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Old July 28th, 2005, 03:29 PM   #1
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How do you set pricing?

I'm trying to set up an internal package pricing formula and was wondering how some of the more established guy have done it. I know alot of it has to do with quality of the product, experience, which events are covered, and so on.

I have broken it down to the most simple aspects of my business. The first is the amount of time that I spend shooting, transfering, editing, rendering, DVD authoring, and DVD/case preparation. I don't think it's far fetched to say that it could be as much as 40-60 hours per client. So then I have to decide how much my time is worth (this is a night and weekend gig for me and I work 44 hours per week with my day job). The next thing I consider is the cost of supplies, such as DVDs, cases, case covers, and ink. If I really wanted to get technical, I could include electricity and personal car mileage. Finally I consider the wear and tear on my equipment, such as camera, computer equipment, sound equipment, and tripod/monopod. If depreciated over a two year period, I have determined how much would I have to charge in addition to labor to make enough money to replace these items, if I do one wedding a month on average over two years. Even if I don't have to replace some items after two years, I still have to recoup the money I shelled out for the equipment in the first place. Additionally, I didn't even include potential advertising expenses.

I was amazed that what I have calculated above is actually very close to what the going rate is in this area. Can anyone confirm or reject my line of thinking? How do you set pricing?
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Old July 29th, 2005, 11:18 AM   #2
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No one has an opinion on this or have I been black listed?
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Old July 29th, 2005, 11:30 AM   #3
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For younger companies and those who do not do this full time, I think the formula needs to be heavily weighted to include the current market value in your area. As you get more experience and the quality goes up, I think you can get closer to what your time is actually worth but I think many of us make a pretty low rate per hour if we were to do the math that way. If you look at photography as an example, there is more demand for that product and it is essentially a staple for any wedding. Because of that, many photographers do very well with providing mediocre quality. If you consider the amount of time that goes into a photo edit as compared to a video edit, as well as the additonal editing equipment needed, a video should be, in my opinion at least 150% of a reasonable photography charge. Now if you try charging that in the beginning, I think you will have a lot of weekends off.
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Old July 29th, 2005, 12:06 PM   #4
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I am sure that most do, however most may consider this a "trade" secret. A quick google search of your area brings up some info:

http://www.thebridesbook.com/marketplace.php

Check out what others are doing. In your area it looks like the starting rate is $775.00 and tops out at $2,000. Do some research. What I charge for weddings will be different than what is charged in Seattle, New York ect. "Know thy market." This is the best advice I can give, if you have an idea what the market is you can go from there. Network with the people in your area. In an informal survey conduted by a group that I belong to, estimates only 10 to 15% of brides actually research and book a videoagrapher so there is pleanty of work to go around. Also look at your skill and product compared to others and "honestly" ask yourself if your product is up to par. Don't talk yourself up and beyond your own abillity. If you promise the moon, you had beter be able to deliver.
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Old August 2nd, 2005, 09:36 AM   #5
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Don't rely on your market to set YOUR pricing...

YOU set your pricing according to COST!

Market Pricing is a bunch of people who include those who are setting their pricing at pennies per hour and not operating a true business.

-DJ
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Old August 2nd, 2005, 09:39 AM   #6
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This is a wedding related forum. For that type of work, I think it is really poor advice to tell somebody to ignore what the market is doing and focus solely on your costs. Our business would not have started the same way if we had followed that route.
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Old August 2nd, 2005, 09:43 AM   #7
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Quote:
Originally Posted by David Chandler-Gick
Don't rely on your market to set YOUR pricing...

YOU set your pricing according to COST!

Market Pricing is a bunch of people who include those who are setting their pricing at pennies per hour and not operating a true business.

-DJ
www.DavidChandler-Gick.com
This is simply bad advice. For two main reasons:

(a) how do you know what your true costs are? and even if you did claim to know your entire costs and were able to apportion them properly:

(b) how are you going to compete if someone undercuts you with apparently the same product?

I believe most people come to the conclusion that you price according to your competition and the alternatives the customer is looking at. Every successful business and industry does it this way for a reason. Including, as you say: a "true business" whatever that is.

You are "only" interested in costs, to keep them down, and your margin up.

