IntroductionWelcome| 00:04 | Hi! My name is Rich Harrington and welcome
to this class on Video Budgeting, which
| | 00:08 | will also work for other creative
type projects like photography or design.
| | 00:13 | In the class today we're going to
explore a lot of different techniques that are
| | 00:16 | used when creating accurate budgets.
| | 00:19 | The thing here is kind of interesting:
everybody likes getting money, but nobody
| | 00:23 | likes having actually do the budgets
that it takes to build the project out.
| | 00:27 | What I'd like you to think about
throughout this process is that with a methodical
| | 00:32 | approach you can accurately estimate the time,
| | 00:36 | then assign reasonable cost, and put
together a package that the client is
| | 00:40 | actually willing to accept.
| | 00:42 | Now most of you are familiar
with me as a software trainer.
| | 00:46 | You've read books I've produced
or watched online video training.
| | 00:49 | What many of you may not realize is
that I actually have a pretty extensive
| | 00:52 | background in business.
| | 00:54 | I've run my own company for more than
a decade, and prior to that I've worked
| | 00:58 | at television stations,
advertising and PR firms, and other video
| | 01:03 | postproduction companies.
| | 01:04 | I've also been a magazine
publisher and web publisher along the way.
| | 01:08 | Now to balance this out, years ago I learned
that I needed to reprogram my creative brain.
| | 01:13 | So, I put myself through night
school and picked up a Masters in Project
| | 01:16 | Management, which is a type of
business degree. And what I found is with a
| | 01:20 | little bit of thought, I could start to
think like a business person and run a
| | 01:24 | more successful company.
| | 01:26 | So, let's a look at the goals of these
workshops and what we're going to take a
| | 01:29 | look at throughout the class.
| | 01:30 | We have a lot of things to explore
today and they are all interconnected.
| | 01:34 | Many people get confused when it comes
to budgeting because they're not really
| | 01:38 | sure where the numbers come from.
| | 01:40 | So instead, what happens is they take on
a BONSOP approach, which is just a fancy
| | 01:44 | way of saying back of napkin/seat of
pants. And they try to come up with some
| | 01:48 | numbers that seem plausible, put on a
piece of paper, show it to the client, and
| | 01:52 | hope that the client says okay
and then they run the project.
| | 01:56 | There's no real thought or reason
that went into creating those numbers and
| | 02:00 | that's not a secret to long-term success.
| | 02:02 | If you just pick numbers randomly out
of the air, chances are you're going to
| | 02:06 | find yourself short on money or
resources throughout the project and you really
| | 02:10 | can't grow your company smartly that way.
| | 02:13 | So, it doesn't really have to be this way.
| | 02:16 | Budgeting isn't hard. It's as simple
as making a shopping list to go to the
| | 02:20 | grocery store, put together a dinner party.
| | 02:22 | So what I'd like you to think about is this.
| | 02:24 | If you can learn how to break a project into
smaller pieces, you could turn it into a budget.
| | 02:31 | By being able to identify all of the
components that you're going to do for a
| | 02:34 | job, you can assign prices to those
individual items and then roll that up
| | 02:39 | into a master budget.
| | 02:42 | This means that you have to identify
deliverables, what you're actually giving
| | 02:46 | to the end customer or client.
| | 02:48 | And when you do this, you then have to
be able to assign estimates for how much
| | 02:53 | time or labor it's going to
cost to pull these things off.
| | 02:57 | It may seem a little bit intimidating
and I threw out some words that might not
| | 03:00 | sound familiar to you, if you're
more creative than you are business.
| | 03:03 | But just hang in there. We've got a
lot to cover and I promise by the end of
| | 03:07 | this course, you will feel much more
comfortable about the business side of
| | 03:11 | being a creative.
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| What you should know before watching this course| 00:00 | I've been talking about the topics of
business and video for several years and
| | 00:04 | invariably, after I give a presentation
on a business topic, multiple people will
| | 00:09 | reach out to me and say, "Can I please
get that template you use?" As if somehow
| | 00:13 | having a spreadsheet template
would make budgeting that much easier.
| | 00:18 | Well, the truth is it's not about a template.
| | 00:20 | It's about having the
knowledge to fill that template in.
| | 00:24 | The simple mechanics of just plugging
in data to a spreadsheet is not hard.
| | 00:28 | We're to cover those aspects, the
actual what buttons to push, in this class.
| | 00:33 | But I'd like you to start to think about
in broader terms what budgeting really is.
| | 00:39 | You see, the act of budgeting is making
sure that you're able to map what you're
| | 00:43 | giving the customer and how much time
it's going to take to pull that off.
| | 00:48 | Once you're able to accurately estimate
time and break down a work package, it
| | 00:52 | becomes pretty clear.
| | 00:54 | The thing you need to realize is
that my rates in my city are going to be
| | 00:58 | different than your rates,
depending upon the cost your company incurs.
| | 01:02 | For example, I'm in the Washington, DC
area, one of the more expensive areas to
| | 01:07 | live in in the United States.
| | 01:09 | As a major city, our rates tend to be higher.
| | 01:12 | Except even within this market, my
rates are different than my competitors.
| | 01:17 | Sometimes that's because others have
to outsource services or they have an
| | 01:21 | expensive office in the heart of the city,
well I'm a couple of miles out from downtown.
| | 01:26 | Lots of factors go in and affect your prices.
| | 01:29 | Don't obsess today during the course,
"How much should I charge for camera
| | 01:33 | operator?" or how much do I
charge for editing per hour.
| | 01:37 | These are numbers that you're going to
have to figure out yourself, and we're
| | 01:40 | going to cover that
throughout the exercises today.
| | 01:43 | What you need to realize is this
is going to become your budget.
| | 01:47 | So pay attention to the theory and the
philosophy behind budgeting and not so
| | 01:51 | much the absolute numbers.
| | 01:54 | So, with this in mind, we're going to go
ahead and explore this whole process. And
| | 01:58 | remember, don't obsess on the little
details; think about the big picture.
| | 02:03 | And pretty quickly you'll
see how it all fits together.
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| Using the exercise files| 00:01 | If your lynda.com membership includes it,
there are some downloadable exercise
| | 00:04 | files for this course.
| | 00:06 | What they are, are templates that you
can use for budgeting, as well as a few
| | 00:10 | sample budgets and proposals from past projects.
| | 00:14 | Now, because of the confidential
nature of some of the clients I work with,
| | 00:17 | I've had to strike out some of the
absolute details, but you can look at these
| | 00:21 | as a guiding point to use as you
start to put together your own business
| | 00:25 | paperwork for your company.
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|
|
1. Services OfferedDetermining your capabilities| 00:00 | One of the first things you have to do
before you could put together a budget is
| | 00:04 | figure out what it is you're actually selling.
| | 00:06 | We call these services, and you need to
determine what services you're going to
| | 00:11 | offer to your customer.
| | 00:13 | Now, there's lots of different ways to
think about this, but I like to start
| | 00:17 | with capabilities of your particular company.
| | 00:20 | With capabilities, you need to
think about what is it that you could do
| | 00:23 | internally with the
existing resources at your company.
| | 00:27 | This means staff, the gear you have,
the equipment, the facility, perhaps,
| | 00:33 | that you rent or own.
| | 00:35 | You need to identify your internal capabilities.
| | 00:38 | This is what you could do with what
you have at hand without any additional
| | 00:43 | expense beyond your monthly repeating
expenses for things like payroll and rent.
| | 00:49 | Additionally, you need to
think about external capabilities.
| | 00:53 | These are services that involve
outside partners. Perhaps it's replication for
| | 00:58 | DVDs or streaming media services for the
network that provides the backbone for your company.
| | 01:05 | You're going to need to think about
trusted partners that you use and then
| | 01:09 | resell their services as
integrated pieces into your overall package.
| | 01:15 | This leads to the decision of Make versus Buy.
| | 01:18 | What is it that you can do with what
you already have, versus buying something
| | 01:23 | and rolling it into your services.
| | 01:26 | Over time, companies increase their
profitability by making more than they buy.
| | 01:31 | Of course, you may discover a few key
areas of things your customers want that it
| | 01:37 | just makes sense to buy from a
trusted partner and roll into your overall
| | 01:41 | offering, and over time things will change.
| | 01:45 | So if you are new company or just
starting out, don't be afraid to just work
| | 01:49 | with a larger team of virtual
customers and employees, using vendors and key
| | 01:55 | people to help you out.
| | 01:57 | But as you get bigger, you may grow
your company and capabilities and bring
| | 02:01 | more things in-house.
| | 02:04 | Determining your capabilities means
that you just need to sit down and look at
| | 02:08 | what it is your company does.
| | 02:09 | Make an accurate list of
all the things you sell.
| | 02:13 | This should be a pretty detailed list
so you can evaluate what are your core
| | 02:17 | services and what are secondary services
that sometimes pop up that your clients ask for.
| | 02:22 | This will help you make smart
decisions and is the first step to putting
| | 02:27 | together a price list.
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| Identifying competitive advantages| 00:00 | As you're putting together your list of
services offered, be sure to think about
| | 00:04 | the competitive advantages
you want over your competition.
| | 00:08 | You might be competing in a local
market, on a national, or even at
| | 00:11 | international scale, and what you
need is something to help you stand out.
| | 00:16 | So we call that a competitive advantage.
| | 00:20 | What you're looking at here
are things that are unique.
| | 00:23 | Now in the world of video it's just a
bunch of pictures and sound recorded
| | 00:27 | sequentially and then cut together.
| | 00:30 | But you probably have a niche or
something you're really good at.
| | 00:33 | For example, at my company, we
do a lot of time-lapse work.
| | 00:38 | We also produce a lot of
corporate documentaries and have a lot of
| | 00:42 | healthcare clients.
| | 00:43 | These are all things we push.
| | 00:45 | I also have some incredibly unique
services like panoramic photography that I
| | 00:49 | push. Not that people ask for it, but
having some cool virtual tours and really
| | 00:54 | nice photos on our website
keeps people there longer.
| | 00:58 | We produce a lot of training content;
not just me talking to you, but other
| | 01:02 | people coming in and recording
training for their companies.
| | 01:05 | And so having these unique services
that we push above all others helps us
| | 01:10 | standout in a busy playing field.
| | 01:12 | So what you're going for here is
perception, you want to make sure that people
| | 01:17 | perceive that your company is unique and
does something different than everybody else.
| | 01:21 | What you don't want the perception to
be is that you are the company that's
| | 01:25 | the cheapest, therefore you should be
chosen for those low-end jobs or when you
| | 01:29 | have to save some money.
| | 01:30 | You don't want to be the most expensive either.
| | 01:33 | But you want to manage your image and
make sure you have a balanced portfolio
| | 01:36 | of services that you offer so people have a
good idea what it is you're actually good at.
| | 01:42 | This is called positioning and you want
to be able to make sure your company is
| | 01:46 | adequately positioned for its strengths.
| | 01:49 | This helps people find you, and
it helps build your reputation.
| | 01:52 | This all ties together with
search engine optimization.
| | 01:56 | You want to think about what are some
of the terms or phrases that people are
| | 01:59 | going to be looking for when
they want to discover your company.
| | 02:03 | In the old days, you were probably able to
build a reputation and just rely on word-of-mouth.
| | 02:08 | One of the things I'm seeing more
and more is that people are discovering
| | 02:12 | us through the web.
| | 02:13 | Especially because people just aren't
going out to as many business events and
| | 02:16 | networking events that are face-to-face.
Instead they're relying on social media
| | 02:21 | and the internet to
discover partners and vendors.
| | 02:24 | So, when you refine your services list,
which again is the first step to putting
| | 02:28 | together a budget, make sure you think
about what it is you're going to do and
| | 02:33 | how it helps position your
company as a trusted partner.
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| Outsourcing| 00:00 | As you're putting together your list
of services offered, make sure you also
| | 00:04 | track what services your clients
ask for that you can't provide.
| | 00:09 | For example, we don't
have a Telecine suite here.
| | 00:11 | So if we shoot a project on
film, I need to outsource that.
| | 00:15 | Similarly, I don't have a DVD
replication facility tucked into the back closet.
| | 00:20 | Now I can make simple
dubs or 50 copies overnight.
| | 00:24 | But if I need a lot of copies of
DVDs or Blu-ray discs, I have to turn to
| | 00:29 | an outside partner.
| | 00:30 | We call this outsourcing.
| | 00:33 | With outsourcing, you need to think about
where you're going to put your business.
| | 00:36 | I recommend you have a certain number of
vendors local, people you can call and trust on.
| | 00:42 | Perhaps it's regular crew that you
use to supplement your productions or a
| | 00:46 | replicator or printer who can provide services.
| | 00:50 | However, as you start to look on a
national or even an international scale,
| | 00:54 | there can be cost savings.
| | 00:57 | Due to the competitive nature these
days, you'll regularly find businesses
| | 01:01 | offering their services worldwide.
| | 01:03 | So your printer may not even be in the
United States, or your DVD replication may
| | 01:09 | happen on an opposite coast.
| | 01:11 | What you need do realize though is that
the further your outsourced vendors get
| | 01:15 | from your business, the more time you
need to allow for shipping as well as
| | 01:20 | potential cost associated with that shipping.
| | 01:23 | I'm not saying only buy local, but you
need to have a good healthy balance of
| | 01:28 | local, national, and international
partners to compete in today's economy.
| | 01:33 | So this all comes down to a little bit
of research. Make sure you think about
| | 01:38 | who's out there, participate in online
forums, check with your peers and find out
| | 01:43 | who can help you build your successful business.
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| Partnering| 00:00 | The last area to pay attention to as
you build out your services list is
| | 00:04 | the act of partnering.
| | 00:06 | You want to make sure you gather
up some good partners and perhaps
| | 00:09 | formalize those agreements.
| | 00:11 | Here's how it works.
| | 00:13 | With partnering, you have the
opportunity to put together an informal team.
| | 00:18 | You might have a core group of
people that you work with all of the time.
| | 00:21 | Maybe they are folks that you worked
with at a past job or you belong to the
| | 00:25 | same professional organization.
| | 00:27 | You also probably have a list of
established freelance talent that you rely upon.
| | 00:31 | You're going to want to check with these folks,
and get them to put their rates in writing.
| | 00:37 | Many folks will have
different prices for different things.
| | 00:40 | For example, some writers charge per
page; others charge an hourly rate.
| | 00:46 | Some charge more for commercial spots
than they do for long form documentary.
| | 00:51 | You need to make sure you have an
honest conversation with your partners and
| | 00:56 | get down their rates.
| | 00:57 | So as you're doing your budgets
you can pull those numbers in.
| | 01:01 | You don't want to keep hitting
roadblocks where every single time you turn to an
| | 01:04 | outside partner, you've got to send
out an e-mail or a bunch of phone calls.
| | 01:08 | So instead, check with those partners
and get some rates and ask them how long
| | 01:13 | those rates are good for.
| | 01:14 | Of course, sometimes with partners, you
may want to formalize things a bit as well.
| | 01:20 | With a formal partnership, you may
actually put a written agreement into place.
| | 01:24 | For example, we have some producers
that we have written agreements with, and
| | 01:28 | they bring in their projects.
| | 01:30 | They know that they get a certain
discount on services and that they retain
| | 01:34 | certain rights to their projects and clients.
| | 01:37 | These written agreements may also
have payment terms for your vendors or
| | 01:41 | pre-established discounts that you could
rely upon due to a certain volume of work.
| | 01:46 | Remember, if you're going to work with
people a lot, it behooves you to actually
| | 01:49 | put together a partnering agreement so
you can rely on those rates and have a
| | 01:53 | consistent repeatable relationship.
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|
2. Setting Your RatesDetermining rates for services| 00:00 | Once you know what it is you're selling,
you need to assign some rates so you can
| | 00:04 | actually charge for those things.
| | 00:06 | Now determining your rates often
involves little bit of soul-searching.
| | 00:10 | There is a lot of thought. How do you
want to be perceived? How much money do
| | 00:14 | you need to make? What type
of life do you want to live?
| | 00:17 | In the old days, we used to be able to
charge a lot more than we could today for video.
| | 00:22 | Now that non-linear editing systems
cost less than $1000 and you don't have
| | 00:26 | years leases to deal with, and more
and more people are coming out of schools
| | 00:31 | trained how to do video, it's a
much more competitive marketplace.
| | 00:35 | So, make sure you give a lot of thought
to your rates and how you price things.
| | 00:40 | Here's what you need to consider.
| | 00:42 | With your rates for services, the first
thing I want you to realize is there are
| | 00:46 | three things those rates are covering.
| | 00:49 | If you're a freelancer, you may not
have thought about this as much because
| | 00:53 | you're used to just getting paid for
your time, and people often provide the
| | 00:57 | equipment that you're using.
| | 00:59 | So, remember the money that you bring
into your company needs to cover three
| | 01:04 | different components. First off, the people.
| | 01:08 | This includes yourself and any staff, as
well as freelance talent that you hire.
| | 01:13 | You also have equipment and these days
equipment wears out faster or becomes
| | 01:18 | obsolete that much quicker.
| | 01:21 | You need to make sure that you have a
strategic plan of a certain amount of
| | 01:24 | money being set aside to handle repairs
as well as upgrades to your equipment to
| | 01:29 | remain competitively relevant.
| | 01:32 | And lastly, your facility. Do you have an
office? Are you working out of your house?
| | 01:38 | Do you need anything to make that comfortable?
| | 01:41 | Making sure that you upgrade your facility
and cover the related costs there are important.
| | 01:48 | The next thing that your rates need to
cover are covering your assumptions.
| | 01:53 | There is a lot of work you do that you
may not actually get paid for unless you
| | 01:57 | remember to build it into your rates.
| | 01:59 | For example, the act of creative design.
| | 02:02 | You need to charge for the creative design;
| | 02:04 | this is the actual act of
coming up with the big ideas.
| | 02:07 | What's the concept for that
spot, designing the storyboards.
| | 02:10 | This should be a bigger rate than what you're
getting paid for to actually just push buttons.
| | 02:16 | And remember, you're doing creative
design all hours of the day. You thinking
| | 02:21 | about it over breakfast or in the shower?
| | 02:23 | Make sure you budget for the time it
actually takes to come up with the big
| | 02:26 | ideas and remember that you're working
sometimes when you're not even in the office.
| | 02:31 | Other things people forget are shipping.
| | 02:34 | Do you have to physically
deliver things to customers?
| | 02:37 | Is it a hard drive or a disk that
has to be sent around the country?
| | 02:42 | Make sure you also investigate other
options like electronic delivery to save
| | 02:45 | money here. And of course storage and archiving.
| | 02:49 | Remember, HD video these days is
pretty big, and you're going to increasingly
| | 02:54 | burn through more and more drives and storage.
| | 02:56 | Have a clear plan of how long you
store data and what sort of things you're
| | 03:00 | backing up, and remember to build
those charges into your projects.
| | 03:05 | If your clients expect you to keep a
copy of everything forever, make sure
| | 03:08 | you're charging them for that.
