Industry Pricing Models

[Tom Greenberg]

A question came up when talking to an owner/op in another part of the country...what do you charge for your camera package and how do you price it? Do you charge a day rate for yourself and your camera package...or keep labor separate from gear? How do you price your major extra items like expensive lenses (RPP's, CP2s, Super Speeds, Master or Ultra Primes, Optimo zooms, etc), bigger lights, dollies, jibs, etc...do you do a la carte pricing for each piece or a package price that includes everything you have...or somewhere in between?

I'm not really talking about rental houses, this is mostly aimed at owner/operators or production companies.

I'm not looking for any confidential info here or any competitive advantage, just want to conduct an informal survey for my own curiosity. I'm especially curious about differences in US regional pricing...NYC, the Midwest, FL, the Southwest, CA, Pacific NW...Canada, Mexico, Europe and other overseas markets too...just trying to get a handle on how the industry is adapting to the changes in different markets with the availability of a lot of new operators and different cameras (Epic, Scarlet, MX, F3, C300, etc.) coming into the biz. Are you seeing a lot of price erosion with all these new operators?

Give as much or as little info as you feel comfortable with...I thought that this group would provide a good cross section of the industry. This is just an informal discussion for our own enlightenment...thanks in advance for your input!

 

[Gavin Greenwalt]

I price everything in life the same way: what's the least hassle and makes me the most money?

I like to bundle where possible and as long as it makes money where I wouldn't otherwise I'll happily cut a deal to make it happen. What my time is worth is often changing based on how I feel that year/month/day and how easy or interesting the job sounds. Want to fly me some place I want to go? Discount. Are going to be a PITA nit picky client? Surcharge.

Generally I just think up a number and then make the numbers work between all the various line items.

 

[Terry VerHaar]

Cost-based pricing vs. value-based pricing?

Cost-based pricing vs. value-based pricing?

Tom - it seems to me that the pricing model in this industry, now and looking forward, should be the focus of a case study for Stanford business school. As witnessed by the immense range of approaches discussed here and on other forums, it seems, to me, that pricing is anything but a science. Most people seem to approach it on a "time and materials" basis, at it's core. They quote a day rate; equipment included or a separate rate. From there, negotiations might ensue based on budget considerations, prior working relationships, trust, known quality of work, length of assignment or other "special considerations. For those in an "individual" role such as a gaffer or a DP or an AC, they are subject to the Producer making a very subjective decision about their "package" and they can be in jeopardy to lose the work to another individual simply because he/she seems "cheaper." How many assignments have been lost because a Producer simply chose the lowest bidder? When the approach to pricing is done this way, then it seems clear that the established pro with an established client base has an advantage, but is not immune from "the race to the bottom."

Because I am not (yet!) well-established in this industry, I am faced with the dilemma of losing "fairly priced" bids to more well known DP/cinematographers (perhaps justifiably), or cutting my prices so I am attractive to a producer - and, in doing so, leading that "race to the bottom." Neither is a good strategy because you never make a living wage yourself while also f*^king up the overall market. Lets face it, despite the increasing demand for video content, there does seem to be an abundance of folks who are willing to shoot for low wages.

Whereas this approach is something of a "cost-based" approach (what's my time worth, what's my equipment worth?), the approach I have been contemplating is more of a value-based one. This tends to recognize what the producer can afford while also taking into consideration how good I might be at delivering that product. It takes some of the risk off the producer and might make me more attractive to the project. A rough and hypothetical example might be - a producer says he is shooting a commercial and expects to shoot for 3 days. We discuss his vision for the project and get a sense for his needs and, rather than saying $X time 3 days for me, plus camera, etc, I might say: I'll deliver to you 4K ProRes 4x4 files on a hard drive, one-lighted and ready to ingest. You'll also get original R3Ds delivered on two separate drives. Maybe I'll even suggest bring my own DIT/offloaded so he doesn't have to worry about that. Going further, if there is a crane shot or a steadicam or a dolly, I'll offer to take care of that, too. You get the idea, which is to promise a deliverable and to price it attractively - based on its VALUE to the client, rather than it's supposed COST from my internal perspective. For all this I might quote (again, hypothetical) $5000 which would also cover things like prep time, travel, maybe even be willing to absorb some extra shooting time if the project goes over, making the client feel less vulnerable.

You get the idea. It's hard to cover all the possibilities here but the bottom line is, perhaps, approaching the pricing issue from the perspective of the value added for the client vs. some sort of hard line assessment of what time is actually worth (since it would seem that most folks do see their "time-value equation" as somewhat flexible.)

More thoughts?