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Old August 2nd, 2005, 10:48 AM   #8
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Quote:
Originally Posted by David Chandler-Gick
Don't rely on your market to set YOUR pricing...

YOU set your pricing according to COST!

Market Pricing is a bunch of people who include those who are setting their pricing at pennies per hour and not operating a true business.

-DJ
www.DavidChandler-Gick.com
Ok I'll bite, I read the info on your site, I will say that there are good examples on some levels, however most people who don't check out what others are doing will end up out of business as well. For most this starts as a hobby and works toward being a full-time gig. Some don't want it that way though. As for myself I had to "work-up" to being able to do it. By that I mean I looked (and still look) at what the market is doing. When I started I had no desire to pony-up the type of costs that would have me doing it full-time right away. Instead I built a nice NLE system, and would rent the equipment I needed per shoot. (I added this into my cost, and charged for it) It took a little over a year of not making quite what I wanted, however I was able to save and purchase the rest of the cameras and equipment I needed. Now what I make I keep, and am able to re-direct into my advertising ect. This takes time, and while not exactly the ultimate business model, it is the one that will keep you going and pay-as-you-go so to speak. Nobody wants debt, and I think that if you are really going to do this you need to keep yourself out of debt. One of the main reasons business close would be due to un-controlled debt. We are talking about events and weddings, not a company that does corp. work all of the time, paceing yourself is key. Do not spend so much that you take the joy out what is a great job. If you don't enjoy it or are stressed out to the point of pulling your hair out, this may not be the job for you. Money is importaint, yet if you manage your resources well , plan ahead for those shows ect, and use rental to plug the holes and re-direct some profits into your infrastructure I think you will be pleased with the results, you will truly own your business. And that in its self may be enough.
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Last edited by Devin Eskew; August 2nd, 2005 at 10:53 AM. Reason: changed it to is
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Old August 2nd, 2005, 11:05 AM   #9
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Tim,
I'm in the process of coming up with my prices as well. Devin said to 'Know thy market'. That is EXCELLENT advice. The MARKET sets the price, NOT your costs. Five thousand dollars worth of video gear and another five thousand in editing equipment does NOT justify charging 8 grand per shoot.

The first thing I did was turn to the trusty Yellow Pages and find all the wedding videographers in my area and those fairly close to my area. I went to their websites and printed out their specific packages, rates, etc. If everyone is charging 500 bucks for the works, I know that I would be out of line to charge 1,800. There would be little business, if any. Of course it also depends on how much VOLUME you would like to have. If you want to do only 3-6 weddings a year, charging more may be the way to go. If you never want to spend Saturday with the wife or kids, you can charge a lot less.

I've visited a few sites where I thought that the individual/company was practically GIVING away their services, charging way too little for the amount of work involved. However, for the 'bride on a budget,' it's probably right up their alley!

Hope that helps.
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Old August 2nd, 2005, 11:11 AM   #10
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Quote:
Originally Posted by Martin Mayer
This is simply bad advice. For two main reasons:

(a) how do you know what your true costs are? and even if you did claim to know your entire costs and were able to apportion them properly:

(b) how are you going to compete if someone undercuts you with apparently the same product?
Let's see...

Some schmuck is undercharging for a professional service and in the end is paying himself $1.50/hr, or worse, producing a krappe product that hurts the reputation of our industry, and you think I should look at him for determining what I should charge...?

It's basic business 101. You do not charge less than cost if you want to stay in business. That's so simple an 8 year old with a lemonade stand understands that.

a) uh... How about something called RESEARCH? Is there even a market for you to join? Or is it already oversaturated with low ballers? What does equipment cost? Insurance? Marketing? Labor? Taxes? Rent?

Ever heard the expression "a failure to plan is a plan for failure?" Ever wonder what they meant by that?

b) you compete on quality. You compete on service. You compete via networking.

You don't compete on price. Aim high. RAISE the bar, do not lower it.

Sadly, so many people think that $900 they are charging is "income" - It's not. It's sales. How about what you pay your labor (including yourself) for work performed. Don't forget the cameras and editing system and electricity consumed. What about business cards, advertising, bridal shows, insurance, vacation? What about continuing education, batteries... Furniture?