Otherwise there are a lot of assumptions and a
| | 03:13 | lot of potential pain.
| | 03:15 | Other things to think about with your
rates for services is a competitive
| | 03:18 | analysis of what's going on in your market.
| | 03:21 | Take a look at what others are able to
get. Look at their websites, and if you
| | 03:25 | can't find information for your
competition, look at similar industries.
| | 03:30 | For example, the print industry and
the web industry often publish salary
| | 03:34 | surveys and other information.
| | 03:37 | The difference between editing video
and building a website these days is
| | 03:40 | not that different.
| | 03:41 | You use the same types of equipment and
computers, you often have the same level
| | 03:46 | of training for people.
| | 03:47 | So you can look at other creative
industries for guidance as to what they
| | 03:51 | charge when setting rates.
| | 03:54 | And lastly is the financial need.
| | 03:57 | Remember, that only about 40% to 60%
of the time are you and your employees
| | 04:02 | doing billable work.
| | 04:05 | You've got cleaning to do.
| | 04:06 | You've got backups and
archive, packing for a trip.
| | 04:10 | You've got the act of actually putting
together business proposals and meeting
| | 04:14 | with customers for business development.
| | 04:16 | While you may be working all of the
time, not everyone is going to pay you for
| | 04:21 | that time you're working.
| | 04:22 | So make sure you build in some pad and
set your rates high enough to cover the
| | 04:27 | cost of doing business.
| | 04:29 | Couple of those other costs to also
think about are general overhead, rent,
| | 04:34 | utilities, and all of these things
that you need to accommodate for.
| | 04:37 | Make sure you take an accurate look at
your average costs for a year, including
| | 04:42 | things like fuel, transportation;
| | 04:44 | communications. And any savings,
because throughout the year business will go
| | 04:49 | up and down and you need to build up a pad so
you don't feel like you're on a roller coaster.
| | 04:55 | So remember, if you were ever a
freelancer or getting a staff salary somewhere
| | 04:59 | else, you were only looking at
one small part of the rate problem.
| | 05:04 | You were looking at the person cost,
but now you've got a facility as well as
| | 05:09 | equipment that you have to think about
and there are lots of factors to consider
| | 05:13 | when putting together rates.
| | 05:15 | People are a big part of the quality of
the work but they're only a small part
| | 05:20 | of the actual cost of doing business.
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| Exploring material costs| 00:00 | One component to setting your rates is
what the materials you're going to use cost.
| | 00:05 | For example, tape stock, camera
equipment, consumables like storage.
| | 00:10 | You need to investigate these options
and I have a couple of tips to help you
| | 00:14 | take better control.
| | 00:16 | When it comes to material costs,
remember, these always change.
| | 00:20 | If you become too reliant on one source,
you might miss out on an opportunity to
| | 00:24 | deal with price changes or
better costs from another vendor.
| | 00:28 | You also have to realize
that things vary incredibly.
| | 00:31 | For example, at the time of this
recording, we are dealing with a worldwide
| | 00:36 | shortage on hard drives due to natural disaster.
| | 00:40 | This has led to greater cost that I have
to plan for in my business as well as
| | 00:44 | making adjustments for projects.
| | 00:47 | Conversely, we've also seen other
equipment prices fall: the cost of a
| | 00:50 | non-linear editor, an HD camera package.
| | 00:53 | So you need to constantly adjust your
rates to reflect what the ingredients
| | 00:58 | actually cost for your projects.
| | 01:01 | Other things to think about are
can you achieve any savings, perhaps
| | 01:05 | through buying in bulk?
| | 01:07 | I mentioned the storage example earlier;
| | 01:09 | we try to buy storage in bulk packages,
so we are getting multiple drives at a
| | 01:13 | time, or replication services always
asking what the different price breaks are
| | 01:18 | for different points of copies.
| | 01:21 | You want to think about
ways that you can save money.
| | 01:24 | If you have vendors that you regularly
purchase items from, make sure you look
| | 01:28 | at those costs every year.
| | 01:30 | Can you see if someone else has a better deal?
| | 01:33 | Can you renegotiate a better deal with
your existing vendor due to the volume of
| | 01:37 | work that you're using them for?
| | 01:40 | This is where bulk or
group leverage really comes in.
| | 01:44 | Remember, these costs should be built-in.
| | 01:47 | Many people, when building out budgets,
think of them as time and materials.
| | 01:52 | Okay, I am going to charge for all of
my time and all of the items that I use.
| | 01:56 | But you need to realize that what
it cost you to buy that hard drive,
| | 02:00 | the physical cost, is not
the real cost to your company.
| | 02:04 | You've got finance charges for
the credit card you have used.
| | 02:07 | You had shipping to get it there to you.
| | 02:10 | You have the fact that you're tying up
your money for an item that's needed to
| | 02:14 | produce the end result and it might
be several months before you get paid.
| | 02:18 | So you need to think about what all of
these costs are and try to roll them in
| | 02:23 | and build in a certain amount of overhead.
| | 02:25 | People often refer to this as markup.
| | 02:28 | A percentage that they charge on top of
the material cost, to cover all of the
| | 02:32 | related costs to using
that item in their business.
| | 02:37 | The other thing I find critical is
make sure you track material usage at an
| | 02:41 | employee level whenever possible.
| | 02:43 | This doesn't mean that people have to
sign out every single pen or pad of paper
| | 02:48 | that they use, but you do want to
make sure that people are logging when
| | 02:51 | they're using consumables.
| | 02:53 | This might include tracking "I used
five DVDs for this project" or "how many dubs
| | 02:58 | or copies did I make?"
| | 03:00 | Shipping is another big one.
| | 03:02 | Think about making sure that people are
logging when they're using items that cost money.
| | 03:07 | So those items get
billed back to the end client.
| | 03:11 | Tracking your material cost will help
you make better decisions about long-term
| | 03:15 | purchases as well as the
consumables you go through frequently.
| | 03:20 | You will also make sure that you're
not just eating those costs and instead
| | 03:23 | tracking them back to the
projects where they're being consumed.
| | 03:26 | This will improve the chances of you
remembering to bill for them and adjusting
| | 03:31 | your rates to accommodate for the
things that cut into your profitability.
| | Collapse this transcript |
| Applying overhead| 00:00 | I'm recording this training
today in a studio, my studio.
| | 00:05 | And you need to realize that even
if there was no business going on, I
| | 00:09 | would still have bills.
| | 00:10 | I would have my monthly rent.
| | 00:12 | I'd have the utility costs of
having phone lines coming in.
| | 00:15 | I'd have a certain fee for electrical hookup.
| | 00:19 | It takes money to keep the
doors of your business open.
| | 00:22 | And we refer to this as overhead.
| | 00:25 | When you're looking at your overhead cost,
one of the biggest ones is going to be rent.
| | 00:31 | If you are renting space from another
person, chances are you have a monthly
| | 00:34 | payment, and that monthly payment is
going to be made by the rates that you
| | 00:38 | charge for the rest of your services.
| | 00:40 | Even if you don't sell enough business that
month, you're going to end up still having rent.
| | 00:45 | So you need to make sure that you're
building an adequate pad to your rates to
| | 00:49 | cover both this month's rent and future rent.
| | 00:52 | Leases or maintenance--you might have
equipment. Maybe it's an edit suite or a
| | 00:58 | camera package or you took out a short-
term loan in order to purchase equipment.
| | 01:03 | Many times you are using equipment
that requires months to pay it off.
| | 01:07 | Rarely will you be able to take the
profit from one job and buy a new HD camera.
| | 01:13 | You need to think about the cost of
your equipment and spread that out
| | 01:16 | over multiple jobs.
| | 01:18 | Utilities are another big one for us
in the creative services industries.
| | 01:22 | You're going to consume a lot of things,
especially things like Internet and Web
| | 01:26 | access or telephone, cell phone
bills. All these things add up.
| | 01:30 | And of course the traditional
utilities like electricity, heat, water.
| | 01:35 | Your office or your physical space is
going to require a certain amount of
| | 01:39 | juice to keep it running.
| | 01:42 | And you need to think about all of
those utilities that go in to have in a
| | 01:45 | comfortable and functional workplace.
| | 01:48 | Other things are the
nice to have--the Amenities.
| | 01:50 | Do you keep snacks in the cupboard?
| | 01:53 | Do you have drinks in the fridge for clients?
| | 01:55 | Do you bring in meals when people are
coming into the office for meetings?
| | 01:59 | These are all nice-to-haves that
make people feel comfortable and at home.
| | 02:03 | But these things all have to get paid for.
| | 02:06 | Marketing is another big one.
| | 02:08 | The cost of maintaining your website
or social media efforts, advertising
| | 02:13 | campaigns, attending professional
events or sponsoring things. The amount of
| | 02:18 | marketing you do for your company may
vary, but chances are you're incurring
| | 02:21 | at least some basic costs.
| | 02:24 | Do you offer anything to your
employees such as training benefits, vacation,
| | 02:28 | health insurance? All of these things
are benefits that you're giving your
| | 02:32 | employee when they're not working.
| | 02:35 | So if you give your employees
vacation time, healthcare, training, or other
| | 02:40 | types of things that add to their well-
being, which are good things to do, you
| | 02:44 | have to remember that they're not
necessarily doing billable work when they're
| | 02:48 | consuming those items.
| | 02:50 | You'll remember earlier we mentioned that
most employees only do billable work about
| | 02:54 | 40 to 60% at the time.
| | 02:57 | This is where that other money goes to.
| | 03:00 | Recruiting folks and keeping
them up to date is pretty tough.
| | 03:03 | You are going to need to make sure that
you're keeping good talent coming into
| | 03:06 | your company and that you actually
have training budgets to keep people
| | 03:10 | current, including yourself.
| | 03:13 | All of these will add to the cost of
your bottom line, which keeps your business
| | 03:17 | competitive and relevant.
| | 03:19 | And the big one that many
people forget, insurance.
| | 03:23 | Insurance is something you will
need to carry for your company.
| | 03:25 | It might be workman's comp, to cover
people getting hurt on the job, or maybe
| | 03:30 | liability insurance to guarantee your work.
| | 03:33 | Many jobs require you to
provide proof of insurance.
| | 03:37 | And on top of this, of course, are
things like taxes and business licenses.
| | 03:41 | There are lots of costs related to
doing business and you really need to
| | 03:46 | remember that overhead is
something that has to be accommodated for.
| | 03:50 | Otherwise, if you're only tracking
gear and people, your credit card bill will
| | 03:55 | get paid and your employees
and contractors will get paid.
| | 03:58 | But when it comes time for you to get paid,
all those "little things" add up, and you
| | 04:04 | will quickly discover that there's
nothing left in the bank account for you.
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| Using a rate sheet| 00:00 | You've probably noticed by now that
a lot of work goes into figuring out
| | 00:04 | what your rates are.
| | 00:06 | If you're going to spend the time to
be conscientious, think it all through,
| | 00:09 | calculate your overhead, think about all the
components you need to discover and then track,
| | 00:15 | you are going to quickly figure out that
writing things down is a pretty good idea.
| | 00:20 | We call that a rate sheet, and it's
simply a written document that lists out all
| | 00:25 | your major services.
| | 00:27 | Chances are you'll group these
together logically. Maybe your preproduction
| | 00:31 | services like writing and script
development are together, and then all your
| | 00:34 | production costs and then
your postproduction services.
| | 00:38 | Some clients will actually ask to see a rate
sheet, expecting it to be available online.
| | 00:44 | If you're dealing with an advertising
agency or a PR marketing firm, they might
| | 00:48 | want to see one as well to
compare one company to another.
| | 00:52 | Other people try to avoid the subject
altogether and just have a rate sheet
| | 00:56 | internally that they use when budgeting.
| | 00:58 | Whether you publish your rate sheet is
up to you, but you do need to have one.
| | 01:03 | The rate sheet is pretty straightforward
and it's up to you if you share it or not.
| | 01:07 | The key to remember is that rates
will vary greatly by market, as well as
| | 01:12 | by size of company.
| | 01:14 | Just make sure you take the time to
document your rates and have them as a
| | 01:17 | point of reference.
| | 01:19 | And then every year, reevaluate those rates.
| | 01:22 | If you can find rate sheets for some
of your competitors in town, that's even
| | 01:26 | better, so you can look at
your rates compared to theirs.
| | 01:30 | If you're dealing with companies that
do work for the federal government, they
| | 01:33 | are often required to publish a rate
sheet as part of their GSA schedule.
| | 01:37 | You can use this as a point to get a
good idea about what they're charging
| | 01:41 | for their services.
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|
|
3. Scoping the ProjectExploring the triple constraint| 00:00 | Okay! You have figured out what
it is your company does.
| | 00:05 | You've got a list of services, and you've
assigned some reasonable rates to those
| | 00:09 | services that you feel that you can
actually go out and start selling things.
| | 00:12 | Well, the first thing that's going to
pop up when you land a client is actually
| | 00:16 | scoping out their project.
| | 00:18 | A client is going to tell you what they
want, but chances are there'll be lots
| | 00:22 | of holes in the information they give you.
| | 00:24 | So, the process here is scoping.
| | 00:28 | You want to go through and create a
clear written definition of what it is
| | 00:32 | you're going to be doing
for that particular job.
| | 00:35 | A scope statement is not saying, "Oh,
it's a 3-8 minute video and it's motivating
| | 00:42 | and exciting and has cool animation."
| | 00:45 | No, a scope statement is, "It's a 3-4
minute video produced in the local
| | 00:51 | Washington D.C. area featuring on-
camera talent provided by the association.
| | 00:57 |
| | 00:58 | It will include up to two days of shooting
in locations within 50 miles of my office.
| | 01:05 | It includes X number of hours of editing,
X number of hours for motion graphic
| | 01:10 | design, and the end deliverables are 100
DVD copies, two files compressed for the
| | 01:17 | Web, and a digital uncompressed master."
| | 01:21 | Pretty big difference there in level of
detail, and you really need to understand
| | 01:25 | what sort of work you're doing in
order to clearly tell the client what you
| | 01:29 | expect to be doing and charging them for.
| | 01:31 | So, when you start to scope out the
project, the first thing you need to really
| | 01:35 | understand is the concept of Triple Constraint.
| | 01:39 | Like a table, there are three legs to
any project, and if you want a stable
| | 01:44 | platform all three need
to be balanced and leveled.
| | 01:48 | So, with triple constraint here, one of
the things that we want to point out is
| | 01:52 | the first element is Scope.
| | 01:55 | What is the work that you're
actually doing for the client that has to be
| | 01:59 | completed so they'll pay you?
| | 02:01 | In simplest terms, this is why were you hired.
| | 02:05 | The reason to write it down and to
make sure it's clear is that you and the
| | 02:10 | client both agree what is
necessary to complete the job.
| | 02:14 | If you rely upon understandings or
verbal communication, it's very possible that
| | 02:20 | people's memory will differ, and you
don't want to keep having the finish line
| | 02:24 | moving further and further away
keeping you from getting paid.
| | 02:29 | You need a clear written definition of "if you
do this, you will get this," and that's Scope.
| | 02:36 | The next area that you
think about is the Schedule.
| | 02:41 | Schedule contains the time
constraints for the project.
| | 02:44 | If you need to get a project done
faster, chances are you may incur some
| | 02:49 | overtime or we weekend work.
| | 02:51 | If you have a longer time to complete
the project, you might be able to fit it
| | 02:55 | in between other jobs or drive the
cost down a bit by pushing off tasks like
| | 02:59 | rendering to overnight work.
| | 03:01 | Making sure you understand the
schedule that needs to be completed for a job
| | 03:05 | will help you gauge things like rush
charges and how many people need to be
| | 03:09 | staffed in order to achieve
the desired delivery date.
| | 03:13 | And the last constraint you
need to be aware of is Budget.
| | 03:16 | Are there any financial constraints
to the project that will affect you?
| | 03:21 | Most creatives are not
comfortable talking about money.
| | 03:25 | They just want to let the client
control the situation but when it comes to
| | 03:28 | budget you really need to be clear.
| | 03:31 | You're doing work and you need to be paid.
| | 03:34 | So, on this front you just want to
specify what it is you're doing and then how
| | 03:39 | much you're going to get paid for doing it.
| | 03:42 | Knowing the constraints of the budget
up front is helpful because it means that
| | 03:46 | you won't design a solution
that the client can't afford.
| | 03:49 | I can't tell you how many times I've
seen my colleagues design incredible videos
| | 03:55 | and have these really great ideas
and they start making promises to their
| | 03:59 | clients before they've ever asked
how much money they have to work with.
| | 04:04 | Yes, you want to be creative.
| | 04:05 | Yes, you want to execute ideas that
people love, but those ideas have to be
| | 04:10 | based on reality, and reality is the budget.
| | 04:14 | So, with the Triple
Constraint think of it this way.
| | 04:18 | You have to balance these
elements in order to succeed.
| | 04:21 | You need to think about the
Budget, the Scope and the Schedule.
| | 04:24 | There's one more force that
matters and that is Quality.
