Undercutting

[Jim McKinney]

I've started this thread in hopes to provide a forum about the topic of "undercutting," a topic that seems near and dear to the hearts of many. Also, we can discuss this topic directly here, rather than hijack the threads of people trying to advertise a certain rate for kit or services.

There are two sides to the issue (at least). Let's try to be respectful and civil to those on the opposing side of the issue. It seems there are two truths out there:

1. We have a right to charge whatever we want to.

2. We have a right (or should) to voice our opinion if we feel someone is undercutting the market. (but should be polite when doing so.)

At the end of the day, it all boils down to "What's a fair price that's sustainable and allows for future innovation and a working business model?" The equation can differ from person to person.

 

[Cüneyt Kaya]

my rates depend on the project, a starving artist gets the price of a bottle of water if i like the project, a well budgeted project has to pay my price if they want to work with me, that simple.

 

[Stephen Williams]

Historically equipment has rented out for 1% of its cost price per day with a 3 day week, when rates are higher than this, more people enter the market until prices fall substantially below 1% a day. At that point companies start going bankrupt & rates rise. Welcome to the realities of the rental business.

 

[Emmanuel Cambier]

Pretty well summed up in only three posts… that's the spirit.

 

[Cüneyt Kaya]

a starving artist did get my RED for a 10 day shoot for 2 Red Bulls and a package of cigarettes,
now his 20 min short will premiere at Berlinale...its a cheap price i payed to see someone so happy and the movie is damn good

 

[Martin Weiss]

The upside of selling yourself cheap (i.e. under the going rate) is that you make yourself more attractive to potential clients, it might help you enter a relatively closed market.

The downside is that a) you might not be taken seriously; I myself experienced that when I was looking for freelancers and threw out the too cheap ones; "At that rate, he cannot be good" b) your clients might expect you to charge the same low rate on future projects - you will have a hard time arguing why they should suddenly pay 2 or 3 times as much for the same perceived service c) your fellow workers will dislike you for polluting the rates; at some point or other you will need their help and people tend to remember these things d) this is a hard-to-sustain business model; you can only develop your company and support your family at this rate if you work pretty much every single day of the year.

So it really comes down at how you plan your future. Do you want to be that cheap guy, or be taken seriously?

My advice for anyone considering that "cheap" route is to a) Find out what the local/regional rates are b) Make yourself available at a slightly (not extremely) lower rate and make sure everyone understands that this is limited to a certain time period. That way you can meet some clients (who might likely be the kind of clients you don't really want) and build up a showreel.

 

[Stephen Williams]

The upside of selling yourself cheap (i.e. under the going rate) is that you make yourself more attractive to potential clients, it might help you enter a relatively closed market.

The downside is that a) you might not be taken seriously; I myself experienced that when I was looking for freelancers and threw out the too cheap ones; "At that rate, he cannot be good" b) your clients might expect you to charge the same low rate on future projects - you will have a hard time arguing why they should suddenly pay 2 or 3 times as much for the same perceived service c) your fellow workers will dislike you for polluting the rates; at some point or other you will need their help and people tend to remember these things d) this is a hard-to-sustain business model; you can only develop your company and support your family at this rate if you work pretty much every single day of the year.

So it really comes down at how you plan your future. Do you want to be that cheap guy, or be taken seriously?

My advice for anyone considering that "cheap" route is to a) Find out what the local/regional rates are b) Make yourself available at a slightly (not extremely) lower rate and make sure everyone understands that this is limited to a certain time period. That way you can meet some clients (who might likely be the kind of clients you don't really want) and build up a showreel.

Hi,

I would be vary wary of giving a low price the first time you work for a company. They will enter what you ask in their system & you will never get any more than the original price. Rates are virtually unchanged in 20 years.

Clients will use you for 2 reasons:-

1) you are good at your job & they will pay what you ask.
2) you are the cheapest in town, they don't really care about quality just get people to work for Free or nearly free. There are 1000's of other people who will work for very little & throw in a Red, EPIC or whatever the camera of the day is.

Stephen

 

[David Adamic]

I was ready to purchase a Red by the deadline at the end of October until I saw this in my local area:

I'm pissed off at all the OVER INFLATED prices for gear and services in the
world. It's a DREAM killer!!! I'm sure most of you know the feeling.
I researched rates for the " RED ONE" to use for my current project "&D#*G#" and
the prices are a RIP-OFF!!!
So instead of RENTING it, I bought it!!!
And to prove that dreams don't have to die I want to offer my fellow filmmakers
a NO-BULL RATE at 500$ a week for use of my studio and any gear I have.

