Value Based Pricing

[Jeff Anderson]

Hi guys - I don't do much posting here, but lurk around frequently and have learned a ton! Appreciate the community so much for its willingness to share wisdom and help those (like me!) that are new to the industry. I've got a little blog going and would love to hear your opinions on something though. I know rates can be a sensitive subject, and I'm not looking to start a fight, just get your thoughts on this in these interesting economic times. Especially interesting when you are just beginning your career as an operator.

 

Lately I've been doing a good deal of thinking about business strategies as well as how best to market myself and stay thriving in these odd economic times. Many businesses are switching to value based pricing - is this something that will work in our industry?

 

See blog post here - http://www.maxo-facto.com/blog/2009/03/app...video-industry/

 

Have an opinion? Let's hear it! I'm trying to get a variety of opinions and see ways this could be best applied or perhaps reasons it shouldn't be at all.

 

Would like to get comments all in one place on the blog, but feel free to discuss here too of course. Interested in what everyone has to say.

 

Thanks - much appreciated!

 

Jeff

[Erwin Landau]

Seventy plus views and no comments, that should tell you what people think of that "new" concept.

 

And who would be put in charge to determine if a certain day was "light" or "heavy"?

 

"Walk and talks are easy"... yeah try 14 takes of a 4 minutes plus music take walking down Downtown Los Angeles backwards without sitting down... and a cute little singer chasing you down while increasing her speed.

 

So would you just volunteer to give back a part of your hourly earning because the day was even lighter as assumed and they let you go home after 8 hours...

 

So it would come down to the UPM or Line Producer... They are already trying to get you lower every time you negotiate, trying to get your hard earned equipment for a day and a half per week. Or per use with no minimum guaranty.

 

I can already hear them...

 

Oh can we pay you for a half day and pay half rental... even though you can't pick up another job for the reminder of the day as the want you to work from 9 to 3... ( I tried a couple of times to book myself for the afternoon... guess what? Oh we are not done with that shot you have to give us over time and finish the shot or we will not pay you for the day... call the other company and cancel... or ask them to come later... even though it was agreed that it would never go later then 2pm... bla bla bla).

 

Your call time was 7am... but we didn't use you until after lunch and you where only in the rig for four hours...

 

You didn't carry the rig you where hard mounted.... from the dolly, the quad, the motorcycle... we don't have to pay you as much then right?

 

You only had to go down one flight of stairs... etc.

 

 

We are working in a country and a business that lives on precedents... once is set it's very hard to reverse it... you start doing your value based pricing and you will accelerate the downward spiral in rates...

 

 

Yes the seasoned ops are complaining because they have been around for longer and have seen the decline of rates over a long period of time (No one of them is getting any close to what they got 15 years ago, even though they have 15 years more experience). Also they have a bigger over head (families, house and car payments, retirement funds, college funds, insurance obligation for more then just one or two people) then the guys that are starting out (usually single or just married, no mortgage exempt for the rig payments, etc)

 

And experience is hard learned... can the new guy do the same shot as nice as the seasoned, no but he is cheaper... and as long as you are giving the production alternatives just based on price... the bean counters will go with the cheaper way, even if it looks worse. Check some of the episodic on TV right now...

 

Also we are a business, the Film Business. It's about profit. And the Producers are hired to get a product made for the money they were given or less if they can. The amount that is spend in production has no influence on the total take that the project will garner... it has only influence on the profit.

 

They are not making the amount of cash that they projected they would, so we still want to walk away with $100 million in profits let's shave of at the production side... neee we can't pay Samuel L. Jackson less then we did last time but we can get almost the same crew for 10% less and we are making the projected profit again on the next one... etc.

 

Couple of years ago... A Jackson Movie. Budget $40 million, Samuel is getting $20 million as the star... so it's actually a $20 million movie... one of the first departments called in was camera, if they could give the Studio (Paramount) a brake on the individual kit rental and over time cut off... and they got it.

 

That's more Feature related, but let's look at TV...

 

That's what's going on with "Without a Trace" right now, The Nielson ratings are down, so they have to cut there overhead or get cancelled... they will lose an actor or two, save on crafty, more studio based shooting minimize location and then they will look to renegotiate every bodies rates... Hey better I make less then have no show at all... right? Right.

 

At the hight of "Will and Grace" when all cast members where given Porsches as Bonuses... Production was cracking down on expendable... how much tape was actually used, do we need the second unit? do we need the loader?

 

The Actors or the Producers or the Writers will not be asked to get less money (Unless fired)... they will find it below the line.

 

 

If you want to work for Peanuts, go ahead but you will pull everybody down with you, so don't expect any back padding when you come up with Ideas like that.

 

Work a couple of years in the industry and look if you are still going to be able to sustain yourself and your future family, once that pricing is in effect... or are you going to pick up a second job after you wrapped early on the set and still are short for the month...