| | 04:29 | People want things on time, they want
them on budget, and they want you to give
| | 04:34 | them what they asked for, but
they also want the work to be good.
| | 04:38 | Quality is the unique factor that
you'll use to bring back repeat business.
| | 04:44 | Simply put Good, Fast, Cheap... Pick Two.
| | 04:48 | Chances are you've heard that adage before
and it really does work: Good, Fast, Cheap...
| | 04:53 | Pick Two.
| | 04:54 | The problem is every
single client wants all three.
| | 04:59 | So, if you think about it, it needs to be
what they wanted at the quality that they want;
| | 05:05 | they want it when they expect it
and for the price they want to pay.
| | 05:10 | So, all of those things tie together.
| | 05:13 | If you want something really good and
you wanted to be highly affordable, the
| | 05:18 | person doing the work
will need a longer schedule.
| | 05:22 | If they want it super-fast and they need it
to be cheap, it's not going to be as good.
| | 05:30 | Lastly and most obviously, if they need
it fantastic and they need it tomorrow
| | 05:35 | morning, you're going to be bringing in
lots of people and pounding away through
| | 05:39 | the midnight hour, and for that people
are going to pay, probably a lot or at
| | 05:44 | least you should ask them to.
| | 05:46 | So, you need to learn to balance all
of these aspects of the project and that
| | 05:51 | is Triple Constraint.
| | 05:53 | When you build out your budget it's not
just enough to know about the scope of
| | 05:56 | the work; you need to understand the
budget constraints, the schedule, and the
| | 06:01 | type of quality the client wants, so
you can make a budget that reflects that.
| | Collapse this transcript |
| Determining scope| 00:00 | So, now that you understand the concept
of Scope, let's talk about the process
| | 00:04 | of clearly defining it for the client.
| | 00:08 | Scope is something that needs to be
written down and I want to walk you
| | 00:11 | through a logical workflow and then share a
standard document format that you should be using.
| | 00:17 | Let's first look at the workflow.
| | 00:19 | What happens in any project is you have
a need to start, and once a project is
| | 00:24 | underway you're going to set objectives.
| | 00:27 | These objectives might be set by you or
the client, but this is defining the goal.
| | 00:33 | The goal is often the end result that
needs to be achieved and you'll map a
| | 00:38 | series of deliverables towards that goal
that you believe will create the proper outcome.
| | 00:43 | Next, there's a need to gather
information about the project and the customer.
| | 00:48 | This is where things like the budget
constraints kick in and the schedule that
| | 00:52 | they need, as well as further
clarification about those items--how many copies,
| | 00:58 | what cities need to have footage
shot in, is there any travel involved.
| | 01:03 | You then continue to start to execute
the project and along the way you will
| | 01:08 | track your progress versus the targets.
| | 01:11 | So, what happens here is you'll have
a plan and then reality will kick in.
| | 01:17 | The first thing you have to ask
yourself is are you guys happy with
| | 01:20 | what's happening? Are you
delivering good work and is in line with the
| | 01:25 | client's expectations?
| | 01:27 | If you're not, you need to take remedial action.
| | 01:31 | If the problem lies with the client,
chances are you're going to need to address
| | 01:35 | the issue with them and broach
the topic of a change in cost.
| | 01:40 | However, if the problem lies
internally due to mistakes that you're making or
| | 01:44 | bad choices with vendors, you may end
up eating costs, but this is where it
| | 01:49 | becomes important that you're tracking
what's happening and where you're burning cash.
| | 01:55 | Going forward, if everything is
satisfactory and you're continuing to do well,
| | 02:00 | you then need to track as
you complete milestones.
| | 02:04 | If the project is hitting those
milestones, then you can go ahead and issue a bill.
| | 02:09 | We'll talk more about billing
strategies later but the key to think about here
| | 02:13 | is you want to tie certain progress
to certain bill amounts so that you're
| | 02:19 | seeing money throughout the
project for satisfactory work.
| | 02:23 | If the project is completed, then you're done.
| | 02:27 | If it's not, you keep the cycle going
as you continue to make deliverables,
| | 02:31 | tracking changes that the client asks
for, and taking corrective action along the
| | 02:36 | way to make sure that you're maintaining
the cost, the schedule, and the scope of
| | 02:41 | work while maintaining a high quality.
| | 02:44 | This is really a simple document, but
it does clearly define what's happening.
| | 02:49 | Now that you understand the project
workflow, you need to think about putting it in
| | 02:53 | writing for the client.
| | 02:55 | For virtually every project I've done
for the last 10 years I have created
| | 03:01 | scoping document, and if I haven't done
it personally a member of my staff has.
| | 03:06 | This document is a simple, clearly
written document that specifies what it is
| | 03:12 | we're doing for the client and it
also identifies some major points of
| | 03:16 | information that are
typically where conflict arises.
| | 03:20 | Here's what's in a Scoping Document.
| | 03:22 | On the right, you're seeing a copy of
the outline and this outline is covered in
| | 03:27 | depth on my blog as well as in
the downloadable Exercise Files.
| | 03:32 | The first thing is the name of the project.
| | 03:35 | You need to have a name for the project that
lines up with what the client wants to call it.
| | 03:41 | This may be very specific.
| | 03:43 | Try to avoid acronyms and make
sure there's adequate level of detail.
| | 03:48 | Having the accurate name for the
project improves the chances of your invoices
| | 03:52 | getting paid when they come into the company.
| | 03:55 | You want to make sure that you're
all talking about the same thing.
| | 03:58 | Next, you provide an Executive Summary.
| | 04:02 | The Executive Summary is just
that, a summary for an executive.
| | 04:07 | Chances are other people are going
to need to find out about the project.
| | 04:10 | So, people who are not as closely tied to
it like your direct client. It might be
| | 04:15 | an executive who's deciding which
projects get cut and which ones continue.
| | 04:20 | It might be deciding who's going to get
funding and who's going to have it pulled.
| | 04:24 | The Executive Summary clearly states
why this project was being executed and
| | 04:30 | what's trying to get accomplished.
| | 04:31 | It's normally a less than one page
document that just lets anybody who reads it
| | 04:37 | get the high-level overview of the project.
| | 04:40 | The next section is Background.
| | 04:42 | This is why the project was being
executed and any relevant information that the
| | 04:47 | client has given you.
| | 04:48 | If you're dealing with the request for
a proposal or you've had a meeting with
| | 04:52 | the client before delivering the
proposal to them, this allows you to put in
| | 04:56 | important background information that
ensures the customer you understand why
| | 05:01 | the project is being executed and any
important information that you need to
| | 05:06 | make sure everyone on the team is aware of.
| | 05:10 | Next becomes the Scope.
| | 05:12 | And at a high-level you're
talking about lots of things.
| | 05:15 | Not all of these will go into every
Scoping Document, but you're going to want to
| | 05:19 | talk about the objectives and the deliverables.
| | 05:22 | Who's going to be involved?
| | 05:25 | Does the customer need to do
anything in relation to the project?
| | 05:28 | Are they providing somebody to be on-set
during shooting or are they offering up
| | 05:33 | subject matter experts to appear
on camera without getting paid?
| | 05:38 | You need to talk about any assumptions
you're making when building out the budget.
| | 05:42 | Perhaps you're assuming that you'll be
able to shoot in the clients' offices at
| | 05:46 | no cost or that the customer will
review anything you post within 24 hours and
| | 05:53 | respond back to you during the business week.
| | 05:56 | You need to clearly spell out your
assumptions that will affect if you can
| | 06:00 | deliver the project on time and on budget.
| | 06:03 | Other things include any constraints
as well as what are the criteria that the
| | 06:07 | customer will use to gauge if the
project is complete and if it was a success.
| | 06:13 | Some people choose to talk about any
risks to the project as well as point out
| | 06:17 | the benefits, but most importantly I find is
clearly spelling out the budget and the schedule.
| | 06:25 | Not the every single item that has
to be done checklist but the key major
| | 06:30 | milestones that include things like
when is the client going to see the rough
| | 06:34 | cut, when are they going to see the
first script, when do you need feedback on
| | 06:39 | that script. Lots of logical things
like that that identify major progress
| | 06:44 | points in the life of a project.
| | 06:46 | Once you've clearly spelled out the
scope, you may want to identify some of the
| | 06:50 | key people involved.
| | 06:52 | Who's involved on the
project? Who's managing it?
| | 06:55 | Who's going to be on the team?
| | 06:57 | This will make sure that everybody
knows who to get in contact with.
| | 07:02 | And lastly, a signature line.
| | 07:05 | Putting something in writing is pretty
meaningless if the client doesn't sign
| | 07:09 | it and agree to it.
| | 07:10 | Having a clear Scope document means
that you have identified what the project's
| | 07:15 | about, what are the risks involved
in the project, what are you going to
| | 07:20 | accomplish and why is this project being
undertaken, how much should it cost and
| | 07:24 | what are the things due.
| | 07:26 | Putting this in writing cuts down on
all sorts of arguments and dramatically
| | 07:31 | improves the likelihood of success.
| | 07:34 | It also forces the client to closely
look at it and will improve your overall
| | 07:38 | relationship with the end-customer.
| | 07:41 | What I like to say is knowledge is happiness.
| | 07:44 | By clearly defining the work that's
going to be performed, people understand and
| | 07:49 | they know what to expect and when to get it.
| | 07:53 | They also know what is going to be
considered reasonable and you've laid out
| | 07:57 | when the deadlines are.
| | 07:59 | You've clearly identified who's on the
team, who's the leader, who's going to be
| | 08:04 | points of contact for
different aspects of the project.
| | 08:07 | The Scoping Document gives a much
better picture to the end-customer of what
| | 08:12 | it is you're doing. Sure,
| | 08:13 | a spreadsheet with some fields filled
in, a couple of rates, and some hourly
| | 08:17 | numbers are great, but if you don't
understand the schedule and the scope that
| | 08:22 | led to the generation of that budget, all
you have is a number written on a piece
| | 08:27 | of paper and that doesn't
really give you any legs to stand on.
| | 08:30 | Remember, three legs to make a
stable table, three legs for that Triple
| | 08:35 | Constraint: the Schedule,
the Budget, and the Scope.
| | 08:40 | All of these come together and you
have to identify them for the customer and
| | 08:44 | then of course deliver on time with
great work and make sure that it actually
| | 08:50 | matches what you promised.
| | Collapse this transcript |
|
|
4. Creating a BudgetWhat does a budget look like?| 00:00 | Now that you understand what type of
information you need from the client, let's
| | 00:04 | take a look at what a
budget should actually look like.
| | 00:07 | In front of you here, you're seeing
a sample budget for a video project.
| | 00:11 | Again, don't obsess on the details of
what this cost or how much I'm charging
| | 00:16 | for a producer or a makeup artist.
Instead, just look at the level of detail.
| | 00:21 | You'll see that we've identified Pre-Production
categories, Production
| | 00:25 | categories, and Post-Production.
| | 00:29 | I've given a line item cost for all
the major items, I've rolled those up by
| | 00:34 | Work category, and I've totaled it up at
the bottom for the end customer to look at.
| | 00:40 | Now, the level of detail you give may be variable.
| | 00:45 | On the left is an example of a line
item budget with all of the prices and
| | 00:49 | discount rates spelled out.
| | 00:52 | On the right, I have what I call a flattened
budget where I'm able to show the
| | 00:57 | client all of the major line items
that went into the project, as well as the
| | 01:02 | total prices per category
and have things spelled out.
| | 01:07 | Now, these are two different budgets;
there are slight variations between them.
| | 01:11 | That's why the costs
are a little bit different.
| | 01:13 | But you get the idea by looking at it
the level of detail that you'll often
| | 01:17 | want to give to the end customer.
| | 01:20 | What I encourage you to do here is think a
little bit more like a chef or a caterer.
| | 01:24 | People don't want to know
what every single item costs.
| | 01:27 | So, if you were catering a party, they
don't know how much every single egg cost
| | 01:31 | and how much you're
charging for a pound of bacon.
| | 01:34 | What they do want to know is what they're
paying per person to serve them breakfast.
| | 01:39 | So, you need to think about all those items.
| | 01:42 | Customers want to see everything
spelled out, but you don't want to find
| | 01:46 | yourself in a situation where you're
quibbling over little tiny dollar amounts.
| | 01:51 | I can't tell you the number of times in
my career people have had conversations
| | 01:55 | that went like this: "Well my other
vendor only charges me 4 dollars and 50 cents
| | 01:59 | for a VHS tape but you're charging me fire dollars."
| | 02:02 | "Yes, but your other vendor charged you
for stickers and labels and cases and
| | 02:06 | that's rolled into my cost."
| | 02:08 | "Well I'm not so sure about that?" and
the back and forth just keeps going over
| | 02:12 | little, foolish things.
| | 02:14 | People want to know that
you're giving them what they expect.
| | 02:17 | They want to look through a manifest
and see an idea of everything that they're
| | 02:21 | going to get for the money they're spending.
| | 02:23 | But make it easy. Give them the level
of detail that answers their questions
| | 02:29 | and doesn't raise new questions.
| | 02:32 | So, if you look at these two levels of
budgets, both of them have details, but
| | 02:37 | the flattened or simplified budget is
much better to give to the end customer.
| | 02:41 | And try to avoid giving them the
line item budget with all the costs if
| | 02:45 | you can.
| | Collapse this transcript |
| Estimating time| 00:00 | If you look at a budget, you'll
notice that there are two things that go
| | 00:03 | together to create the actual cost.
| | 00:05 | There is the rate per item, which is
often an hourly or a quantity rate, and
| | 00:10 | then you have the duration or the
quantity total that goes together.
| | 00:15 | So you multiply the rate that
describes the item or the time delivery, plus
| | 00:21 | the quantity that you're going to give them
and this will create a total cost for that item.
| | 00:26 | Well the thing is that when you
talk to most creative folks,
| | 00:29 | they're not that good at estimating time.
| | 00:32 | As a creative, we often take great
pride in our speed and how we can come up
| | 00:36 | with really cool things.
| | 00:38 | But what we forget about is how often we
get lost in thought or the creative process.
| | 00:43 | We always underestimate the time
involved, and if you think you're any better, ask
| | 00:48 | yourself this: how many times have
you picked up the phone, called your
| | 00:52 | significant other, and had a
conversation that went like this?
| | 00:55 | "I'm already in the car. Traffic's really
bad. I'm sorry I'm going to be a little
| | 01:00 | late for dinner. It's just really bad
traffic" and you are stepping out of the
| | 01:05 | front door of your office
having this conversation.
| | 01:08 | Even if you don't occasionally tell
small lies to your spouse or significant
| | 01:11 | other, I'm sure that you have found
yourself working far later than you ever
| | 01:15 | expected on more than one occasion.
| | 01:18 | And that's because as creative people,
we're not really good at estimating time.
| | 01:22 | So what I'd like to share with you is
a simple strategy used by the federal
| | 01:26 | government and it works pretty well.
| | 01:29 | With time estimates, you're going to
first off want to draw upon historical data.
| | 01:35 | Do you have any material that you can
look at, past projects that you did for
| | 01:39 | this client, or other
projects that were similar in nature?
| | 01:43 | Take a look at those time logs and
see if you can see any patterns.
| | 01:48 | When we did this for the client last
time, this is what we said it was going to
| | 01:51 | cost and this is how long
it actually took us to do it.
| | 01:55 | There is a reason to time track on
projects, so you learn from mistakes and can
| | 02:00 | build more accurate budgets in the future.
| | 02:03 | Those past budgets are useful, but
again, they're only useful if you update them
| | 02:08 | with actual numbers.
| | 02:09 | If you don't have any numbers to draw on,
this is where that Federal Government
| | 02:13 | formula comes in to play, (1O+4M+1P) divided
by 6. What that really means is this.
| | 02:23 | 1 times the Optimistic time estimate, +4
times the Most Likely time estimate, +1
| | 02:34 | times a Pessimistic time
estimate and then divide that all by 6.
| | 02:39 | So you're saying, "Well what's an
Optimistic and a Most Likely time estimate?"
| | 02:44 | Well, you just ask people,
who are going to be doing the work.
| | 02:48 | So if you have to go and work with a
motion graphic artist or perhaps a Script writer,
| | 02:53 | you go and you ask them to estimate the time.
| | 02:56 | So for example, I describe a project
to a motion graphic artist and I say, "How
| | 03:01 | long do you think that will take?"
| | 03:03 | Try to give them as much good information
to use and accurately describe the project.
| | 03:07 | He or she may come back and say, "Oh, 20 hours."
| | 03:12 | Well, that is not the Most Likely number.
| | 03:17 | That is the Optimistic number because
everyone will always underestimate their
| | 03:22 | own time about themselves, because they
want themselves to look better to you.
| | 03:27 | So you turn around and say, "Well, what
might it take somebody else to do that job?"
| | 03:31 | "Oh, 24 hours." And then you say,
"How about if things went wrong?
| | 03:37 | Not acts of God and the power went out,
but if things came in from the client
| | 03:43 | and they just weren't as organized as
we thought, or we had to do more work
| | 03:46 | prepping the assets." "Oh!
| | 03:48 | 30 hours."
| | 03:50 | Well with that information in hand, you
can create a pretty accurate estimate.
| | 03:54 | Let's put that into the formula.
| | 03:56 | 1 times the optimistic number was 20, 4
times 24 is going to give you 96 hours.
| | 04:05 | 20 plus 96 is 116, plus the
pessimistic number of 30 gives us 146.
| | 04:14 | If we divide that number by 6, we get a
number that is approximately 24.3 hours.
| | 04:21 | Chances are likely, 90% likely, that
the job is going to take about 24 hours,
| | 04:28 | which surprisingly is about where
that most likely number kicked in.
| | 04:33 | How long it would take somebody else to
do the job, not the person you're asking.
| | 04:37 | If you want to improve the accuracy of
this number, just survey more people or
| | 04:42 | talk to multiple people on your team
or your vendor list and try to get them
| | 04:46 | to estimate the job.
| | 04:48 | What you're going for here is a more
accurate number that you can put into your budget.
| | 04:52 | Remember, you can't build a
budget just knowing your rates.
