Local TV and Cable Spot Production Rates
 

My business is still in the early stages but I'm finally getting some wheels under it. I've done a few spec spots to demonstrate my ability. What I am trying to determine is a reasonable rate to charge in the future and the method by which payment is to be made.

I'm not at the caliber that will be producing network material. But then, I'm just one guy. I do have professional training and a background in Radio and Video production. I am capable and I feel confident that my material is good enough for clients looking to advertise on local TV and cable systems.

But determining a fee for producing a 30 second (or 60) is difficult. Now I know it will utimately be determined by what the market will bear. I had thought of approaching other spot producers. I wouldn't think that they'd be too eager to divulge information to a potential competitor. I wouldn't.

The 30 or 60 second spots are for the average "locally owned and operated" type business. Places like local car dealers, local restaurants, furniture stores, etc.

These places make money and usually benefit from TV ads but, they don't have a huge budget for production. So instead of fancy, high tech commercials, they have those "down home, we're one of you" feel. Not a great deal of lengthy shooting or elaborate editing. For the most part the spot can be shot, edited, and delivered in one day. I don't offer one-day delivery but all together, there's probably a full day into production from beginning to end.

I would like to hear the opinions of others who are doing something like this if possible.

Is $400 a reasonably fair price for producing a 60 second spot? Is it to high? Too low? What are others charging?

And should I collect any payment for the shoot upfront. Should I collect upon delivery. I know I won't be billing. I'm not too crazy about even showing up if I have no guarantee of compensation for my efforts. Though it may only take a day to produce, I don't want to waste time only too hear "this has been a slow week, can I send you a check next week?". Sorry pal, just because it's been a slow week for you doesn't mean it has to be a slow week for me.

I shoot with a Sony VX2100, edit on Vegas, and print back to DV tape. The local cable company (most feasible broadcaster in my rural area) accepts MiniDV format. They also charge $4 to 8 per 30 second spot. The local cable provider serves 4 counties in NW Ohio.

Any guidance or insight is appreciated.

Jeff

You're leaving out the MOST IMPORTANT element. What you need to make to run your business. A basic model is to tally all your expenses from housing, food, utilities, equipment maintenance and upgrades when the time comes.

Your rate should be based on about 20-25 billable hours a week (the rest doing all the other "unpaid" things you do to run your business).

I wouldn't do flate rates since you can lose big time that way UNLESS you offer a "forumula" service which is a very specific package.

I've done local cable spots. A typical spot will be either a half or full 8 hour day shoot and 6-8 hours of post production. That can change though depending on the need for graphics, music, voice over, number of set-ups for the shoot, etc.

Cable companies often do production at a loss in order to sell the airtime. If you're good and your rates low enough, it's possible the cable company itself will "sell" you for their lower budget clients (where their low budget production plus small ad buy would be net a loss for them).

Billing the client. For local spots I'll often ask to 1/3 in advance (if you get enough advance notice) to firm the shoot date and the rest at the end of the day of the shoot. I want to be paid in full before editing begins. If you want you can do 1/3 in advance, 1/3 on day of shoot, 1/3 on delivery. On delivery means they only get the tape when they hand me the final payment. On delivery is not after delivery.

I do think it's good if you bring in the spot to the cable company yourself. Since they don't really make money on production, they'll appreciate that you're bringing them ad buys.

There are also some perks or add ons you can offer to help make the sale/add a little extra income. Offer to compress the spot so the client can use it on their website. Since there's no time buy involved in that, the client might feel they're getting an added service even the cable company doesn't offer. Don't forget every business who pays for you to produce a spot is also a potential customer for additional sales. Consider offering to do "in store/point of purchase" videos for them too. In many cases you can use some of the material you shot but didn't use in the spot due to the 30 or 60 second limit. Doing a 2 or 3 minute version for in the store display can add more details and may even answer some questions the potential customer may have based on what they saw in the spot.

Thank you Craig for your response.

As far as leaving out the most important part, I did leave that out although I had considered it. Right now, I still work a regular 40 a week "real job" that covers living expenses and family expenses. But it is my goal for my own business to replace that income. I have a 5 year plan for achieving that.

I operate from a home office to keep expenses to a minumum. In my mind, a brick and mortar location will give more legitimacy to my business and I plan to reach that point inside of 2 years. I do have a website www.emeryvideo.com , and I have contracted for 2 regional YellowBook display ads which will appear in the edition coming out this fall.

