A lot of people, especially the ones who are just starting out in the multimedia industry, have no idea about pricing their services for video production, graphic design or animation in the Philippines.And because of this, it has made the industry under-value the skills, training and time , artists have invested in their respected fields for years. Hence the start of the trend of the modern day, starving artist cliche in multimedia.
I remember a colleague of mine argued that the only people who call the shots in the industry are the producers and the clients. And the only way to convince them to hire you is to set the lowest price possible until they can maximize their profit. While I have no arguments on their objectives about profit, I find it troubling that they don’t see acquiring your skills as an investment or added value to their brand. And I don’t believe that to be hired, means having to price your services so low, that it will then be the base price for other clients to compare. Good service or skill requires fair compensation and you should not be afraid to say NO to clients if they are being unreasonable. The relationship of a client and artist should be a two-way thing and not just on the side of the client or producer.
And because of this presumption by artists in the industry (including my colleague), many oftentimes fall victim to a producer’s cheats and manipulation of undercutting and corruption. The most sickening part of though,is that artists in the industry are brainwashed to accept this as their reality.
This is also why most of our most talented professionals choose to work abroad instead.
These cheats are getting more and more common amongst the local advertising and tv broadcasting circle of producers in the philippines. They have somewhat created a cartel amongst themselves so that they can make the most profit, leaving us artists to fend for their scraps and forever be on the losing end of the table.
What if you use those same tricks of these producers in other businesses?(See Video Below)
Throughout my career, I am very much against these producers who trick new incoming multimedia professionals into offering their services in exchange for exposure, unreasonably low prices or for SPEC Work. These one-sided deals, act like a cancer that slowly kills the industry as more and more people agree to it. It is up to us to band together and to put a stop to this while we still can. Producers should not dictate the course of the industry. Artists should learn how to demand a fair conpensation for their services and band together to establish a standard price.
For this post I thought I would share with you a pricing formula I have researched from several business books that talked about pricing in the service industry. I have used this formula for almost every awarded project to me and it seems to provide a very accurate and competitive estimate in terms of valuing the right price for different types of projects.
For any type of project I handle, I look to three key things to find the right estimated value and add them all together so that I can provide my client an educated bid. Below is also a sample of a creative brief so that we can try and use the formula.
An infographic video project that is 1-3 minute long for a tech startup company. The timetable is one week and would involve two freelance artists.The script, background music, and voice-over audio are provided by the client.
LABOR + OVERHEAD + MARKUP(20%) = FINAL PRICE
(52,000) + (1,100) + (10,620) = 63,720
LABOR = (HOURLY RATE * DIFFICULTY LEVEL / SKILL LEVEL ) * No. of Hours Total )
In this area, you will need to know the total cost of man-hours. Labor has three things to consider: 1) the type of job and its hourly rate; 2) what certain level of skill it takes to finish the job or its level of difficulty; and 3) the total no. of hours it takes for you to finish the job.
HOURLY RATE – While I was at ABS-CBN IPOST, whenever we are asked to do a job, we were required to fill out a job order which contained the Type of job you are required to do. (either Graphics Animation, Graphic Design, 3D Animation, 3D Lighting & Rendering, 3D Modeling, Editing, CG Supervision, etc.).These can go up to 250 pesos per hour to about 500-600 pesos per hour depending on the industry standard. The hourly rate is then multiplied to your current Skill Level or also referred to as the projects difficulty level. See example below
*Please take note that if you plan to work in teams, each task is considered a different person so make sure to create a separate computation per artists and add their Skill Level and total no. of hours separately before adding them all up.
Person Name Task Rate/Hr Skill Lvl No./Hrs Total
Nikki Graphics D. 250* 3* 16 (2 days) = 12,000
Gerard Animation 400* 5* 20 (3 days) = 40,000
*Cost of Labor(only) for one week Project = 52,000
SKILL LEVEL – The skill level is determined by your supervisor from the outputs you produce either from your practical exam during hiring or from your milestones you reach while working at a corporation. Your skill level also increases as you get more experience through the years thus making you more valuable as you build more tenure. For now, if you are starting out as a freelancer, try to determine how many tasks you can perform and at what speeds and competency you gauge yourselves for each one. Usually everyone starts with a skill level of 1 but if you think you are an above average artist, you can bump up your skill level to 1.5 -2 ( Ex. Graphics Design 2/5, Motion Graphics 4/5, Video Editing, 4/5, Coding 1/5). Mind you the skill level can also be a multiplier to determine the level of difficulty a project is for an artist. For example, if a certain video project is just a 30second long animation but includes elaborate 3d/2d animations, one can assume that it would be very difficult to finish within a week, thus you might consider setting a skill level of 4-5 when computing for the labor cost. Pricing it higher also helps you get the fair compensation you deserve for those long nights you spend on certain problematic projects.
NO. OF HOURS TOTAL – This is the total number of hours you need (or the total estimated no of hours if you are asked for a fixed pricing) for you to complete the project. Be aware also that a person cannot work straight for 24 hours, so 8-10 hours per day is the maximum amount of hours you should consider. If you need to finish a project sooner, you might want to consider hiring extra help to help share the workload.
OVERHEAD = EQUIPMENT FEE + SOFTWARE FEE
Overhead expenses are the costs of all of the tools and resources you need to be able to do the job. As a freelance consultant, you would only include the equipment and software you use. Otherwise, if you own a company, the overhead would include other things like Rental Cost, Electricity, Internet Connection, etc.