| | 04:56 | You need those time estimates if
you're going to build a Time and Materials
| | 04:59 | Budget, which is the way that
most video projects get done.
| | Collapse this transcript |
| Understanding the work breakdown structure| 00:00 | So you might be thinking, I've been able to set
my rates and I've been able to estimate time,
| | 00:06 | but how do I know what
things go into the budget?
| | 00:10 | Well, that's the Work Breakdown Structure.
| | 00:12 | What you need to do is clearly define
what's going into the project to get it done.
| | 00:17 | In food terms, this is the
shopping list of ingredients you need to
| | 00:21 | prepare that dinner.
| | 00:22 | Or if you're a general contractor, this
is all the stuff you need to pick up at
| | 00:26 | the hardware store in order to build
the home improvement project that you
| | 00:29 | promised the client.
| | 00:31 | It's just the ingredients
that go in to get the job done.
| | 00:35 | And formally, this is a Work Breakdown Structure
and it's not that hard to do. Let's have a look.
| | 00:41 | With the Work Breakdown Structure, what
you're thinking about is what's all the
| | 00:45 | work involved, and this is key in
order to create an effective budget.
| | 00:49 | You don't have to go crazy here, but
you want to identify the major tasks
| | 00:53 | necessary to successfully complete the project.
| | 00:57 | You keep breaking those jobs down
into smaller and smaller pieces, so you
| | 01:01 | feel that you can create an accurate
budget and then assign time estimates to
| | 01:06 | those individual pieces.
| | 01:08 | Along the way, you're going to get
input from the client and anyone on the team
| | 01:12 | who's going to be doing the work.
| | 01:14 | You're essentially creating
a roadmap for the project.
| | 01:19 | Here's an example of a
small, simple video project.
| | 01:23 | We did a Tradeshow Demo Loop for a
customer who had a lot of existing video assets.
| | 01:29 | They wanted a DVD to play in their booth
at a trade show and hand out to the end
| | 01:34 | customer who came to their booth to visit.
| | 01:37 | So, we identified that there were
four major components to this project.
| | 01:42 | The individual videos that were going
onto the disk, the menu an actual disc
| | 01:48 | authoring that had to be created,
| | 01:51 | The packaging for the discs that
physically held them and had artwork, and then
| | 01:56 | the project management to ensure
that the whole project got done.
| | 02:00 | Everybody forgets to
charge for project management.
| | 02:04 | As a creative person we just like to
think about the work we're doing and
| | 02:08 | somehow we feel guilty for
charging the client for being organized.
| | 02:13 | Keeping a project moving forward
smoothly, the job of a producer, an executive
| | 02:18 | producer, or a project manager is work.
| | 02:21 | It's work that means early morning e-
mails and late-night phone calls. It's
| | 02:26 | work that means picking up the phone,
spot checking other peoples quality.
| | 02:31 | All of these things need to happen.
| | 02:33 | It's part of the normal process.
| | 02:35 | If you had a ship, someone had to
drive the ship; otherwise it would crash.
| | 02:41 | The Captain of the ship is a paid position.
| | 02:44 | Sure, you'd like to think that all the
other sailors and crew members knew what
| | 02:48 | to do and that everything
would just run smoothly.
| | 02:51 | But ultimately, somebody has to be in charge.
| | 02:54 | That's the Project Manager.
| | 02:56 | You need to charge for project management.
| | 03:00 | Let's go ahead and break down the rest
of these costs in a little more detail.
| | 03:04 | On the video assets front, I was
thinking about this project in that they had
| | 03:08 | lots of videos already done.
| | 03:10 | First thing I needed to understand
was how many total minutes of video
| | 03:14 | they wanted to capture?
| | 03:15 | Once I understood how much video we're
talking about, I was able to assign a
| | 03:19 | reasonable time estimate
to digitize these sources.
| | 03:23 | I of course asked which of them were
coming from tape, how many of them were
| | 03:27 | already existing as digital,
| | 03:29 | did any of them need to be
extracted from other DVDs?
| | 03:33 | But by identifying how much video there
was, I was able to generate a reasonable
| | 03:38 | price estimate based on the complexity.
| | 03:41 | I then determined that I wanted
to consistently have good audio.
| | 03:45 | So I was going to EQ the audio for a
nice, sweeter sound and normalize the volume.
| | 03:51 | Talking to my external vendor, I was
able to get a price estimate for how much
| | 03:55 | it would cost to clean up what ended
up being 90 minutes of finished audio.
| | 04:00 | I informed them that these were
previously mixed pieces and that they
| | 04:04 | theoretically had decent audio to begin with.
| | 04:07 | But I was looking for a more
consistent volume throughout all the pieces.
| | 04:12 | We then applied lightweight color
correction, to ensure that they all had a
| | 04:16 | similar exposure level and saturation level--
| | 04:19 | not shot by shot, but global
adjustments to make sure things worked.
| | 04:24 | And then 90 minutes of video had to
be encoded and compressed for delivery.
| | 04:31 | Now, this is easy to estimate because
on my rate sheet I've determined a per
| | 04:35 | minute cost for creating video for the
Web and DVD, which is what I was doing here.
| | 04:41 | The next category was the DVD Menus,
and we asked the client if they wanted
| | 04:46 | storyboards to see the initial
thought process of the menus, which
| | 04:50 | fortunately they did.
| | 04:52 | So we delivered paper menus first, that
had some general sketches and identified
| | 04:57 | how many buttons would be on each screen.
| | 05:00 | We then got the client to agree to doing
Photoshop style menus, not motion menus
| | 05:05 | because the budget was a little bit smaller.
| | 05:07 | So we simplified the project.
| | 05:09 | That decision was made based on asking
the client what they wanted to spend and
| | 05:15 | if they didn't have a perfect
answer, we just used simple language.
| | 05:19 | For example, the customer may not be
able to tell you an accurate number, but
| | 05:23 | you could say, "Hey look, how
fancy of a project is this?
| | 05:28 | Do you want premiere motion graphics
and lots of fancy animated menus or do you
| | 05:33 | just want something that looks
respectable and is clean and simple?"
| | 05:37 | People are going to tell you
what they're comfortable spending.
| | 05:41 | Through the years I've had customers
that wanted everything and sometimes they
| | 05:45 | want different things.
| | 05:47 | Some customers want it fancy all of the time.
| | 05:50 | Others have literally said to me,
"Oh, this is a fund-raising piece.
| | 05:54 | We want it to look clean and
professional, but don't make it look like we're
| | 05:57 | spending too much money on the video."
| | 05:59 | So you need always ask the customer how
fancy do they want it and how much money
| | 06:04 | do they want to spend.
| | 06:06 | If they don't get what you're
asking for, put it in simple terms:
| | 06:09 | "Do you want me to give you a Yugo, a
Chevrolet, or a Beamer?" and find something
| | 06:15 | that works for the customer, so they
understand what you're asking them.
| | 06:19 | Let's take a look at the other categories.
| | 06:20 | We were able to then map out how much
authoring was involved in building this
| | 06:24 | DVD and then we took a look
at the manufacturing process.
| | 06:28 | These DVDs were going to have cases.
| | 06:30 | There was duplication to create the DVDs.
| | 06:34 | They had to be packed and
shipped and those all involve cost.
| | 06:38 | On the project manager inside, somebody
needed to track down all of the assets
| | 06:43 | and we had to build in time
for finding missing elements.
| | 06:47 | There was client communication, and
of course quality control of checking
| | 06:52 | the work along the way.
| | 06:54 | This person will look at things as
they developed and of course, try out
| | 06:58 | the final disc to make sure that every
button worked and every video track was clean.
| | 07:04 | If you want to build a graphic like
this, it's pretty easy to turn your Work
| | 07:08 | Breakdown structure into an actual flowchart.
| | 07:12 | In this case, I used an application
called OmniGraffle, and you will find
| | 07:16 | training for OmniGraffle
available here at Lynda.com.
| | 07:20 | You can also use applications like
Microsoft PowerPoint, which features an
| | 07:24 | organizational chart maker or just
do a search for organizational chart
| | 07:29 | software and you will find graphing
and charting tools out there to make this
| | 07:33 | process easier.
| | Collapse this transcript |
| Using peer and external reviews| 00:00 | So, you've put together a budget,
some time estimates, and all your costs.
| | 00:05 | Well, here's the bad news: you have
probably made some mistakes and I don't just
| | 00:09 | mean you, I mean everybody.
| | 00:11 | When I do budgets, I make mistakes, and
this is why we have the review process.
| | 00:17 | In my own company, no budget goes out
unless at least two people have looked at it.
| | 00:23 | For my own particular company, it's
usually myself and my business partner.
| | 00:26 | However, our Vice President of
Postproduction usually chimes in and oftentimes
| | 00:31 | we'll still want it pass a producer
or someone else on the team to look at
| | 00:34 | their area of subject matter knowledge.
| | 00:37 | This process is typically called Peer Review.
| | 00:41 | What you're doing here is
you're looking for Number checking.
| | 00:44 | You want somebody to go through and
make sure that the budget numbers you have
| | 00:47 | assigned are working and that the
math and the formulas actually adds up.
| | 00:53 | If you have been adding and subtracting
cells, you can get to a situation where
| | 00:57 | you have screwed up your spreadsheet.
| | 00:59 | Another big area is Forgotten charges.
| | 01:02 | The most personally damning example of
this for me is a project I shot on film
| | 01:07 | where I forgot the telecine charge.
| | 01:10 | I had the colorist in there, I had all
the crew and the film stock, but I forgot
| | 01:14 | that somebody had to
actually transfer this to videotape.
| | 01:18 | And you know what I couldn't charge
the client because I didn't put it in
| | 01:22 | the original budget.
| | 01:23 | That's an example where having someone
else look at your budget is a good thing.
| | 01:29 | Another area that's important is Plausibility.
| | 01:33 | Is your budget believable?
| | 01:35 | Does it seem reasonable to be
asking for this type of money?
| | 01:38 | There are times that the facts add
up to a budget that will never fly.
| | 01:45 | Perhaps it's because the client is
asking for unusual things, like
| | 01:49 | cramming everything into a single day
and the overtime charges are just going to
| | 01:53 | make it too expensive.
| | 01:54 | I've often had to explain to customers
that an eight-hour crew day means eight
| | 02:00 | hours from the time we leave the
office to the time we get back, or maybe for
| | 02:04 | your policy the time you
arrive to the time you pull out.
| | 02:08 | It doesn't mean showing up at 5 a.m.
to set up for that first executive who
| | 02:12 | wants to do an interview from eight
to nine then taking a three hour lunch
| | 02:17 | break and coming back in the afternoon
to do something else, then hanging out
| | 02:21 | for an evening event.
| | 02:23 | You have to make sure that you spell
out clearly what you're doing and that the
| | 02:28 | client's expectations
are in line with the budget.
| | 02:31 | You may need to suggest alternatives to
make sure that what they're expecting is
| | 02:36 | delivered, but don't be afraid to
make suggestions on cost savings. "Hey,
| | 02:40 | you know what? I think we should really
split this into two days. The overtime
| | 02:44 | benefits will be much better; we'll
keep labor costs down." Or "You know what"
| | 02:49 | let's go ahead in this section and
just have a separate videographer who runs
| | 02:53 | around and gets B-roll while
we are doing the interviews.
| | 02:56 | I don't think we need to have a full-
blown crew for that other person, but an
| | 02:59 | extra set of hands will let us get a
lot more accomplished and be able to do
| | 03:02 | everything in one shooting day instead of two."
| | 03:05 | These are situations where you look
at what the numbers say versus what
| | 03:09 | you think the client is willing to spend
and try to compare and resolve that conflict.
| | 03:14 | What you are really looking
for here is a second opinion.
| | 03:18 | When you're putting a budget together,
it's kind of a risky proposition.
| | 03:21 | You are essentially taking a gamble
that what you're putting on the paper is
| | 03:26 | going to be agreeable to the client.
| | 03:28 | If you go too high, you might lose the job.
| | 03:32 | If you go too low, you might
underbid and lose their confidence.
| | 03:36 | You need to find the sweet spot.
| | 03:39 | Another area you can do is External review.
| | 03:42 | By sending the budget out to other
folks, you can get their comments.
| | 03:46 | Perhaps it's peers in a different
market, people you met at a conference, or
| | 03:50 | professional colleagues you
worked at, at a previous job.
| | 03:53 | Or maybe its strategic partners,
some of your vendors or key providers of
| | 03:57 | services that you rely on who can tell
you ways to get the budget down, or you
| | 04:02 | forgot to charge for this, or did you
know that rates have gone up in town?
| | 04:05 | Subject matter experts can help you
look at a section of a budget and tell
| | 04:10 | you if it's accurate.
| | Collapse this transcript |
|
|
5. Building a Sample BudgetThe sample project| 00:00 | Now that we've explored the essential
concepts, I think it's time that we put a
| | 00:03 | real budget in place.
| | 00:05 | To do this, I want to look at a real
project and this is a spot I recently directed.
| | 00:11 | Now, the client was a nonprofit association,
so there were lots of challenges to the budget.
| | 00:16 | We needed to keep things very
reasonable and maximize their money.
| | 00:20 | We also had some great benefits in
that the association provided some of the
| | 00:23 | talent and locations for us to use.
| | 00:27 | Let's go ahead and watch the spot first to
give you a little bit of context. (Music Playing)
| | 00:30 | Female Speaker:
| | 00:30 | Life can hit you with the unexpected,
forcing you to make difficult decisions,
| | 00:49 | leaving you feeling helpless.
You don't have to lose your home;
| | 00:59 | it's time to take control.
| | 01:01 | The National Foundation for
Credit Counseling can help.
| | 01:05 | The NFCC is a nonprofit organization
that has been providing quality financial
| | 01:10 | counseling and education for 60 years.
| | 01:12 | Our national network of community-based
member agencies have helped millions of
| | 01:17 | consumers with foreclosure prevention.
| | 01:19 | Seek advice from our certified
housing counselors today. Call us or visit
| | 01:25 | MortgageHelpNow.org. Real
Solutions for Real People.
| | 01:32 | Pretty straight forward;
I'm quite happy with the spot.
| | 01:34 | The client was great to work with. We've
done a few commercials with them and we
| | 01:38 | really enjoy the relationship.
| | 01:40 | And what I'd like to do now
is break down the process.
| | 01:43 | We're going to take a look at this from a
preproduction, a production, and a post standpoint.
| | 01:48 | I cannot emphasize enough
that your rates will vary.
| | 01:51 | Remember, as we've discussed through our
exercises today, you have to set your own rates
| | 01:56 | based on several factors.
| | 01:58 | Don't use my rates;
| | 02:00 | don't rely on these numbers I'm
going to give you. These are simply being
| | 02:03 | provided for illustrative purposes.
| | 02:05 | Alright, with that in mind, let's
jump in and explore the process.
| | Collapse this transcript |
| Estimating pre-production| 00:01 | Alright, we're going to jump into
budgeting the preproduction side. To do this,
| | 00:04 | I'm using Apple numbers.
| | 00:06 | However, you can use any
spreadsheet that you want.
| | 00:09 | If you're a Lynda.com subscriber, I've
made a template file available that you
| | 00:13 | could download and populate with your own rates.
| | 00:15 | You may also have your own spreadsheet
already, so don't worry so much about the
| | 00:19 | actual mechanics; just listen to the
logic that goes into the budget. Here we go.
| | 00:26 | This is the plain budget with all of
the rates removed and you're welcome to
| | 00:30 | populate it with your own rates for
this exercise. I've already started to do
| | 00:35 | that and I'm going to jump into a
budget that I have already begun.
| | 00:38 | Okay, in this particular case I am producing
one spot with three durations--a 60, a 30, and a 15.
| | 00:50 | Plus we're going to go
ahead and do a radio version.
| | 00:53 | Alright, let's go ahead and start off at the top.
| | 00:58 | Creative design is us getting the whole
team together to brainstorm and come up
| | 01:02 | with some ideas on how we
want to pull the spot off.
| | 01:05 | In this case, we actually came up
with the ideas and the treatments and
| | 01:09 | presented them to the client.
| | 01:11 | So, we had a four-hour brainstorming
session to do that and I'm going to drop that in.
| | 01:17 | Because this client is a nonprofit
I typically extended 10% discount.
| | 01:21 | However, you can adjust that with this
slider or have your own method for what
| | 01:26 | you're going to give the client.
| | 01:28 | I'll set this to 10%.
| | 01:30 | Next, we had some producer time.
| | 01:32 | For a spot like this, we ended up
having a grand total of five setups.
| | 01:38 | The first was an office location and this
location was provided to us by the customer.
| | 01:45 | This happens to be their national office.
| | 01:48 | We've shot in this location before,
so we were already familiar with it and
| | 01:52 | didn't need to do a location scout.
| | 01:56 | Our second location in the spot is a pawn shop.
| | 02:00 | So, the producer needed to go out and
scout different pawnshops in our area and
| | 02:05 | find one that would allow us
to shoot in their location.
| | 02:09 | We had to agree upon a fee and broker
out an agreement that allowed us to get
| | 02:14 | access to the pawn shop after hours.
| | 02:18 | We also were able to recruit a pawn shop
employee to be an actor in the finished
| | 02:22 | spot and we paid him.
| | 02:24 | Our next location was a children's bedroom.
| | 02:27 | For this particular shot, we went back
to a house that we had shot in before.
| | 02:32 | We also used their
driveway for the moving scene.
| | 02:37 | Finally, the spot finishes
back in the association's office.
| | 02:42 | We use their conference room
for the counseling session.
| | 02:46 | For this particular project we
budgeted two days of a producer's time to
| | 02:50 | coordinate talent, locations,
permissions and all of the details associated with
| | 02:56 | getting the project accomplished.
| | 02:58 | We also allowed a day and a half for
the production coordinator to pack up all
| | 03:02 | of the equipment and line up a crew.
| | 03:06 | Because this was a two-day shoot, we
budgeted for approximately a day of prep for
| | 03:10 | each of the key personnel
involved in the preproduction tasks.