I don't have everything, yet, but what I do have I offer to you.

FOR 500$ a week You will get:

1.RED CAMERA 24/7

2.Studio use: (4) hours a day.

A week later I got email saying $750/week and a couple weeks after that $100/day.

Personally, I'd rather let the thing sit and collect dust then let it go that cheap. Still, it's his right to do what he wants with it.

I think he's going to get a lot of bottom feeder clients that don't know how to treat the gear AND don't understand the post process and a lot of people are going to be frustrated.

 

[Jim McKinney]

a starving artist did get my RED for a 10 day shoot for 2 Red Bulls and a package of cigarettes,
now his 20 min short will premiere at Berlinale...its a cheap price i payed to see someone so happy and the movie is damn good

Cuneyt, I applaud your attitude. It is nice to help someone out and watch them take full advantage of the opportunity.

 

[Shane Kelly]

I have to agree with Stephen on this, be very wary of giving a low rate the first time that you work for a company. It is extremely difficult to get them to increase that rate later on. First off, you need to let them know what your ideal rate is. This can then be negotiated upon but you need the producer to know that they are getting a deal. You can even put this on your invoice as a discount. A way that I sometimes do it is to stick to my rate but throw in some gear such as my 17" monitor which would cost them $150 to rent from a rental house. So you are negotiating on gear rather than your talent.
I usually keep my rate as a DP separate from my equipment rate as the equipment can vary widely and I don't always use my own gear. It's better to discount gear than your own rate. It can be hard to turn down a low ball offer when you have no other jobs but it will pay off long term. If you are good at what you do and your rate is reasonable, they will find the money.

 

[Michael Lindsay]

Hi

I've thought for along time it is better to work for free than for cheap. If a project is worthwhile and your cost is so high that your costs will stop the project happening then working for free (or offering equipment for free) is sometimes a good thing to do. Not charging at all lets it be known that there is a charge and free is NOT it. Working for cheap skews everything and cannibalises the industry..

Ultimately most come to understand that price is not a USP. There is always somebody cheaper.

my pennies worth..

Michael L

 

[Jim McKinney]

Absolutely keep your day rate (for services) separate from your kit rate. They should be two distinct items. Not only to keep numbers straight (as the camera package expands or contracts - or your services do likewise), but politically, it's less likely to cause confusion with your dialogue with the producers.

 

[Jim McKinney]

How many have heard this one: We really need a really good deal on this one, but we've got several more jobs coming down the pike?

 

[Shane Kelly]

How many have heard this one: We really need a really good deal on this one, but we've got several more jobs coming down the pike?

just reply: " pay me full rate on this one and I'll give you a deal on the next one"
that's what I'd like to say anyway....

 

[Stephen Williams]

How many have heard this one: We really need a really good deal on this one, but we've got several more jobs coming down the pike?

They forgot to say that the later jobs will have to be cheaper still.

When asked by a new client to do a special price, I always say I will charge full price for the first job & give them the price they ask on the second job. No producer has ever taken up that offer.

 

[jimhare]

This conversation should also address the difference between a formal rental house and an owner.

A rental house is offering a very different service, giving a lot of support, lens choice, back up and confidence-building infrastructure.

When someone just gets a friend's "kit," they compromise on most of these things, and should expect to pay a lot less.

 

[Stephen Pruitt]

I'm probably one of the few pathetically sad RED owners who doesn't like to rent out his gear at all. I mean, if the rates were decent ($500 a day), then maybe. Less than that and it just doesn't seem to make any sense to me. It just isn't worth the hassle and inherent risk.

I do do jobs for free for non-profit projects I applaud, but, here in Kansas City, there are precious few of those.

Stephen

 

[jimhare]

I'm with you Stephen. I don't rent mine out. I get these ridiculous calls about being able to get the guy's down the street for $350 so that's what I should expect.

I say I don't expect anything and hang up! :cursing:

I have spent about $100k so the 1% rule should mean $1000/day. Yeah right!

It's a wonderful tool to own and have 24/7 access to. I wouldn't trade it for anything!

 

[Scott Schneider]

How many have heard this one: We really need a really good deal on this one, but we've got several more jobs coming down the pike?

We hear it every single day.


And let me add a few more:

“I have a bunch of buddies in the industry; I can pass along your name to them”
“It’s low budget…it’s zero budget…our budget is tight…we only have $x.xx in our budget…”
“We are film students, can we get a deal?”

 

[scott william]

100K thats a lot of cash jim! Are you freelance or do you have a day job like most of us?