so you can answer the cost question with confidence.
In this post, I'll break down what actually goes into producing a video, including some hidden costs you might not be budgeting for already. Then, I'll go through how to integrate production costs into a larger retainer package, for a long-term relationship with multiple projects and ongoing video marketing work.
What is a budget and why does it matter?
To price your video production services, you need a budget. Your budget is the crucial tool needed to break down the cost of each video.
Even if you're working on a small scale, there are a lot of things you do to prepare for a project that a typical day rate simply won't cover. At a large scale, a huge amount of time goes into the discovery, setup, and planning of a video. That time provides real value and has real costs, so you should budget accordingly to make sure you're operating efficiently and not losing money.
A key area that I see people forget to budget is the pitch and proposal process. While that might be work you're willing to do for free in order to land a project, don't forget to recoup those costs!
What goes into a typical production budget?
Each project is different, and you should always be open to changing your template. But the three main categories will always be pre-production, production and post-production.
Here are the key activities I scope out as part of pre-production:
- Initial meetings and research
- Brainstorming and concept
- Pitch and proposal
- Scripting and shot listing (writing out exactly what you’ll be shooting)
- Scheduling and logistics
As I build my budget, I add specific sub-activities based on these categories. I list how much time we expect to spend on each line item, as well as our hourly rate. More complex projects will have more granular budgets with more line items.
If you're not sure of your hourly rate, the best way to figure it out is to be your own best case study. Make a video for your own agency, and carefully note how many people were involved and how long it took to complete each step of the process.
Production costs are formatted a bit differently. In my budgets, each crew member gets their own line item with the expected number of shooting days and their estimated day rate. I also add in fixed costs like travel and equipment rental.
In post-production, I switch back to an hourly format with the following key activities as my guideline:
- Ingest and conversion
- Motion graphics
- Sound design (VO recording/mixing)
- Color grading and finishing
File ingest and conversion is where you take your raw footage and do any transcoding, as well any logging for clips like interviews, where you’re looking for specific moments. Once you have your selects, you can begin to put them in the timeline and sequence your project. Motion graphics are visual elements like lower thirds and titles.
I also budget in fixed costs like music and stock footage licensing, as well as any delivery costs (overnighting hard drives is expensive!).
These costs are all added up and compared to the 'sticker price' that ends up being quoted to the client. Based on the difference between that quote and my internal costs, I can calculate my estimated profit margin. A typical margin is 25-30%, but it can vary depending on your business goals.
I also leave room to come back and write in my actual costs as the project gets underway. This lets me know if we’re running over/under budget, and helps me make more accurate budgets in the future.
If we're over budget, that's a sign that we might be working out of scope, and I can talk to the client about adjusting our approach or charging additional fees to cover the extra work. By assessing how accurate each budget is after you complete a project, you can get better at creating future budgets and ensuring you're not losing money on a project.
Budgeting long-term relationships
Having ongoing engagements with clients makes a lot of sense for an agency. When you have this kind of relationship, there are a lot of other activities that can factor into your yearly budget, beyond the sum of your production quotes.
I start with the one-time setup costs. This includes discovery activities like meeting with the client, coming up with internal documents and resources, as well as actually developing what our strategy is and how we'll execute on it. I budget these just like the pre-production costs earlier—each task gets a line item with an estimated time allotment and hourly rate.
From there, I add in the total production costs based on what I calculated with my individual project quotes. With long-term contracts, these will often be more generalized estimates than a final production budget.
My next section covers ongoing distribution and reporting costs. This can include everything from copywriting and scheduling posts to managing ad spend to monitoring community engagement. It also takes into account the key activities that go into regular reporting and analysis. These items will vary depending on what services you're providing beyond production. Again, these are budgeted based on an hourly rate attached to each task.
Just like the production budget, these costs are added up and compared to the quoted price to calculate my estimated profit margin. As before, I have space to put in my actual costs as we go along, so I can keep track of how I'm doing.
Auditing and tweaking
Once you have a budget template you're happy with, you're not done - far from it. As you begin working, keep note of tasks that you're constantly adding in or taking out and adjust accordingly.
Time tracking is an invaluable tool to keep yourself accountable and informed about how you spend your time. If you're not tracking your time already, start now and make sure your budgets are accurate. Just like any marketing campaign, success comes from experimentation and optimization.