| | 03:14 | The production coordinator received
some support from a production assistant
| | 03:18 | who packed up the gear.
| | 03:19 | That person is billed at a lower rate
in our shop, but as you see here, the
| | 03:23 | producer put in two days and
production coordination put in two days for a
| | 03:28 | two-day project of shooting.
| | 03:30 | We allowed a single day for the location scout.
| | 03:33 | Location scouts allow you to actually go
and find locations where you want to shoot.
| | 03:39 | Typically you'll bring a camera with you,
maybe a DSLR, and fire off a few stills
| | 03:44 | and test clips, so you could show your
customer what that location looks like.
| | 03:49 | We were pretty familiar with most of
the locations. We had shot at the house
| | 03:52 | before and we had shot at the office,
so we just needed to check to make sure
| | 03:56 | that the house was available
and go and find a good pawn shop.
| | 04:00 | Fortunately, this process was pretty
smooth, so we only allowed one day
| | 04:03 | for location scouting.
| | 04:05 | Normally, if you had five separate
locations, you'd want between half a day and a
| | 04:09 | full day to find those locations.
| | 04:12 | If not more if they were incredibly unique.
| | 04:15 | In my office we charge a
flat fee for office expenses.
| | 04:20 | This is charged per project and it
covers things like paper and a photocopier
| | 04:24 | machine, envelopes, folders,
just general office supplies.
| | 04:29 | Then came scripting. For this
particular client, we charged very low, because
| | 04:35 | they were nonprofit and we've been
able to do the scripting internally.
| | 04:39 | Normally, for me I would charge
approximately $500 to $1000 per spot.
| | 04:45 | But in this case we charged a flat
fee for scripting for television and a
| | 04:49 | smaller fee for radio.
| | 04:52 | That gave us our preproduction total.
| | 04:55 | When it comes to building out the budget,
you'll typically start at the top of
| | 04:58 | the budget and work your way down.
| | 04:59 | In this case, preproduction
is pretty straightforward.
| | 05:02 | Remember, each project is unique and
you'll use different numbers and time
| | 05:07 | estimates based on your project and experience.
| | 05:10 | This rule that I did here is not for
every project; I just am simply sharing
| | 05:14 | with you a real-world project and how I
approached it in terms of budgeting and
| | 05:19 | actual execution.
| | Collapse this transcript |
| Estimating production| 00:00 | Let's go ahead and take a look at
the production side of this budget.
| | 00:04 | In this case, it was a two-day
shoot for a nonprofit client.
| | 00:08 | Remember, we had a lot of things
provided to us including some of the on-camera
| | 00:12 | talent and the locations.
| | 00:15 | So this help keep the budget down lower.
| | 00:17 | For this particular project, our
client decided to use nonunion talent.
| | 00:22 | This is because they were a
nonprofit and they were also unsure of their
| | 00:25 | distribution plans for the
public service announcement.
| | 00:28 | Whether your productions use nonunion
talent or union talent is both up to
| | 00:32 | you and your customers.
| | 00:34 | Be sure to check with AFTRA-SAG in your
market or if you're international with
| | 00:39 | any actors unions that you may have.
| | 00:41 | They can typically provide very accurate
numbers that you can use in your budget
| | 00:46 | for on-camera talent as well as
licensing fees involved with national and
| | 00:50 | international
distribution for video productions.
| | 00:53 | Let's take a look at the budget.
| | 00:54 | Now, in the production budget, there's
a lot more categories and many of these
| | 00:59 | are not going to be used to begin with.
| | 01:02 | So, let's go ahead and start filling it in.
| | 01:04 | We had two days of a Director and
two days of the Producer and an Assistant
| | 01:11 | Producer onset to help with continuity.
| | 01:15 | We did not have an Art
Director for this production
| | 01:17 | so I can go ahead and hide this row.
| | 01:19 | We had a Director of Photography for two
days, plus we had a meeting prior to the
| | 01:24 | project to discuss details and he had
some camera prep to do to make sure the
| | 01:28 | camera was ready and all of
the crew was where he wanted.
| | 01:32 | We did have a Camera Assistant for
both days because this was a DSLR-style
| | 01:36 | production with cine lenses.
| | 01:38 | We did not have a Videographer, a Camera
Operator, or a Jib Operator, so I can remove those.
| | 01:47 | We did use a Gaffer on two days.
| | 01:50 | The Gaffer provides assistance
and direction for the lighting.
| | 01:54 | For this particular spot, we did
not have a full audio engineer because
| | 01:59 | there was no dialogue;
| | 02:00 | there was just background sound
effects recorded on locations.
| | 02:04 | So, we used an Audio/Grip person
who could swing and do both roles.
| | 02:10 | There was no Prompter as well.
| | 02:14 | We did have a Makeup Artist for both days.
| | 02:17 | We did not have an Event
Photographer because we didn't need
| | 02:20 | behind-the-scenes stills.
| | 02:22 | We simply popped a few off from the DSLR.
| | 02:25 | Camera Packages will
vary in complexity and cost.
| | 02:29 | We used this fee here because we
rented prime lenses to enhance our camera
| | 02:33 | package as well as some additional support gear.
| | 02:37 | There was no Steadicam or Jib.
| | 02:40 | For this particular project we had a 5
ton Grip truck with support materials
| | 02:45 | such as track and reflectors.
| | 02:48 | We also used a medium-size Lighting Package.
| | 02:52 | I recommend that when you're putting
together your production budget, you have a
| | 02:55 | conversation with the Director of Photography.
| | 02:58 | You're going to want to ask them
several questions about what they think
| | 03:01 | should be accomplished.
| | 03:02 | You'll also want to share your constraints
that you have from a budget point of view.
| | 03:07 | By having the conversation up front you
can decide how to maximize the budget
| | 03:11 | and give them some guidance on how
the crew people and what type of gear
| | 03:15 | they'll be able to work with.
| | 03:17 | Let's keep budgeting.
| | 03:19 | We had no Green Screen.
| | 03:22 | I could take all of that out.
| | 03:25 | We did have a basic Audio Package.
| | 03:28 | Along the way I just minimize the rows that
I'm not using, so they're still in my template.
| | 03:35 | We had no Tape Stock because
this was a tapeless project.
| | 03:39 | Set that to two days--that's a common
mistake I often make, making sure I put in
| | 03:44 | the same number for every shoot days.
| | 03:46 | And then we charge for Expendables.
| | 03:49 | Expendables is a really nice way of
saying gaffer tape, extension cords, things
| | 03:56 | that wear out that you go
through on lots of shoots.
| | 03:59 | Gel for windows, diffusion, black
Duvetyne. Those little silly things that you
| | 04:05 | need to help finesse the shot that
just gets used up on the production.
| | 04:10 | By charging $50 for each day of
shooting, I cover some of my basic
| | 04:14 | out-of-pocket cost and I don't have to
line item the client and say oh, you went
| | 04:18 | through 1.5 rolls of gaffer tape and
we used fourteen C-47s on the shoot.
| | 04:24 | This allows it to keep things little smaller
and simpler. By the way a C-47, a clothespin.
| | 04:31 | Let's keep going.
| | 04:32 | Talent is going to be a tough issue.
| | 04:35 | In this case, we had four on-camera talent.
| | 04:39 | We had the mother, the father, the
daughter, and the pawn shop worker.
| | 04:45 | Now, to pull this off, we also had some extras.
| | 04:49 | The mother and father characters were
each used for two full days of shooting
| | 04:52 | and they were our principal talent.
| | 04:54 | However, they were nonspeaking,
so their rates were a bit lower.
| | 04:58 | As far as other folks went, we had
some additional on-camera talent.
| | 05:01 | Technically, these weren't extras but
they were in nonspeaking roles and much
| | 05:06 | more minimal support function.
| | 05:08 | We had two moving people, the
daughter character, and the worker at the
| | 05:15 | association playing the role of the counselor.
| | 05:18 | Now, we didn't have to pay the
counselor because she was an employee and was
| | 05:21 | offered up by the client
to use in the production.
| | 05:25 | So, we simply had to budget for the
daughter character and two moving men plus
| | 05:31 | the pawn shop worker, for a grand total of four.
| | 05:35 | The Casting Session was run to cover finding
the talent working with the casting agency.
| | 05:40 | I'll go ahead and hide these.
| | 05:44 | We did allow for Wardrobe, 6 instances.
And Craft Service made sure that there
| | 05:50 | were snacks and drinks on set for two
days and we had lunches for two days.
| | 05:56 | We also budgeted for transportation and
parking. Le me take that to 150 since we
| | 06:01 | had downtown parking on one-day,
and there were two days of that.
| | 06:06 | In our case, we did a little bit of double duty.
| | 06:09 | We needed a large vehicle to move
all of the production equipment around.
| | 06:13 | Instead of renting a grip truck, we
rented a moving truck, which happened to
| | 06:19 | also fill in nicely in one of the scenes where
the family was loading up the moving vehicle.
| | 06:25 | By being a bit creative, you can often find
ways to stretch your budget like we did here.
| | 06:29 | All right!
| | 06:31 | That gives you an idea on
how the production was handled.
| | 06:34 | Let's move on to postproduction.
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| Estimating post-production| 00:00 | Okay, postproduction is where
all of the pieces come together.
| | 00:04 | In my particular company,
postproduction is one of our strengths, and we have
| | 00:08 | pretty much all the capabilities in-house.
| | 00:11 | This allows us to keep our rates a bit lower.
| | 00:13 | Remember, if you don't have an
internal service and you're relying upon an
| | 00:17 | external vendor, turn to them as a
subject matter expert and collaborate on that
| | 00:22 | stage of the budget so they can have input.
| | 00:25 | The last thing you want to do is make
bad assumptions about how long something
| | 00:28 | is going to take and put in a
number that's completely unrealistic.
| | 00:33 | Let's explore how I approached this
project from the postproduction angle.
| | 00:38 | There is a total of four spots being produced.
| | 00:40 | So, we budgeted for 16 hours of
time for the producer to work on the
| | 00:45 | project during post.
| | 00:47 | This would cover reviews, client
feedback, checking in with the editors to see
| | 00:51 | how all the pieces were coming together.
| | 00:54 | We also allowed one day for an
Assistant Editor to load the project and get all
| | 00:58 | of the media onto the computer and organized.
| | 01:01 | For spot work, there were only three video spots.
| | 01:05 | We budgeted a total of 24
hours or 8 hours per spot.
| | 01:09 | This number was pretty straightforward
because all of the spots were tightly
| | 01:13 | scripted ahead of time and we knew
exactly how they were all going to go together.
| | 01:18 | It was a completely planned out
shot from one angle to the next.
| | 01:21 | So, all it was a matter of was finding
the right shots, piecing them together, and
| | 01:26 | then working on timings.
| | 01:27 | Now, there were some special effects
that were subtle to create the transitions
| | 01:32 | between the shot and obviously the
editor had to find the best performance and
| | 01:36 | get the timing down, but the bulk of
the time was spent getting the 60 done and
| | 01:41 | then the 30 and 15 were just
cut downs of that longer version.
| | 01:46 | Editing is one of those things that
you'll want to discuss with the editor and
| | 01:49 | make sure the numbers were accurate,
but we had a long history with this client
| | 01:53 | and these numbers turned out to be pretty right.
| | 01:56 | We had no decks in this case.
| | 01:59 | We did, however, have a fair amount
of special effect transitions to tie
| | 02:02 | everything together where we did
some morphs to smooth out the shots.
| | 02:08 | There was no 3-D work, Flash
Programming, or Graphic Supplies. We had no film to
| | 02:14 | develop, we did have a Narrator
however, and for this, there was a total of 4
| | 02:22 | pieces: the 3 spots and the radio piece.
| | 02:27 | We did allow for a Record Session, 2
hours to record all of the different
| | 02:32 | voiceovers and to have a supervised
session with the client and there was one
| | 02:40 | spot for radio, which is the same rate.
| | 02:42 | So, I'll just leave that out.
| | 02:44 | We had no Tape Stock for review.
| | 02:48 | However, we did need to make
a master tape and output it.
| | 02:54 | Grand total of 4 were made.
| | 02:56 | And Internet Review allowed us to post
clips for the customer to review online
| | 03:00 | as the project progressed.
| | 03:03 | We charge a flat rate for
online review and approval.
| | 03:05 | This allows the client to check progress each
day and see rough cuts as they move forward.
| | 03:10 | We find that using online helps keep our
shipping cost down and speeds up the project.
| | 03:15 | There's lots of great solutions out there.
| | 03:18 | We rely upon a combination of Vimeo as well
as project path or base camp from 37 signals.
| | 03:26 | When this was all done, there were three
spots that needed to be compressed and a
| | 03:31 | grand total of
approximately 3 minutes of footage.
| | 03:34 | Those were also compressed with
secondary format for the Web and we had to make
| | 03:40 | a master tape and ship it out.
| | 03:43 | I charged the mastering fee
separate from the tape stock.
| | 03:48 | There was music for this particular piece.
| | 03:50 | It was used four times.
| | 03:53 | There was a collection of sound
effects used for the background sound design.
| | 03:58 | No Stock Footage or DVDs, and we also
needed to make an archive of the project
| | 04:06 | footage for backup and we charged
for online storage during the edit.
| | 04:12 | For many people they consider backing
up and having hard drives to edit on
| | 04:16 | something that's just part of the job.
| | 04:18 | If you've been paying attention
throughout our exercises, you'll recall that we
| | 04:22 | emphasize that things that are
part of the job typically cost money.
| | 04:27 | We've decided to charge for
these items as a project cost.
| | 04:31 | In other words, if you have a
project and it needs the media backed up, we
| | 04:35 | charge a back up fee and that fee will go up or
down depending upon how many days of shooting.
| | 04:40 | For us, the base fee will cover up to
two days of shooting and then we just
| | 04:44 | increase that beyond.
| | 04:45 | We use a series of LTO, optical
media, and magnetic hard drive type
| | 04:50 | technology for our backups.
| | 04:52 | Also, the editing fee charges for the
fact that we're going to have high speed
| | 04:56 | performance disk drives for video editing.
| | 04:59 | That space will be then charged for so
that the project could sit there online
| | 05:03 | with the drives for up to six
months after the project is complete.
| | 05:07 | This allows us to deal with last-
minute changes, request for extra dubs, or
| | 05:12 | anything that will pop
up throughout the process.
| | 05:15 | Remember, charge for the
assumptions and you won't have any regrets.
| | Collapse this transcript |
| Finishing the budget| 00:00 | Once you think the budget is done, there's
a couple extra steps you should perform.
| | 00:05 | The first would be peer-review.
| | 00:08 | I recommend that you go ahead and send
the budget to a few other people within
| | 00:11 | your company and ask them to look it over.
| | 00:14 | In my own company, we're pretty transparent.
| | 00:16 | All employees could log-on and see the
budget for a project and they know what
| | 00:20 | we're charging the client.
| | 00:22 | For some, this may not be standard practice.
| | 00:25 | So, make sure you check with our
company and you follow what's standard
| | 00:30 | operating procedure.
| | 00:32 | We're pretty transparent because my
folks understand that the cost of running a
| | 00:36 | company is different than
just making payroll. All right!
| | 00:38 | I'm going to go ahead and send this off
and get some feedback from another team
| | 00:43 | member and let's just do that now.
| | 00:46 | Go ahead and choose Share>Send
via Mail and attach a spreadsheet.
| | 00:51 | With iWork, I could send an Excel
spreadsheet, a Numbers file, or PDF. Other
| | 00:56 | apps will vary but this
is pretty straightforward.
| | 00:59 | I recommend you send a PDF file, so
they see a flattened version for reference
| | 01:04 | and then a live one either as a Numbers
or an Excel spreadsheet depending upon
| | 01:08 | the operating system of
the person you're targeting.
| | 01:12 | Let's assume I'm perfect.
| | 01:14 | There was no feedback and changes.
| | 01:16 | Now, that would never happen, but for
purposes of our exercise today we're going
| | 01:20 | to treat the budget as approved and move
forward and get it ready to share with the client.
| | 01:25 | Here's what I do.
| | 01:27 | First, I'd go ahead and
duplicate the current budget.
| | 01:32 | You could do this by duplicating the
sheet or just duplicating the main file and
| | 01:38 | I'll call this Flat.
| | 01:40 | You may remember we talked about
removing too much information from the budget,
| | 01:44 | so the client had their questions
answered but didn't raise new questions.
| | 01:50 | First thing I'm going to do is just
step through and make sure that these
| | 01:54 | numbers are adding up, that what's in
Cell C, the quantity, is being charged by the
| | 01:59 | rate and having the discount amount applied.
| | 02:02 | I don't need to do this math in my head;
I could you step through and check my
| | 02:07 | formula bar and see that all of these
cells are using the same basic formula,
| | 02:13 | which means it's accurate. And as I
step through there, that one looked like a
| | 02:19 | problem, although, that's just because
there's no discount in that field. So we're okay.
| | 02:24 | Going down, looks great.
| | 02:27 | The next big thing is to check
that the subtotals are correct.
| | 02:31 | So, I'll click on them and see that this is
indeed the subtotal of all of those cells.
| | 02:38 | As is that one and the one down here.
| | 02:43 | Hopefully, between my peer review and
my review, I'll catch any formula errors.
| | 02:48 | The last thing you want to do is
have a mischarge or a forgotten charge
| | 02:52 | because you have a mistake with your template.
| | 02:55 | Now, since the template is good and
the budget looks to be locked down, we'll
| | 02:59 | prep it for the client.
| | 03:01 | The goal here is to get their
questions answered but not raise new questions.
| | 03:06 | So, I'm going to flatten the budget, make
it a little bit easier for them to read.
| | 03:11 | Let's go-ahead and select everything.
| | 03:14 | Click on the last cell, click
up here, and I'll choose Copy.
| | 03:22 | I'm now going to go ahead and Paste it
right back into itself but Paste the values.
| | 03:28 | Normally, a spreadsheet is
a collection of formulas.
| | 03:32 | I'm now getting rid of the formulas.