 

You give them the little finger and they will pull until the hand falls off.

 

Because we are a dime a docent for most right out of school bean counters.

 

That's Capitalism at it's best.

 

 

Just my opinion.

[Jess Haas SOC]

There is always Ted Churchill's example rate chart:

"18. Determining your Rate

 

More often than not, the operator - after a particularly grueling day - will feel that he or she has not been adequately remunerated for the gross amount of effort spent. Therefore, it behooves the operator to establish a rate schedule which will accurately reflect the work done and with which there can be no disagreement and misunderstanding. For example:

 

$ 100.00 at the time of your appearance on the set

$ 2.00 per yard forward (walking)

$ 5.00 per yard forward (running)

$ 3.50 per yard backward (walking)

$ 7.00 per yard backward (running)

$ 10.00 actor in the shot

$ 15.00 actor not in the shot

$ 20.00 per flight of stairs (up)

$ 15.00 per flight of stairs (down)

$ 10.00 each additional consecutive flight

$ 25.00 to put the camera in the Low-Mode

$ 15.00 to put it back

$ 35.00 to change sides with the Arm

$ 25.00 to put it back

$ 5.00 per rehearsal minute, 16mm & Arri 2C

$ 10.00 per rehearsal minute, Arri 35BL

$ 15.00 per rehearsal minute, Panaflex on Steadicam

$ 35.00 per rehearsal minute, Panaglide

$ 3.50 per focus change

$ 2.50 per iris change

$ 8.50 both focus & iris at the same time"

(http://www.steadicam.ca/mainfile/article/churchill/tedbook/tedbook.html)

[Jeff Anderson]

Erwin, appreciate your opinion and your sharing it here. And I agree that the 70 views and no responses prior to yours says quite a bit.

 

Its good to see things from another perspective such as yours though and gives me some great reasons why this type of model doesnt apply to our industry. Just for the record I was merely thinking about value based pricing. And am still currently charging what I consider to be a fair amount per day given my market and experience. I think in a previous blog post I said something along the lines "it looked good on paper, but so does communism".

 

I was all on board with it though until you mentioned a few things that have really swayed me back this way - "walk and talks are easy" - I think (at least I hope!) I qualified that a bit with compared to some of the other things an operator may or may not do. Greatly apologize if I didnt. Anyways your mention of the 14 take walking backwards shot that the talent just can't get right reminded me of a "easy" sit down interview that should've been a half an hour and ended up at close to a full day. Luckily I was just a camera op, but being there for a half an hour versus a whole day is quite different. And of course it would be near impossible to gauge when this is going to happen and provide a pre-determined "value".

 

And yes I have noticed some of the poor operating in my primetime television :)

 

You've also reminded me who a large majority of us are constantly dealing with. Producers :) I think I've just been really fortunate so far to work primarily with producers who do care about quality and are happy to pay for it. As you've reminded me, this isnt the norm and if I work for cheap on one project, they'll want me even cheaper on the next...

 

And I hope no one has taken offense to any of this. Its just that lately as I've expanded into Steadicam operating and have been re-marketing myself a bit and trying to learn a bit more about this business side I've seen alot of similar industries adopt this model with success so I said to myself "why not us?" - now I know :)

 

So thank very much Erwin for taking the time to give your thoughts, and helping an inexperienced fool like myself see the flaws in his thinking. And thank you Jess for posting that piece of wisdom from Ted - I had seen it quite a while ago and had totally forgotten about it. While humorous its a good reminder of every little thing we are doing.

 

Erwin would you mind if I re-posted what you've said in a follow-up blog post?

 

Thanks guys, and I really hope I haven't offended with this, my sincere apologies if I have.

 

Jeff

[Eric Fletcher S.O.C.]

There is always Ted Churchill's example rate chart:

"18. Determining your Rate

 

More often than not, the operator - after a particularly grueling day - will feel that he or she has not been adequately remunerated for the gross amount of effort spent. Therefore, it behooves the operator to establish a rate schedule which will accurately reflect the work done and with which there can be no disagreement and misunderstanding. For example:

 

 

Ahhh and here is where you get into trouble.

 

Ted's Manual of Style, It's Tongue in Cheek HUMOR.

 

That was all a Joke. It's not meant to be taken seriously

[Jess Haas SOC]

You mean I shouldn't require my assistants to have "had at least two years of post - graduate courses in both mechanical and electronic engineering, has a basic understanding of Newtonian physics, access to a machine shop and friends at all the rental houses"?

 

Sorry if the humor wasn't obvious enough, although I would love to see someone try to implement that litterally. You would need a whole nother assistant just to keep track of it. That is if you don't have the new Cinema Products docking stand meter, but who doesn't have one of those?

 

~Jess