EQUIPMENT FEE – This is calculated by adding up all the costs of the tools you use for a project ( Example: Canon Cameras, Tablet, Mouse, Laptop/Editing Machines). After you have added up the cost, determine the lifespan of these tools and divide them by the number of years you think they will last until you need to replace them. (Example: MacBook Pro: Php 150,000/ Lifespan 4 years = 37,500 per year or Php 102/day). By adding this to your cost, you will have the funds to upgrade your equipment before it breaks down without having to use the money you earn from LABOR costs. Trust me, this will be a lifesaver in the future.Because I remember one time, during one of my projects, my laptop was already 4 years old. In the middle of the project, it suddenly stopped working with only 2 days before the deadline.That day I ended up buying a new laptop using my savings for almost 3 years. Lesson learned, I hope you won’t experience the same thing but its best to always come prepared.
Nikki Macbook Pro (240 pesos for 2 days)
Gerard Macbook Pro (360pesos for 3 days)
SOFTWARE FEE – There is a saying, a designer who uses legitimate software attracts good clients and discourages bad ones.
A lot of software companies today offer a monthly fee as low as 2000 pesos a month for a whole bunch of different jobs. Charging your client for software fee lets you negotiate a good downpayment when you explain to your client that the downpayment includes purchasing the software(s) you would use for the project or else you cannot start.This helps weed out the problematic clients.
Php 2000/ per month Adobe Creative Suite
Nikki Adobe Creative Suite ( 100/day for 2 days = 200 pesos)
Gerard Adobe Creative suite ( 100/day for 3 days = 300 pesos)
MARKUP ((LABOR + OVERHEAD) * 20%-500%)
My multimedia business students often ask me, what are the benefits of being employed versus being your own boss. Well, this is it, your markup price. When you are an employee, you are only paid for the work you have done for the month or the project but, if you are a freelancer, the markup is added to the money you earn from labor. It can start out as 10-20% of your overall cost from Labor and overhead; or if you have built your reputation for years, you can raise it to 100%-500%.A lot of freelancers often wonder why even though they have been in the industry for so long, they are just breaking even with their cost of labor and overhead and don’t seem to have the resources to upgrade and grow their business. That is because most of them forget to add a markup price to their costing. Lots of other business add markup to their prices to help grow their business.
With the markup price, you can stay competitive and provide a fair cost estimate to a project without sacrificing your compensation. A freelancer could choose to raise or lower their markup to match the client’s budget. By altering the Markup range and not the labor plus overhead, one can be sure that the work is not undervalued and you are fairly compensated.
This is the most time-consuming and toxic part of a project. Having to come back and re-work( or sometimes start from scratch) all the things you have done for a project.To help limit this step and stay profitable, I usually state in the contract that my initial bid includes of 4-5 Minor Revisions or 1 Major Revision.
Minor revisions are fixes after the project that are easy to do From the start I make it so that the client knows what these are. See example below
Allowed for Minor Revisions:
1) Change Font,Font color, font size,Text Position,Text Layout,Text contents.
2) Change Background Color/Background Layout
3) Change Sound
4) Change Design of Graphic Elements for 1-4 items.
5) 1-2 simple changes in animation
Major revisions are the fixes you do to a project that is very time-consuming and difficult to do especially with a tight deadline.
Major Revisions are considered when the client asks to:
- Re-Layout of all of the Graphic elements
- Re-design of all Graphic elements
- Re-Animation of the entire video
- Or redo an animation for a particular part of the video ( this will be on the artist’s discretion)
Whenever you engage with a client in the Philippines, I know most of the time their payments will be delayed. To compensate for this you want to move on to the next project as soon as possible to make up for lost time.But being bothered with endless revisions even when the project schedule has passed, makes it difficult for you to do move on. Most of the time you might end up with 4-5 projects all on top of each other with the same deadlines because they have compounded on one another through time.
Less Revision, Lower Price
To help avoid this I make it a point to tell my clients that as an incentive if the project is done within two weeks, I can give a discount of 5-10% because they have requested fewer revisions or no revisions at all for the project. That encourages them to be more careful in their instructions and be less flaky on their mood swings during approval time.This in turn also becomes beneficial for you as a freelancer because now, you are free to entertain other projects after two weeks and avoid compounding with other project schedules.
Pay now, discounted price.
Another thing I do to help avoid this problem is to give incentive or discount to clients who pay-up-front from the start of every project.When a client pays up front I give a 5-10% discount from the initial costing ( which I deduct from my markup).That way even though the price is discounted, as more projects pay up front, this, in turn, will help increase your cash flow allow you be more profitable.
Moving deadlines, Higher Price
One of the things that are most deadly with working on projects is moving deadlines from the client’s side. This is because you take in more costs as the deadline is changed to a shorter or longer timetable.
A) If a project that is set for a 1-week timetable and adjusted to 3 days shorter compared to before, the artist will need to do a lot of overtime to finish the job.This, in turn, will add more working hours to the cost. These additional hours could also make the difficulty level to increase because the artist also needs to work faster. One way to help reduce overtime is to hire another freelancer to share the load. But all in all, making the deadline shorter increases the cost of the project by an estimated 40-60%.
B) If a project that is set for a 1-week timetable and was adjusted to extend beyond that because of revisions will also take in costs for you because you will be working on extended hours already. If the client exceeds the agreed revisions agreement, I ask them to pay about 5-20% of the total cost per week. Having to do revisions for past projects on top of new ones limits your focus in doing the job which might get you into trouble later on so try to discourage them anyway you can.