| | 03:35 | The formula might be quantity
times rate equals this line item.
| | 03:40 | Well, I am going to hide
some of that information.
| | 03:43 | In my case, I'm going to go ahead and
give them the quantity, but I want to
| | 03:47 | get rid of the individual rate for each
item and I want to remove the subtotal
| | 03:52 | from each individual cell and just
have a subtotal for preproduction,
| | 03:57 | production, and post.
| | 03:59 | Some clients are going to
insist on getting all the line items.
| | 04:02 | My personal philosophy, if you can get away
with it, is to just go with category budgets.
| | 04:07 | This is much less stressful for folks
and gives you good numbers that you can
| | 04:12 | discuss without getting bogged down with nitty-
gritty arguments or too fine of a level of detail.
| | 04:17 | Here's how to flatten.
| | 04:18 | We'll go ahead and paste those values in.
| | 04:22 | I can now delete the Rate column and
notice all the values stay the same.
| | 04:29 | I can go ahead and remove the Discount
column if I want or leave that in place
| | 04:34 | to tell the client there's discounts.
| | 04:36 | I'll typically remove it and just
tell them that I applied a discount to
| | 04:40 | several categories.
| | 04:42 | And then we can go ahead and clear
out the individual totals per item.
| | 04:49 | That's cleared out, looks pretty good.
| | 04:52 | If you need to, you can go back through
and take out any items you don't want to
| | 04:56 | have to explain like Office Expenses.
| | 04:58 | Just hide that row and perhaps
you don't want to have to explain
| | 05:02 | what Expendables are.
| | 05:04 | It still went into the item but
you've just cleaned up the budget a bit.
| | 05:08 | At this point the budget looks good.
| | 05:10 | We've gone through
preproduction, production, and post.
| | 05:12 | I'd go ahead and send this off to the
client and hopefully get their approval
| | 05:16 | and the green light to execute the project.
| | Collapse this transcript |
|
|
6. Creating a Quote or ProposalGetting started| 00:00 | Okay, you've got a plan together, a
budget. You've also gone through and done
| | 00:04 | your work breakdown structure and have
a good idea about the project. Perhaps
| | 00:08 | the Scoping Document is ready as well.
| | 00:11 | At this point, you're going to want to
put it all together into a proposal and
| | 00:14 | get the client to both
accept it and more importantly, sign it.
| | 00:19 | Let's talk about a couple of
strategies for putting together an
| | 00:22 | effective proposal.
| | 00:23 | First off, I recommend you give a little bit
of thought to what you're trying to accomplish.
| | 00:28 | Before you write anything down, you
want to identify a couple of objectives.
| | 00:33 | First, who are you trying to reach?
| | 00:36 | Who's actually going to be reading the proposal?
| | 00:38 | Is it your customer or perhaps an
executive member of the company?
| | 00:43 | Is your client just one member of a
board who's going to be reviewing this?
| | 00:48 | Perhaps you're being contacted by a
contracting officer and several other
| | 00:52 | people with less knowledge of your
company are going to be looking at it.
| | 00:56 | Again, you always want to think about
who's on the other and before you put pen
| | 01:00 | to paper or start typing on a keyboard.
| | 01:04 | The next thing you should ask yourself
is why do you need to reach these people?
| | 01:08 | What is it that you're
trying to convert them to do?
| | 01:11 | Obviously, this may seem simple--give
you money. But chances are there're a
| | 01:16 | couple of hurdles you need to overcome
to get them to understand about their
| | 01:19 | project and how you're going to be tackling it.
| | 01:23 | Next, think about what you're trying to say.
| | 01:26 | This may sound a little new age or touchy-feely
but the bottom line here is that
| | 01:31 | you're trying to create a
reaction in the audience.
| | 01:34 | What is it that you want them
to think about your company?
| | 01:37 | Are you the best partner
due to technical excellence?
| | 01:40 | Are you very reasonably priced and on
board with the organization's mission?
| | 01:45 | Maybe you have lots of past experience and
you welcome the challenge of this new job.
| | 01:51 | You want to create excitement that you're a
good vendor to work with and the right match.
| | 01:56 | Making sure you think about the
message you want to send means that you stand
| | 02:00 | a better chance of getting them to accept
your budget as well as your Scoping Document.
| | 02:05 | You need to actually sell your company here
and to do that takes a little bit of work.
| | 02:09 | What type of work?
| | 02:10 | Well, think about the
challenges that are in the way.
| | 02:13 | Are you the incumbent?
| | 02:15 | Are you competing against
a bunch of other companies?
| | 02:17 | Are you dealing with people who
have never done a video project before?
| | 02:21 | When you send it, offer to give
them a call and walk it through.
| | 02:26 | You want to make sure that people
understand what's in the budget and how
| | 02:29 | you're approaching it.
| | 02:31 | One of the things I'll typically say is, "Hey,
| | 02:33 | I've taken a stab at the budget."
| | 02:36 | Maybe I've included two options. "Have a look.
| | 02:39 | Think about it.
| | 02:40 | Let us know if we miss the mark."
| | 02:42 | "If I'm way under or way over, give us
another chance but I've built this based
| | 02:47 | on some assumptions."
| | 02:48 | I've spelled out those assumptions and
I think this is a good match for you and
| | 02:51 | your project, but let us know.
| | 02:54 | Chances are you didn't try to hire my
company because if you thought we were
| | 02:56 | the cheapest but because you've worked with
us before or you heard good things about us.
| | 03:02 | So, make sure you let the customer know
that you care about them and that this
| | 03:06 | budget is your best guess.
| | 03:08 | But to be perfectly honest, that's
all a budget is, a best guess based on
| | 03:12 | partial knowledge and a whole
heck of a lot of assumptions.
| | 03:16 | You could be wrong, but by giving the
customer background information and letting
| | 03:20 | them into your process, you're going to
at least improve the chance that they see
| | 03:24 | you as a trusted partner and that they
can then sit down and hash out the budget
| | 03:28 | with you and finesse it
| | 03:29 | so it is a good match and
something that they can afford to buy.
| | 03:33 | Make sure you understand the requirements.
| | 03:35 | If the client has given you a request
for a proposal or a list of technical
| | 03:39 | requirements or perhaps deliverables,
review that and make sure they have all
| | 03:43 | that material together.
| | 03:45 | You also want to think about who's
going to be on the project and what sort of
| | 03:48 | people or staffing you're
going to need to pull it off.
| | 03:51 | When you're putting the proposal
together, I recommend going for a quick
| | 03:55 | response if at all possible.
| | 03:57 | Don't pad out your proposal
with anything except what's needed.
| | 04:00 | Ask the customer what sort of
information do they want, do they need background
| | 04:04 | on the company, do they want
profiles or bios for key personnel?
| | 04:10 | Always determine the level of detail.
| | 04:13 | Some customers that I've worked with
before just want a simple budget and a
| | 04:17 | treatment. What you want to make sure is
that you don't overwhelm folks with paperwork.
| | 04:22 | Similarly, you don't want to underwhelm
them by competing against somebody who
| | 04:25 | gives them all sorts of detail and
you send over two sheets of paper.
| | 04:30 | Make sure they're comparing apples to
apples and that you're giving them enough
| | 04:33 | information that meets their expectations.
| | 04:36 | You're also going to want to have a
library of resources available to you:
| | 04:40 | photos, bios of key people, and
potential work samples. All of these things will
| | 04:48 | help put things into context for the
customer and build their confidence that
| | 04:52 | you're the right match.
| | 04:54 | If you have them, pull some past
proposals from similar projects that you
| | 04:58 | can review and look at.
| | 05:00 | This will help you find the right
language as well as examples to use in
| | 05:04 | strengthening the proposal.
| | 05:06 | It will also give you some good
resources to draw upon and cut down on the time
| | 05:11 | it takes to prepare a new proposal.
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| Refining the message| 00:00 | All right! You've taken a stab at getting the
basics down for the customer, and
| | 00:04 | you've written it out.
| | 00:06 | Now, it's time to refine your message
and start getting all those details on
| | 00:10 | the page so they really
sing. Let's tackle that.
| | 00:14 | When it comes to refining your message,
I recommend that you re-read the Request
| | 00:18 | for Proposal and any notes that
you had from the client meeting.
| | 00:22 | Not all customers will give you a
formal RFP, but you may have an email or you
| | 00:26 | may have some notes from a phone
conversation or face-to-face meeting that
| | 00:30 | you can look back over.
| | 00:32 | Make sure everything the client asked for
is reflected in the budget and the proposal.
| | 00:36 | You'll also want to
review the past relationship.
| | 00:39 | Have you done work for this customer before?
| | 00:42 | Look at budgets and any proposals
you've done and make sure that the new job is
| | 00:46 | in line with past pricing.
| | 00:49 | You may also want to see what they've
done in the past, so you're familiar.
| | 00:53 | Discuss the project with the client or
the sponsor, and make sure that you've
| | 00:57 | got all the assumptions in there.
| | 00:59 | Don't be afraid to pick up the phone,
and tell them when you're just about done
| | 01:02 | with the proposal, that you would
want to clarify a couple of quick things.
| | 01:05 | One of the things I'll often do is give
the client a call after I have got the
| | 01:10 | budget done and a couple
of my base level outlines.
| | 01:13 | I will just put the conversation in
terms of, "I want to talk a few things through.
| | 01:18 | Make sure that we are on target with
the budget amount and our assumptions."
| | 01:22 | Once you've done that, you could
finesse that and put it into a final proposal.
| | 01:26 | But, you want to get to the case where
you've got a good relationship with the
| | 01:29 | client and can engage
them in open conversation.
| | 01:33 | After all, the client wants
this whole process to be easy too.
| | 01:36 | Minimize surprises and don't be afraid
to pick up the phone or drop them a line.
| | 01:42 | Gather up any outside information if
necessary and then put it all together with
| | 01:46 | a treatment for how the
project is going to be tackled.
| | 01:50 | Once you have got the goals
down, it gets a lot easier.
| | 01:53 | I'm also a big fan of brainstorming
sessions where you pull people together to
| | 01:57 | work on the creative ideas as
well as the proposal details.
| | 02:01 | However, don't have a brainstorming
session with more than eight folks, because
| | 02:05 | invariably, some people won't talk and
it will be a pretty unproductive meeting.
| | 02:10 | I try to keep most meetings to five people
unless it's an all staff meeting for a good reason.
| | 02:16 | Make sure everybody involved has the
notes about the project or any formal
| | 02:19 | paperwork so they can get familiar too.
| | 02:22 | Put someone in-charge to moderate the
meeting and to go over all the details.
| | 02:26 | This doesn't necessarily need to be you.
| | 02:29 | While you're probably used to being in
charge if you are the producer or the
| | 02:32 | director, sometimes it's
good to have a fresh voice.
| | 02:35 | Consider delegating and letting
someone else run the meeting and sit back and
| | 02:40 | observe the best details.
| | 02:41 | By being more of a listener than a
talker, you can ensure that the best ideas
| | 02:45 | are captured and that you're
getting those down for the project.
| | 02:49 | To the best of your ability, ensure
equal participation; try to get people to
| | 02:53 | open their mouths and talk.
| | 02:55 | Sometimes the best ideas come from the
quietest people and the worst ideas from the loudest.
| | 03:01 | This is why we try to document all ideas.
| | 03:04 | While the idea might not be a good
match for this production, it could be the
| | 03:08 | perfect solution for another project.
| | 03:09 | Also, when doing creative development,
I often find that many good ideas can
| | 03:15 | come from a single session, and we could
then draw upon those for next projects.
| | 03:20 | Above all, keep it moving. Try to have a
brisk pace to the meeting and just work
| | 03:25 | on getting the details down.
| | 03:27 | You're not going to write a proposal or
a budget with eight people in the room.
| | 03:31 | But what you can do is talk through
the big ideas and bounce them off of a
| | 03:35 | little focus group to see how they work.
| | 03:38 | Use this as a trial and error session,
ask the tough questions, confirm with
| | 03:43 | your subject matter experts that the
assumptions going into the budget are
| | 03:46 | accurate, and take it from there.
| | 03:49 | Once you feel you've got all the
information down, it's time to put it in writing.
| | 03:53 | Remember, assumptions and verbal
communication don't go very far when it comes
| | 03:57 | time to deliver a bill.
| | 03:59 | You need a written agreement that
has all the key information in it.
| | 04:03 | Here's what I recommend when
you're starting to write things down.
| | 04:06 | First off, try to keep the
customer's attention; get to the best
| | 04:11 | important information first.
| | 04:13 | That's why we'll kick things off with the
executive summary and the scoping document.
| | 04:17 | Remember, you're selling them something,
so make sure that you keep it tight and
| | 04:21 | that it's consistent and you have good
action words so they understand what it
| | 04:26 | is you're going to be doing for them.
| | 04:28 | Try to avoid boilerplate language;
don't just copy and paste from one proposal
| | 04:33 | to another, but do your best to update it.
| | 04:36 | And remember at all times, who is
going to be reading this proposal?
| | 04:41 | Don't bore them with details they
don't need, but don't assume that your
| | 04:44 | audience is as knowledgeable as you are.
| | 04:47 | Try to avoid jargon and make sure that
you clearly identify what it is you're
| | 04:51 | going to do for the customer
and why you're the perfect vendor.
| | 04:56 | Lastly, let your personality show through.
| | 04:59 | I don't mean that you should be telling
jokes or try to make yourself sound interesting.
| | 05:04 | What I mean here is your corporate personality.
| | 05:07 | Customers choose to work with the
company because they like that company.
| | 05:12 | Truth be told, there's
lots of people who do video.
| | 05:15 | And as good as you may be, there is
always somebody better, and as affordable as
| | 05:21 | you may be, there's always somebody cheaper.
| | 05:24 | The reason why people choose to work
with you and your company is because they
| | 05:28 | like you and they trust you.
| | 05:30 | The whole goal here with the budget is
to preserve that relationship, help keep
| | 05:35 | the trust or further deepen it, and
provide the right level of information so
| | 05:40 | the customer knows you and has
confidence in you and your company.
| | 05:43 | What you are trying to do here is
just establish the relationship.
| | 05:48 | Customers who simply choose a
relationship based on cost are not good
| | 05:53 | long-term partners.
| | 05:55 | Remember, the budgeting and the paperwork
are all part of finessing the relationship.
| | 06:00 | Take the time and put it together right.
| | Collapse this transcript |
| Using fixed-price contracts| 00:00 | I'd like to briefly talk
about fixed price contracts.
| | 00:03 | Chances are that the budget you create
is going to be used by the customer and
| | 00:08 | it may even be used against you.
| | 00:10 | You want to make sure that the budget is
accurate, but you build in a little bit
| | 00:14 | of protection for yourself, so there's
room for the budget to expand or contract
| | 00:18 | based on changes in the project.
| | 00:20 | Let's talk about fixed price
contracts, and how they should be written
| | 00:24 | versus how they often are.
| | 00:26 | With the fixed price contract,
these are becoming very, very popular.
| | 00:31 | You don't have to be afraid of a fixed
price contract, but you don't want to put
| | 00:34 | yourself in a bad situation.
| | 00:37 | If they're written properly, a fixed-
price contract provides both protection to
| | 00:41 | you and the customer.
| | 00:42 | If you let the customer write the
contract and you make no real input, chances
| | 00:48 | are that fixed-price contract
will only protect the customer.
| | 00:52 | A fixed-price contract simply states
that you're going to do X and get paid Y.
| | 00:57 | If X changes, Y has to also change.
| | 01:00 | However, many people write very poor
scope statements or no statements at all,
| | 01:06 | and simply promise that they're going
to provide "exciting, dynamic music video,"
| | 01:10 | "a really compelling marketing piece that
will give great success and incredible results,"
| | 01:15 | and they write all of this flowery
language about what they're going to
| | 01:18 | accomplish, and what happens is
they don't get paid because the client
| | 01:22 | could object and say, "Oh!
| | 01:24 | Well, we don't know. We haven't seen
results from the video yet" or "I showed it
| | 01:28 | to several people and about half of
them thought it wasn't that great."
| | 01:32 | You want to create really clear scope
statements and tie that to your budget so
| | 01:36 | people understand that when you do this,
you get paid this. Let's keep going.
| | 01:42 | You want to avoid favoring
the client as opposed to you.
| | 01:46 | So to do this, it's very important
that you clearly define the product or the
| | 01:50 | service that you're going to be delivering.
| | 01:53 | This means an actual list of
deliverables as well as a clear scoping statement
| | 01:57 | that identifies what the customer is purchasing.
| | 02:01 | Spell out how much preproduction,
production, and post-services they are getting.
| | 02:05 | Provide time estimates, details about
type of crew, how many rounds of review
| | 02:11 | are budgeted for, et cetera
| | 02:14 | What you really want here is to
provide protection to you if the scope or the
| | 02:18 | project is going to change.
| | 02:20 | Now, "if the project is going to change"
is kind of a silly thing to say because
| | 02:24 | the details always change.
| | 02:27 | The key here is to realize that if you
have a plan, you can deviate from it.
| | 02:32 | If you don't have a plan, then
you're constantly playing catch-up.
| | 02:36 | By having an accurate scope statement
and a detailed line item budget, you can
| | 02:40 | track progress against that.
| | 02:42 | And then, as the customer makes changes,
you can deal with those changes and
| | 02:47 | respond to them and make sure that you update.
| | 02:50 | When putting the budget together, it
is essential that that scoping document
| | 02:54 | and budget are accurate.
| | 02:56 | This way, you've clearly identified what
it is you're doing for the end customer.
| | 03:01 | In your fixed-price contract, you're
going to make sure that you specify time
| | 03:05 | estimates and you're going to want to
keep time records as you go through.
| | 03:11 | The bottom line here is pretty simple.
| | 03:12 | You are going to say what you're doing
for the customer. Then you do what you said.
| | 03:20 | Along the way, you make updates.
| | 03:23 | Now, this sounds
incredibly simplistic, but it's not.
| | 03:27 | You must clearly spell out
the work to be performed.