These are all expenses that most startups (be it video or a coffee shop) fail to fully account for.

I've been in this biz a long time. I've made the mistakes. I see the same mistakes being made regularly. But hey... What do I know?

Go ahead, stay in the basement. Keep the industry in the toilet.

I'm sorry, but I cannot respect anyone who doesn't respect themselves enough to strive for more, not less.
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Old August 2nd, 2005, 11:25 AM   #11
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Quote:
Originally Posted by Devin Eskew
Ok I'll bite, I read the info on your site, I will say that there are good examples on some levels, however most people who don't check out what others are doing will end up out of business as well.
I don't agree. What the next guy is doing is irrelevant.

Take care of your own business, and strive to educate the next guy in the process.

Videography, unlike a lot of established industries, became an industry bass-ackwards. And that's the #1 reason it's not thriving.

Hobbyists decided to make some extra money on weekends, and quickly, an industry was born. The problem? People are still looking at this industry with that hobbyist mentality, instead of as a BUSINESS.

As it is, it artificially keeps prices down, and businesses dropping like flies when they cannot maintain quality, pace, or upkeep.

I know because I made these same mistakes.

I'm not preaching from some ivory tower, here. I'm in the trenches, doing it day in and day out.

Every week I hear about videographer woes, and it's done to ourselves. BY ourselves.

We are in control of our own destiny.
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Old August 2nd, 2005, 11:30 AM   #12
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We want to raise the bar, but when you start out you have to look at the market value of the product you are selling. When your new you don't have the experience to justify the new higher rate that a veteran would be asking for. You need to look at you own work, and the work of others that are making a comparable product, and set the rates according to that.

Brides aren't stupid and they aren't going to pay one and a half times the going rate for the same product that another company can deliver. And they definitely won't do it for someone starting out.

Start at the market rate, develop your skill set, and then raise the level. There will always be people at the lower end because people need to start somewhere, but once you get the first few done you can adjust for the correct pricing that you really want.

When you start out it's a long term investment that doesn't see a direct return on your initial hours.

Ben
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Old August 2nd, 2005, 11:56 AM   #13
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Just look at it this way... a potential client comes to you because you are charging the same as the others, only you don't have anything to show for it because you're starting out... who do you think they are going to choose? You have to start somewhere and people aren't going to go with you because you "say" you can do it, you have to show them you can. Set your prices so you'll get the business and experience you need according to your capability, then work your way up.
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Old August 2nd, 2005, 12:01 PM   #14
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Quote:
Originally Posted by David Chandler-Gick
Let's see...

I've been in this biz a long time. I've made the mistakes. I see the same mistakes being made regularly. But hey... What do I know?

Go ahead, stay in the basement. Keep the industry in the toilet.

I'm sorry, but I cannot respect anyone who doesn't respect themselves enough to strive for more, not less.
Let's not get personal, David.

If you wish to imply:

- I have the logic of an 8 year old,
- I know nothing about business,
- I am making mistakes,
- I am in the basement and keeping this industry in the toilet, and
- I don't respect myself

...well, that is your perogative, but throwing derogatory cliches at me is not very constructive, and I'm not sure whether or how you benefit either.

You make some valid points, as I believe do I, but your approach is that of someone who knows it all better than anyone.
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Old August 2nd, 2005, 03:02 PM   #15
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I couldn't get anyone to post for a couple days after starting this thread, but look at it now. Boy did I start something! I can't thank you guys enough for all the different angles. Really, you are all correct. There are so many different factors to consider when setting price. It's probably wise to keep an eye on the market in this area. I would also be nice to have some work to compare against. At the same time, there are justifications for charging more or less than the market price. I DO enjoy this line of work, but at the same time I want to make money as well. I did a freeby for my cousin the first time and charged $500 last weekend. The second one was for the son of a good friend and coworker, and she just happens to direct 12 or more weddings a year. She has already lined me up for two $1200-1400 weddings in September. I hope to charge $1500 for the whole shooting match after that.

I just found it interesting that after paying myself a decent wage for approximately 50 hours of work and throwing a decent amount towards equipment and supplies, puts my pricing around $1500. Thanks for your input.

Tim
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