There’s a HUGE mistake I see young filmmakers making when it comes to making money. That mistake is charging hourly. Now I get it… this makes sense for some services (like post-production). But if you run a production company or are a director you don’t have work like this.
Let me fill you in on an industry secret to make a lot more money, feel less stressed, and land better quality work. It’s charging by the project instead of hourly.
Why Charging Hourly Can Suck
When you charge hourly, a lot of painful things happen for both you and the client. For one thing, you’re limited in scope. Because you’re charging hourly the client doesn’t you as the leader of the project.
You’re not able to hire other folks or spend money on other areas. This includes gear rental and other freelancers to make the project better. You’re limited to what you can control. And if you want to get any of those things you have to jump through a bunch of loopholes with the client.
The Final Project Won’t Be As Good
You’re also not in control of the final quality. Straight up… your video is not going to be as good. By charging hourly you are a cog in the machine. You’re not a manager, you’re not in control of the broader vision of the film, you are an employee and that’s it.
Another issue with charging hourly is the fact that time is limited. You can’t scale time. This means that your income is limited. You can only make a certain amount of money by charging hourly. I got stuck in this world for a while… and struggled to make enough money to pay the bills. Sure you can raise your rights… but then those price-gougers come in.
The other freelancers that are undercutting you every step of the way. Sure you might be able to scale up your hourly rate or your day rate, but there’s always somebody that charges cheaper than you. So you’re having to adjust your hourly rate or day rate to compete and that’s not helpful for anyone.
Lastly, you’re not rewarded for working efficiently. This goes back to those other freelancers. Sure they might be cheaper… but you know that you can get the project done 10x quicker than they can. However, you only charge 2x the price they charge.
You’re not incentivized for working quicker. And you’re not getting paid for the value that you’re actually bringing the client or agency.
What Does it Look Like to Charge By The Project
Now imagine if you could jump outside of these issues. And you can charge for the entire project. One you wouldn’t be stuck to an hourly rate. You would be able to scale up and make a lot more money in the long-term.
You also can hire others to do the work that you hate. And focus on doing the work that you love. All while making a lot more money at the same time.
This means more security for you, your business, and your family. Charging by the project also allows you to do higher-quality work. You can hire folks to level up the production value.
The client is trusting you on the project and giving you the reins to the project from start to finish. They’re putting a lot more trust in you and paying you for it, by relying on you to be able to hire the best team to make this project amazing.
Let’s be honest, you know better than the client what editor is going to work best for this project, or which Director of Photography you should hire. You know the industry better than they do.
Rather than being a cog, you get to put together the machine and deliver a high-quality video for your customer.
When you do higher-quality work your reel becomes better. And in turn, because your reel looks better you’ll actually attract a higher quality of client.
Good work attracts good clients. We’ve all been there, where a client wants an amazing video for the cheapest price. And they are never happy with what you deliver. They’re the ones that come back for constant changes and tweaks.
Better Quality Work = Better Quality Clients
By doing higher-quality work you’ll be able to attract a higher quality of client. The best way to make higher-quality work is to own the entire project from pre-production through and post-production. This allows you to deliver something that’s amazing instead of just being a tiny hourly rate employee.
The best part about charging by the project is being able to make a lot more money. This is how I started making 6-figures within my first year of freelancing. I’ve been through the process.
I wasn’t charging hourly I was charging by the project. And as I did more projects my reel became better. And because my reel was better I ended up attracting even better projects. This means higher quality clients, clients like McDonald’s and Nissan.
Charging by the project has enabled me to scale my business up and make a lot more money. And at the same time, I’m able to hire friends on these projects and work with folks who are way better than me.
How Do You Make the Switch?
So how do you switch from hourly pricing to project pricing? the first step is making it clear to clients that you don’t charge by the hour you charge by the projects.
The next step is being aware of folks you can hire and what their rates are. When you create the budget for the client, include those folks you want to bring in and put that in the budget as well.
The beauty of this is you can charge them for the projects and you don’t have to skimp on anything. You can look for the best freelancers to give the best quality for the client. This allows you to scale out the cost of the projects while at the same time scaling up the quality.
Another way to get out of the hourly mindset, is to think about the value you’re video is bringing. How much money is this going to save them over the next year? How much money is this going to make them over the next year?
If you’re creating a video ad for a company, how much ad-spend they’re going to put behind a video? How many leads and customers is it going to generate them as a business?
Then you can tailor this video and make it amazing to give them results they want (leads and sales).
If this video is going to generate the client $1,000,000 in sales next year then you should have no problem charging them $60,000 for the project. If you know they’re goals, and the results they’re after – you can deliver an amazing video that helps them hit those goals. They’re paying for results.
At the same time imagine you charge them hourly for a video like this. One, you’re not aware of what the video is for or what kind of value it’s bringing. And two, you’re not getting paid based on the results you bring them.
So figure out the value you’re bringing, and allow that to help you navigate the project cost. It will also help you educate clients on what video projects are worth it, and which aren’t.
You Can Do This. Make the Switch!
You’re not a workhorse anymore. You can move out of the hourly rate game, you can become a trusted adviser to your client.
Think about it… you are an authority in the video production industry compared to your client. You have a pulse on what works, what doesn’t, and you are the best people to hire for a project.
So go out there and start charging by the project.
I’m going to write more articles over the next few weeks about how to raise your rates, how to budget out projects, and also how to land new clients.
If you need help on budgeting out a project, or have success, send me an email at firstname.lastname@example.org.