| | 03:30 | Then, you have to make sure
you actually do all of that work.
| | 03:34 | If you promise to deliver 200 dubs and only
send over 150, technically the job is not done.
| | 03:41 | Now, if the client changed their mind
and said, we only wanted 150 dubs, you
| | 03:46 | may need to adjust the price, and put
that into writing. Just as you would
| | 03:50 | change if they called back and asked
for 2000, you may need to lower your price
| | 03:54 | if they ask for 100 or 150.
| | 03:57 | You need to accurately track
consumption and usage of resources and make
| | 04:01 | sure that the customer pays accordingly or
gets a credit accordingly as things change.
| | 04:07 | As those changes pop up,
make sure you get approval.
| | 04:11 | This doesn't necessarily mean you have
to send a courier or a formal letter in
| | 04:15 | the mail, but an email that the client
authorizes, or a fax document that goes
| | 04:20 | back-and-forth can help track changes.
| | Collapse this transcript |
|
|
7. Payment TermsSetting payment terms| 00:00 | So now we're getting to the fun part.
| | 00:02 | You might think that's a little bit
strange, but think of it this way.
| | 00:06 | Once you've actually done the budget
and have given it to the client, you are
| | 00:09 | that much closer to getting paid,
which is the best part of budgeting--
| | 00:13 | the actual payment and checks that come in.
| | 00:16 | Now, in order to get there, there is
one more thing we have to talk about, and
| | 00:19 | those are payment terms that the
customer needs to agree to that you use when
| | 00:24 | it comes time to collect
money. Let's take a look.
| | 00:27 | With payment, there are
lots of different methods used.
| | 00:30 | You could have period-based payments
based on time of month or weekly schedules.
| | 00:36 | You could charge clients at time of
service for simple projects like dubs or
| | 00:40 | field shoots. Perhaps, you keep track
of things for a long period of time and
| | 00:45 | send over a monthly bill if
you're on a retainer or you can have
| | 00:49 | progress-based payments as you hit
milestones or performance-based objectives
| | 00:54 | tied to how well a project does.
| | 00:56 | Similar is the royalty-based method
which might be used to calculate your
| | 01:00 | payment based on the success of the
program or the content you have created--
| | 01:04 | perhaps sales or its use by others such
as stock footage or music compositions.
| | 01:11 | There is lots to these methods,
and I'd like to explore them more in
| | 01:15 | greater detail.
| | Collapse this transcript |
| Exploring time-based methods| 00:00 | One method of payment is time-based payments.
| | 00:04 | These are most often used for
contractors, freelancers, or employees.
| | 00:09 | Let's explore some of the
methods that are pretty common.
| | 00:13 | First off are period-based
payments, such as payday.
| | 00:17 | If you have employees, you're going to
pay them typically on the same day of the
| | 00:21 | month. Perhaps it's the last day of the
month, or the first, or you might have in
| | 00:26 | every two weeks arrangement.
| | 00:28 | If dealing with freelancers and you're
the freelancer, you're going to want to
| | 00:31 | push for a better deal.
| | 00:33 | You can ask for weekly payments
if you're on a long-term contract.
| | 00:38 | So if you're an editor and you're
working at a facility often, you may want to
| | 00:41 | submit an invoice every week.
| | 00:44 | However, the facility might push
back and ask for monthly payments.
| | 00:48 | If you can, try to get every other
week, and that's going to work pretty well.
| | 00:55 | The big thing though is you want to
make sure you submit all of your financial
| | 00:58 | requirements on Day 1 of the
first hire or their first gig.
| | 01:03 | This means carrying a copy
of your W9 or tax ID with you.
| | 01:07 | Now W9 is the form used in the US, but
you will have similar forms around the
| | 01:11 | world that provide all of the
essential tax information for the employee, the
| | 01:16 | contractor, or the vendor.
| | 01:18 | You can fill this PDF form out and
keep it on your phone, in your inbox as a
| | 01:22 | message that you forward on, but you
want to give it to people right away.
| | 01:27 | Back in the days of freelancing, when
I worked with a lot of other companies
| | 01:30 | and not so much just stayed in my own office, I
would make sure to submit a deposit invoice.
| | 01:36 | It would be for a small token amount,
but I would send it in with all the
| | 01:39 | paperwork about me as a vendor.
| | 01:42 | I can't tell you how may times I hear
lame excuses after the fact about the
| | 01:47 | reason why I wasn't paid is "well, we
didn't have your tax form" or "oh, we didn't
| | 01:51 | have the name of the project."
| | 01:52 | By putting up an invoice on Day 1, the
first day you work, for a small amount,
| | 01:57 | it helps you get into the system and
ensure that you get paid that much faster.
| | 02:02 | All right, let's go on to another method
of payment and that is time of service.
| | 02:08 | Getting paid a time of service is
very common for production crews.
| | 02:13 | If you are going to hire crews,
especially if you're traveling to a different
| | 02:17 | market, many of them will expect to
be paid upon execution of the shoot.
| | 02:23 | Oftentimes, a videographer will not hand
over the tapes if they haven't been paid upfront.
| | 02:28 | If you have a long-term relationship
with the crew and a proven credit record,
| | 02:32 | they might extend you credit
or give you some time to pay.
| | 02:35 | However, you're going to want to
attempt to get paid at time of service.
| | 02:40 | If you have a production company, this
could be pretty difficult though, because
| | 02:43 | most other industries are not used to
paying for folks when they first come out.
| | 02:47 | The way around this is to accept credit cards.
| | 02:51 | You will lose a little bit of
money taking money on a credit card.
| | 02:55 | Typically the banks will take
a small fee out of the charge.
| | 02:59 | However, this fee is usually offset by the
benefit of having money in hand that much quicker.
| | 03:05 | It will cut down on cash flow issues and
reduce your need to put other operating
| | 03:10 | expenses on your own personal credit.
| | 03:13 | This is good for simple jobs such
as gear rental or one-day shoots.
| | 03:18 | If you're a small company and you need
to accept credit card payments, I am a
| | 03:22 | big fan of Square, which makes a
simple credit card reader and allows you to
| | 03:26 | process credit cards right in the field
off of your iOS or other phone devices.
| | 03:32 | There are lots of other
solutions out there as well;
| | 03:34 | this is just one that I have personal
experience with and find both reliable
| | 03:38 | and reasonable in fees.
| | 03:40 | The last type of time-based
payment are end-of-the-month payments.
| | 03:44 | This is typically used with time
and material agreements where you're
| | 03:47 | tracking the usage of materials on a
job and how much labor was executed
| | 03:52 | during a time period.
| | 03:53 | You'll then generate an invoice to the
customer at a certain date and bill them
| | 03:57 | for all the work to date.
| | 04:00 | This involves time tracking and it's
important that you time track on an employee level.
| | 04:06 | Ensure that you have an accurate
system and that change orders and client
| | 04:09 | requests are also noted.
| | 04:12 | This is generally a risky method,
however, because it means all the work is
| | 04:16 | executed and then you're asking for payment.
| | 04:19 | Sometimes clients will question the
time records or want additional proof and
| | 04:24 | this frequently leads to arguments
over what you said you did versus what the
| | 04:27 | client thinks is reasonable.
| | 04:30 | With any of these time-based methods,
it's important that you clearly specify
| | 04:34 | them with the customer and
that you both agree to them.
| | 04:39 | Typically, I try to avoid time-based
payments as they're not very reliable.
| | 04:45 | I'll use them with my own employees
because they need a paycheck each month,
| | 04:49 | and I may use some time-based methods
if we have an ongoing contract and we are
| | 04:54 | delivering a monthly service like
maintaining a video library or hosting for video files.
| | 05:01 | But for performance-based contracts,
I would rather tie them to what I did
| | 05:06 | rather than what month it is on the calendar.
| | Collapse this transcript |
| Exploring performance-based methods| 00:00 | I'm a big fan of
performance-based payment methods.
| | 00:04 | In other words, you do
something and you get paid.
| | 00:07 | The great thing here is that you can track
payments throughout the life of the project.
| | 00:12 | You don't want to do
everything and then hope to get paid.
| | 00:16 | By setting a series of progress payments,
you can get micro-payments along the
| | 00:20 | way and make sure that the client is
going to be reliable and not necessarily a
| | 00:25 | deadbeat and it comes time to making
sure that you have money in your pocket.
| | 00:29 | Here is how it works.
| | 00:31 | With the progress payment, you are going to
want to tie these to milestones in your project.
| | 00:35 | A milestone is typically a deliverable.
Perhaps it's a deposit due after you
| | 00:40 | send over the scoping statement and
treatment, and then another payment due
| | 00:45 | after delivery of script, another
payment upon the initiation of field
| | 00:49 | production, another payment upon the
completion of field production, upon
| | 00:55 | delivery of the rough cut, et cetera.
| | 00:57 | You're going to want to carve the
project up into a series of milestones that
| | 01:00 | are mutually agreeable and
issue invoices as you make progress.
| | 01:05 | Here is how that could look.
| | 01:07 | When you put those progress payments in,
make sure they're not identical. In
| | 01:11 | other words, don't cut your project up into
two 50% payments or a equal 25% at all times.
| | 01:18 | One of the things I've seen
repeatedly is confused accountants.
| | 01:24 | Accountants can get confused;
same with the accounts payable.
| | 01:28 | What's important is that
you make it easy for them.
| | 01:31 | Several times in the past, I've seen
them get confused when the invoice
| | 01:35 | amounts are identical.
| | 01:37 | I'll call to check on the status of the
payment and be told that that was already paid.
| | 01:41 | Turns out they were referencing the
deposit which was sent a month earlier.
| | 01:46 | Many times people are lazy or
they avoid details or the programs do
| | 01:51 | auto-entry for data.
| | 01:53 | People will miss that the invoices had
different dates. They will just see same
| | 01:58 | amount, same company, mark it as done.
| | 02:02 | By having different dollar amounts on
your invoices, it makes it easier to track
| | 02:07 | if they were paid and makes them
stand out a bit more in the system.
| | 02:11 | Here's how I would split things up.
| | 02:13 | If I was doing a project that was
just production only, I would put more
| | 02:17 | up front for deposit to help cover my
cost of booking crew and planning the
| | 02:21 | project, and then 45% due.
| | 02:24 | If it's an existing customer with a
long relation, I would allow them 30 days
| | 02:28 | credit to pay that 45%, but I would
still insist on the deposit being in hand
| | 02:34 | before the shoot began.
| | 02:36 | If this is a more complex project,
one that involves production and post, I
| | 02:40 | might put 40% upfront as a deposit
during the preproduction stage and then
| | 02:45 | trickle out and collect the
rest over the life of the project.
| | 02:48 | Similarly, if it was a longer project
that went over several months, I would
| | 02:53 | put more money upfront and then put
smaller progress payments in as we got to
| | 02:57 | the end of the Project.
| | 02:59 | The goal here is to put as much money
in your hands as quickly as possible.
| | 03:03 | Put more money in those first payments.
Bigger deposit, more money in hand for
| | 03:08 | early milestones, and then it
trickles off towards the end.
| | 03:12 | Ideally, I feel a lot more
comfortable having at least 50%, preferably 75%
| | 03:18 | of the money in hand before I hand off master
tapes or final deliverables to the customer.
| | 03:25 | If you don't have the project in your
hands and you don't have money in your
| | 03:29 | hands, you have zero power.
| | 03:32 | You want to make sure that you have
possession and then you transfer it to the
| | 03:36 | customer once you have the
bulk of the money in hand.
| | 03:40 | That's why we put progress payments upfront.
| | 03:43 | It also serves as an early alert system
for clients who are a bit flaky or have
| | 03:47 | problems paying their bills on time.
| | 03:50 | Make sure you talk to your accountant
and put some good strategies in place for
| | 03:53 | how you want to handle billing.
| | 03:55 | In some unique situations, your
payment will be performance-based.
| | 03:59 | This might be the points model. Some
people working on independent or low-budget
| | 04:04 | productions will receive additional
money based on how the project performs.
| | 04:08 | Thinking of it this way,
| | 04:10 | you need to be careful unless you're
working with the well-established partner.
| | 04:14 | If you have a long-term relationship
and you have seen money from them in the
| | 04:17 | past, you might be willing to take a
points deal on a project, volunteering your
| | 04:22 | time or services because you
really want to work on the project.
| | 04:26 | This is often used for independent
or artistic projects and it's a fair
| | 04:30 | and reasonable offer.
| | 04:31 | But I can't tell you how may people
offer me points and have nothing to stand
| | 04:36 | on with any past performance or any
proof that I am going to actually ever see
| | 04:40 | any money in my hand.
| | 04:42 | If possible, I recommend pushing for a
hybrid model, one where you agree to work
| | 04:47 | at a discounted rate.
| | 04:49 | Perhaps you waive the equipment cost, or
you give them your time but only charge
| | 04:53 | them for some of your hard
expenses and a small daily stipend.
| | 04:57 | You would then agree to take a
performance-based model for how the project does.
| | 05:02 | This is a reasonable compromise.
| | 05:04 | You are on board and helping them out,
but you're not losing money and funding
| | 05:09 | their credit card bill.
| | 05:11 | Always ask yourself, is your
livelihood worth risking based on the creativity
| | 05:16 | and marketing savviness of someone else?
| | 05:19 | If this person happens to be
Steven Spielberg, the answer is yes.
| | 05:23 | However, there are a lot of so-called
talented people out there throwing around
| | 05:28 | great deals and big ideas with nothing in place.
| | 05:31 | Before you sign on board for a
points deal, make sure you ask to see the
| | 05:35 | marketing plan and look to see how
valid the person's connections are.
| | 05:39 | A good idea is just that--a good idea;
| | 05:42 | it doesn't actually give you the money to
run your company or take care of your family.
| | 05:48 | Another method used, however, are royalty-
based payments, and this often can work pretty well.
| | 05:54 | If you are delivering things like
licensed footage such as to a stock footage
| | 05:58 | company or another news service that's
going to take that footage and license it,
| | 06:02 | this can work pretty well.
| | 06:03 | You'll find both royalty-free
collections on the market that allow for footage
| | 06:08 | to be licensed and used by any end result,
often repeatedly by the same customer
| | 06:14 | who purchases it, or other licenses
that are more restricted-use for footage
| | 06:18 | that's highly unique.
| | 06:20 | Make sure you pay close attention to
the terms, including how you can audit the
| | 06:24 | records and track payments.
| | 06:27 | One thing to keep in mind is that you
typically cannot take footage from client
| | 06:31 | projects you've done and
then resell it after the fact.
| | 06:35 | While this would be a great way to
make extra money, you often will not have
| | 06:39 | the rights to the performances, the locations,
or the subjects that appear in that footage.
| | 06:45 | Chances are your photo or model
releases only cover the original production.
| | 06:50 | However, there are some potential
opportunities here if you're going to be
| | 06:53 | traveling or doing some self-funded
productions to make an aftermarket dollar off
| | 06:59 | of some of the footage that you didn't use.
| | 07:01 | Consider exploring some of these
details and see if this is a good way to
| | 07:05 | supplement your company's income.
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|
|
8. Creating an InvoiceUnderstanding what goes on an invoice| 00:00 | Okay, you're in the home stretch.
| | 00:01 | You've gone ahead and got an approved
budget, clearly spelled everything out in
| | 00:04 | the Scoping Document, and actually did the work.
| | 00:07 | Now comes the best part, getting paid.
| | 00:10 | To do that, you're going to need a
bill or an invoice, and while it sounds
| | 00:14 | simple--just write a few things
on a piece of paper--it's not.
| | 00:18 | Improperly formatted bills or invoices are
the number one reason for not getting paid.
| | 00:23 | You might think it's malicious, the
client doesn't have the money or they are
| | 00:26 | holding it, and in a tough
economy, that could be true.
| | 00:30 | But oftentimes, it's just a clerical
error or bad formatting that leads to
| | 00:34 | confusion or delays in your
payment getting processed.
| | 00:37 | Here is some tips on how
to make a better invoice.
| | 00:41 | First off, your invoice needs to
have all the right information on it.
| | 00:46 | This means that it's properly
formatted and that you've filled in the header,
| | 00:50 | the body, and the footer correctly.
| | 00:53 | On an invoice, you're going
to have three major sections:
| | 00:57 | the Header which contains
information about the customer and you,
| | 01:01 | the Invoice Body which contains
details about what's being billed,
| | 01:06 | and the Footer which contains
pricing and payment information.
| | 01:11 | In the Invoice Header, you're going to
want to have your business name as well
| | 01:14 | as the full mailing address.
| | 01:18 | You might think it's perfectly clear.
| | 01:20 | You sent the moving card to your customer,
you've been in the new office for four years.
| | 01:24 | We still get mail sent to our old address.
| | 01:28 | I still get mail sent to my personal
house, where I used to have my company for
| | 01:32 | a few years over a decade ago.
| | 01:35 | People don't update their system.
| | 01:37 | Making sure you have your correct
mailing address on every invoice increases the
| | 01:41 | chance that the check will
go to the right building.
| | 01:45 | That contact information is also useful;
| | 01:47 | include a phone number and perhaps your
name or whoever is going to handle the
| | 01:51 | billing questions when they come in.
| | 01:54 | You need to put the word Invoice or
Bill large and at the top of the page.
| | 02:00 | It's not an invoice if it
doesn't say the word invoice or bill.
| | 02:05 | People will just think
it's an estimate or a quote.
| | 02:08 | You need to spell it out, nice and big and giant.
| | 02:13 | This is an invoice.
| | 02:16 | You also want a Unique Invoice number.
| | 02:18 | Every invoice generated by your
company should have its own number.
| | 02:23 | If you're using software such as
QuickBooks, it will automatically generate this
| | 02:27 | for you, and many other billing
software packages will handle this as well.
| | 02:32 | If you're manually creating invoices, make
sure you track their numbers as you generate them.
| | 02:38 | You want a date when the invoice was
generated, so when you call you have
| | 02:43 | a point of reference.
| | 02:45 | I can't tell you how many times
I've had this conversation. "Hi!
| | 02:48 | I'm calling about Invoice 1230.
| | 02:51 | It's two months past due." "No, it's not.
| | 02:55 | I just put that in the system yesterday."
| | 02:56 | "No, I sent it two months ago."
| | 02:59 | "Oh no, I just got it from Bob yesterday."
| | 03:03 | If you don't put a date on your invoice,
the accounts payable person doesn't
| | 03:08 | have a point of reference.
| | 03:10 | You need to tell them when that invoice
was sent, not when it actually showed up
| | 03:14 | in the accounting department.
| | 03:16 | Putting a date on there will expedite
the process and put a little bit of guilt
| | 03:19 | on people if they're just sitting
with a piece of paper on their desk.
| | 03:23 | Having a date creates a sense of
urgency and will speed up the process.
| | 03:28 | You also want to specify any payment terms.