I'm in the Toledo OH television market. However, since Toledo is about an hour away, I think the local advertisers will be more inclined to use the local cable company serving our area. This is Time Warner (which bought Adelphia, at least here).

I had a very pleasant conversation with the cable rep who gave me the rates I mentioned previously. The rep told me that they do not do in-house production. The local avail spots they get come from 3 or 4 production companies serving my area. They do refer advertisers to those companies and he told me if I can send some advertising business his way, he'll be helpful enough to add me to the list.

I wasn't planning on being a one-stop ad agency, so to speak. I did intend to wear many hats though.

My formula, for lack of a better description, is to:

Make cold calls by phone or in person to talk to potential clients about video (and radio) commercial spots. I'm hoping that I will get calls once my YellowBook ads appear, but as we all know, advertising is a crap shoot. It may work or it may be wasted cash. I'm betting it'll work.

I will produce the spot. Although it may sound a bit pompous, I believe I have what it takes to write an effective script, shoot the supporting video, edit, and deliver a final product that represents the message that the client is trying to convey. I will, of course, listen to the client so I can understand their needs and wants.

That's as far as I was going to go with it. I would expect the client to take the produced commercial to the ad rep and make their own airing deal. I will provide them with ad rates for the local cable broadcaster (and radio stations if they are just going with that). Quickly on the subject of local radio ads, I worked as an announcer in radio. I know the stations produce a lot of spots. The trouble here is the announcers are not very good. They have the same person doing 2 and 3 spots in a break. And their delivery is always the same, whether doing a commercial for a local bank, restaurant, or a funeral home. My approach for that is to offer a different voice and style that will make their commercial stand out in the sea of mudane spots being produced by the local stations. But I digress.

I also figure that I am on the production side. I don't want to be the go-between for the advertiser and the broadcast company. That way if they have problems with billing and such, I don't have to hear about it.

Jeff

Overall good plan.

Keep in mind to charge for writing the script too. Of course if it only takes you a few minutes you can burry it in with the general cost. If you face client approval and revisions on the script or the spot itself, you have to guard against that. I include that in the total cost. That's why my packages are based on half day/full day (8 hours) and it includes revisions.

I think you should target your rates based on what it would cost to live on your own. If you go too low now it'll will come back to haunt you. Referral business will likely be based on the same rate you charge now and you'll lose clients with a significant rate increase once you're on your own. Charge as if you're living on your own and you may soon be able to do that.

Unless you need office space, home/office is a good way to keep costs down. You don't want to have to increase your rates so your clients have to pay your additional rent/utilities unless there are serious logistical problems working from home or you need space to include area for shooting etc.. If you need brick and mortar to impress it'll impact your expenses. Keep in mind local cable spots is a low budget operation. I'd suggest let your work do the impressing and not an office.

One comment on your site. I wouldn't include wedding video with tv spot video on the site. Keep the two areas separate. It may depend on your market but people like to think they're hiring somone who specializes in what they need.

The one thing your demo spot needs is a graphic for Don's Music. It could be a lower third phone number or web page or and end page with the same.

Also don't forget talent has to be paid as well. If you're doing the voice-over, then you should get a talent fee for that as well as the fee for producing/directing. If someone else is doing it, other than the client, don't forget your rate must cover their pay as well.

And any music you use is going to require licensing. Folks doing weddings might be able to get away with using copyright music without licensing - even though it's not legal not too many producers get caught - but broadcast advertising is a whole nother ballgame and you absolutely, positively must obtain the appropriate licenses and pay the requisit fees and you should include that in the charges to the client.

Thanks Craig,
I added a graphic at the end.

Steve,
Thanks for the input about music licensing. The positive side of that is there is a guy that works part-time at the music store currently demo'd on my site. He is a guitar player extrordinaire, has played professionally with recording artists and has his own album.

He has asked me to do the shooting for his video demo. In exchange for my efforts, he is giving me license to use his vast library of original music tracks. I'll also be able to feature my edits of the video on my reel. And because he has his own studio where he records other bands, I'll pick up some business shooting those too. It's a Win-Win situation.

For additional music I'll be sure to add on the license fee.

Thanks again,

Jeff