In other words, this is due on this date.
| | 03:35 | I don't recommend just saying net 30 or net 15.
| | 03:39 | Combine that with an actual
date that the invoice is due.
| | 03:42 | Again, this will add urgency and
improve the chance of getting paid.
| | 03:47 | Another thing to do is apply a slight discount.
| | 03:50 | Many people will do things
like 1% net 15, 2% net 5.
| | 03:55 | What this means is if the customer pays
the bill early, in other words, as soon
| | 04:00 | as they get it, they can
deduct a small percentage.
| | 04:03 | Sometimes a 1% discount with a two-
week or one-week payment term is enough
| | 04:08 | motivation, especially if
dealing with a large company.
| | 04:12 | In fact, many large companies actually
have it as a written requirement that
| | 04:16 | they have to pay invoices with discounts first.
| | 04:20 | If you've applied any other discounts,
make sure you spell those out on the
| | 04:23 | invoice as well and mark
when the discounts expire.
| | 04:28 | Typically, I'll have invoice discounts
expire on the due date of the invoice.
| | 04:32 | You'll also want to make sure that the
customer name and address appears on the
| | 04:37 | invoice, so there's no question that
this is indeed a bill for that customer.
| | 04:42 | In the body of the invoice, you need
to spell out some important information.
| | 04:46 | This is typically a description of the
goods and services that were provided and
| | 04:51 | what's being charged.
| | 04:52 | You don't need to list everything you've
done to date, just what this invoice is for.
| | 04:58 | This is a chance to go back to that
scoping document and literally copy and
| | 05:01 | paste the details in.
| | 05:04 | Roll it up and simplify a bit, but
spell out what you're billing them for.
| | 05:09 | This way, if there is any question,
which there always is, it's much more clear
| | 05:13 | as to what the invoice is for.
| | 05:16 | Pricing information with per
unit pricing is also helpful.
| | 05:19 | This is where you spell out if you were
charging for items on a per item basis.
| | 05:24 | You can also identify any progress or the
scope of that progress with the percentage.
| | 05:30 | In the footer of the invoice you
want to include the total amount of the
| | 05:33 | items for that invoice.
| | 05:36 | You can also spell out if there's any
taxes applied. And Payment instructions,
| | 05:41 | where to send the invoice and payment.
| | 05:44 | If there are finance charges, make sure
they're clearly identified for the customer.
| | 05:49 | There are legal limits to what you can
charge for finance charges, so be sure to
| | 05:53 | have a conversation with your accountant.
| | 05:56 | This is very similar to the
limits placed on credit card companies.
| | 05:59 | And remember, if you didn't discuss
finance charges with your customer, you
| | 06:03 | can't just add them after the fact.
| | 06:05 | This is a conversation to put into the
agreement and into the scoping document
| | 06:10 | where you identify the payment terms.
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| Creating an invoice with Microsoft Word| 00:00 | If you're a small company and you
need to put an invoice together pretty
| | 00:03 | quickly, Microsoft Word
is a very easy tool to use.
| | 00:07 | You'll find templates built right in.
| | 00:09 | I am using the Mac version here, but
it's very similar on a Windows machine.
| | 00:14 | If you're inexperienced with
Microsoft Word, there is lots of training for
| | 00:17 | it here on Lynda.com.
| | 00:19 | Just choose File > New from Template, and it
will bring up a gallery with lots of choices.
| | 00:26 | In the search field, just type in invoice
and it will come up with a bunch of options.
| | 00:34 | You'll see here different
choices with different color palettes.
| | 00:38 | You can go ahead and roll over and see a
preview of what they look like and even
| | 00:43 | click to change which color palette
is used for that document, making it a
| | 00:48 | little bit more customized
for your particular company.
| | 00:52 | This allows you to just simply choose
a look, refine the colors to match your
| | 00:57 | look and then click Choose to open the document.
| | 01:02 | If we zoom in here, you'll see that
all of the relevant fields are in place.
| | 01:07 | Notice at the top, the word Invoice.
You can go ahead and double-click to put
| | 01:12 | your information for your company.
| | 01:15 | Fill in all the relevant information
like the unique Invoice Number,
| | 01:19 | who it's being billed to, and
then plug in information about Quantities,
| | 01:25 | Items, Descriptions, costs,
and Subtotals rolling it all up.
| | 01:32 | If there's fields in here you don't need,
for example like the Taxable rate or
| | 01:36 | the Unit Price, you can always select
fields and under the Table menu, you can
| | 01:42 | go ahead and actually delete those
columns out to simplify the process.
| | 01:48 | If I click to select the table there,
you see we can go ahead and resize this
| | 01:54 | and now it's back to
normal and looks pretty good.
| | 01:57 | Inside of Microsoft Word are several
templates for invoices. If you're a
| | 02:02 | Lynda.com customer, I've also
included a few sample invoices from past
| | 02:06 | iterations that I've used to help
people understand what it is you're billing.
| | 02:11 | Remember, simply go through that checklist we
went through in the last movie and make
| | 02:15 | sure all of that information is on your invoice.
| | 02:18 | If you do that, you'll dramatically
improve the chances of getting paid.
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| Creating an invoice with Apple Pages| 00:00 | If you're a Mac-based shop and you're
not using accounting software like
| | 00:03 | QuickBooks, Apple Pages is a great
way to quickly put together an invoice.
| | 00:08 | You can download Pages from the Mac
App Store very cheap and it comes with a
| | 00:12 | bunch of templates that are
easy to use. Here is how.
| | 00:17 | Once you launch Pages, the
Template Chooser will open.
| | 00:20 | If not, you could choose File >
New from Template Chooser.
| | 00:25 | Go down to the category called
Forms and you'll see several invoices.
| | 00:31 | You can go ahead and adjust the
thumbnail size to get a better idea of
| | 00:34 | what these look like.
| | 00:37 | When you choose one of these, simply
select it and double click and it will open up.
| | 00:45 | You can now customize it including the
artwork, so if there is things you don't
| | 00:48 | want on the invoice, you can modify it.
| | 00:51 | For example, I can go ahead and get rid of the
leaf and then instead, drop in my corporate logo.
| | 00:59 | Fill in the relevant
information for your company.
| | 01:03 | Put in the information in the header
of who's getting the invoice and then
| | 01:07 | proceed to go through and
plug in the Quantity and rate.
| | 01:11 | You'll notice that it comes with sample
data already there, but as soon as you
| | 01:15 | double click on a cell, you're able
to update that. Preproduction Services.
| | 01:21 | I would then look at my scoping
document and charge it out, and
| | 01:27 | notice everything updates.
| | 01:29 | And as you continue to go through,
these numbers will update as well.
| | 01:33 | You can go ahead and remove cells with
a quick right click and just delete rows
| | 01:37 | or columns as necessary, or insert
additional cells by choosing Add Row or
| | 01:43 | Column in order to fill it in.
| | 01:46 | This app is pretty straightforward and
if you need more training on Apple Pages,
| | 01:50 | there is a complete course here on lynda.com.
| | 01:53 | The key here is to just make sure
your invoice looks professional.
| | 01:57 | Don't head on over to your local office
supply store and buy those carbon copy
| | 02:00 | forms that you scrawl out with
a pen at your dining room table.
| | 02:04 | It is so easy to just find a simple
template built into your word processor to
| | 02:09 | make a professional looking invoice.
| | 02:11 | Fill in all of the fields,
| | 02:13 | use the checklist we gave you earlier
when we talked about what goes in an
| | 02:16 | invoice, and you will stand a
much better chance of getting paid.
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|
|
9. Billing StrategiesDelivering the bill| 00:00 | Alright, the bill is done.
| | 00:02 | You got all the
information in there that you need.
| | 00:04 | It's time to give it to the client.
| | 00:06 | All you need to do is
drop it in the mail, right?
| | 00:09 | No, it's never that simple.
| | 00:11 | If you just put it in the mail and
hope that a will check show up, it might.
| | 00:16 | Chances are though, it won't.
| | 00:18 | And so in order to improve the
chances of getting paid, I'd like to give
| | 00:21 | you some strategies on how to deliver a bill
and ensure that it actually gets processed.
| | 00:28 | First off, make sure that you send the
customer a copy of the bill as a PDF and
| | 00:33 | let them know that this is a Draft Invoice.
| | 00:35 | This will improve the chance that
they've seen it and that it's agreeable.
| | 00:39 | Sending over a PDF ahead a time allows
you to give them a warning that you're
| | 00:43 | about to drop the bill in the mail.
| | 00:46 | Tell them that this is a courtesy invoice and
you'd like to make sure that it's acceptable.
| | 00:51 | Give them a deadline of one or two
days and ask them for their feedback.
| | 00:55 | Tell them when you'll be sending the
final bill in the mail, but you wanted to
| | 00:59 | give them a chance to review it first.
| | 01:01 | You also need to send a physical piece of mail.
| | 01:05 | People get inundated with way too much e-mail.
| | 01:08 | If you rely upon them to read their e-
mail just to get an invoice processed, you
| | 01:12 | may get pushed into the Spam folder, or
to the bottom of the list, or even missed.
| | 01:18 | In this day of Blackberries and iPhones, e-
mail doesn't really hold much unique weight.
| | 01:23 | However, I get about five pieces of
physical mail in my office everyday.
| | 01:28 | When we get a paper bill, there is a much
better chance it's going to go into the system.
| | 01:33 | Some customers will prefer faxes.
| | 01:36 | This is not very common, but make
sure you check with the customer if their
| | 01:40 | accounting department likes
to receive them electronically.
| | 01:44 | Some people have requirements that
they can't accept e-mail invoices and can
| | 01:48 | only accept electronic
transmitted in paper form.
| | 01:52 | I also recommend you put a
copy in with the deliverables.
| | 01:56 | Put in an envelope and address it to
the client, so it doesn't get read by
| | 02:00 | everybody in the shipping
department and in the conference room.
| | 02:03 | But put a copy in there,
so they actually get it.
| | 02:07 | Once the invoice is delivered,
you need to close the loop.
| | 02:11 | I recommend a face-to-face
conversation if it's a sizable invoice.
| | 02:16 | This is a chance to invite the client out to
lunch and to thank them for their business.
| | 02:20 | The bare minimum is to pick up the phone
and make sure that things were received
| | 02:24 | and there were no problems.
| | 02:27 | Another good thing to do is
approximately a week after sending that invoice,
| | 02:31 | call the accounts payable
department at the company.
| | 02:34 | Ask them if they have the invoice in hand.
| | 02:37 | Offer to send them a copy as well.
| | 02:40 | Some companies have invoices go through
project managers or your end customer first.
| | 02:46 | Other companies send it to the
accounting department first, where it gets
| | 02:50 | processed and then floated back up for approval.
| | 02:53 | You may need to check in two directions,
both with your direct customer and the
| | 02:58 | accounting department to ensure that things
were actually accepted. Lastly is e-mail.
| | 03:05 | Nobody likes to talk about money and
some people are genuinely uncomfortable
| | 03:09 | picking up the phone.
| | 03:11 | E-mail is acceptable to just close the
loop and make sure people have things.
| | 03:16 | But, if you only rely on e-mail for
invoices and communication about payments,
| | 03:21 | your chances of getting
paid are much, much lower.
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| Dealing with collections| 00:00 | In a perfect world, you'd never
have to deal with collections.
| | 00:04 | You'd send out invoices
and checks would come back.
| | 00:07 | However, things will go wrong and
you'll want to reach out politely, but
| | 00:12 | firmly, to request payment.
| | 00:14 | With Collections, you need to run an
accounts receivable report periodically.
| | 00:20 | This is a report that tells
you which invoices are unpaid.
| | 00:23 | If you're using an accounting
program, this is pretty easy.
| | 00:27 | If not, you'll want to manually track
this using a spreadsheet, where you enter
| | 00:31 | in all of your invoices and their
due dates and then sort by date.
| | 00:36 | You could then remove files from that
spreadsheet as you get them in the mail.
| | 00:41 | When you have a problem with the
payment, you call the accounts payable
| | 00:45 | department at the company you're dealing with.
| | 00:47 | You are in accounts receivable,
they are in accounts payable.
| | 00:53 | For many small companies, the
accounting department will be the same and will
| | 00:56 | handle both payables and receivables.
| | 00:59 | However, if you're dealing with the
larger company, they could be in different
| | 01:03 | floors or even different offices or perhaps,
different countries. Please, be polite.
| | 01:11 | The people you're dealing with probably
are not evil, they're not hiding money.
| | 01:15 | They're not trying to take over the world.
| | 01:18 | They simply made a mistake or maybe
were told not to pay your invoice because
| | 01:23 | they needed some information.
| | 01:25 | When you're polite to accountants, they'll
typically tell you why you haven't gotten
| | 01:29 | paid and when you can expect to get paid.
| | 01:32 | They may politely point out that they
sent over a request for more information.
| | 01:36 | Or that the problem lies with your end
customer, who has not yet approved the
| | 01:41 | invoice for payment.
| | 01:43 | Usually the accounting department will
be helpful to you and if you're polite
| | 01:48 | the chances are much greater.
| | 01:51 | Another thing to consider is calling in advance.
| | 01:54 | Don't wait until an invoice is three weeks
late before you make the first phone call.
| | 01:59 | If you have progress payments or
milestones, don't be afraid to pick up the
| | 02:03 | phone and call earlier.
| | 02:05 | If you're coming to the end of the
project and you still don't have a deposit in
| | 02:08 | hand, you shouldn't tell the customer
the day the video is due that you're not
| | 02:12 | going to give it to them
because you never got the deposit.
| | 02:16 | You need to manage the relationship and
clearly express when payments are due.
| | 02:21 | By being polite and up front and
treating it like its business is normal, you
| | 02:26 | stand a much better chance of being
treated as a professional and being paid as such.
| | 02:32 | Be sure you also place
payment terms into your contracts.
| | 02:36 | What are the finance charges?
| | 02:37 | What are the periods in which
those payments are going to be due?
| | 02:40 | This should appear in the contract or
the scoping document that the client signs.
| | 02:46 | And I cannot emphasize enough the use of
incremental billing as well as deposits.
| | 02:52 | If you've gone all the way through a
project, delivered it, and gave it to the
| | 02:55 | customer and still have no
money in hand, you are a fool.
| | 03:00 | In today's economy, you have to be smart.
| | 03:03 | Make sure that you have progress
payments and deposits, so you feel reasonably
| | 03:08 | comfortable that the customer
is going to pay their bills.
| | 03:11 | You want to have somewhere between 50%
and 75% of the money in hand before the
| | 03:17 | finish project leaves your shop.
| | 03:20 | Otherwise you've given up all leverage
and will be faced with alternatives like
| | 03:24 | collections courts or threatening phone
calls, which really don't go very far.
| | 03:30 | When you've sent the invoice, make
sure the customer accepts the bill.
| | 03:34 | Go over any changes from the initial
estimate or from the scoping document and
| | 03:39 | refresh their minds about change
orders that were previously approved.
| | 03:43 | If the bill has gone up or down for any
reason, make sure you summarize that in
| | 03:48 | an e-mail or even a phone call,
with written notes to follow-up.
| | 03:53 | Use discounts to motivate payment.
| | 03:56 | A 1% or 2% discount will accelerate
payment, if you tie it to a certain due date.
| | 04:02 | And if you've already offered the
customer discounts, make sure those discounts
| | 04:05 | expire if the invoice is late.
| | 04:09 | Deadlines are essential. Always
put a due date onto the invoice.
| | 04:14 | So there you have it.
| | 04:15 | Not too hard to make an invoice, but
remember, you need to make sure that a real
| | 04:19 | person has received it.
| | 04:21 | If you just get an automated message
that a message was received by the
| | 04:25 | accounting department, that's not as
effective as picking up the phone a few
| | 04:28 | days later and making sure that's in the system.
| | 04:32 | Expecting that your client actually
read that e-mail is not as effective as
| | 04:36 | mailing them an invoice and then
giving them a call to discuss it.
| | 04:39 | If it's important you get paid, it's
important that you are accurate with your
| | 04:44 | billing and professional
with your follow through.
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|
|
ConclusionFinal thoughts| 00:00 | I really appreciate you taking
this course and I hope that it helps
| | 00:04 | your business succeed.
| | 00:06 | When it comes to billing and being a
professional, it's not that easy. You
| | 00:10 | really need to put some
thought into it and be consistent.
| | 00:14 | Throughout the exercises, we
covered a lot of different techniques.
| | 00:18 | You're going to need to find
the right fit for your company.
| | 00:21 | Feel free to jump back and watch some of the
movies again to get up on the best practices.
| | 00:27 | I also regularly write about
business topics over at my blog at
| | 00:31 | http://richardharringtonblog.com
| | 00:32 | I sincerely would like to see
your business succeed and the entire
| | 00:37 | video ecosystem thrive.
| | 00:40 | I think you're off to a
good start with this course.
| | 00:42 | Remember, come up with a list of
services that you want to offer and then assign
| | 00:47 | rates than are fair, both to
your customer and yourself.
| | 00:51 | Apply the knowledge of what
you've learned in this course to build
| | 00:54 | good business practices.
| | 00:56 | I truly hope you succeed and
thrive and what's a tough economy.
| | 01:01 | But with good ethical business
practices, you'll be off to a good start.
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