Video Production Business Tips – A Guide on Setting Your Rates

I get asked a lot of questions related to how much you should charge for various types of projects.

Instead of breaking it down to what you need to charge per project, break down how much you need to make per month and how many hours you’ll actually be able to work on billable production services.

Here’s what I mean…

In order to run a sustainable (and successful) business, you can’t work 40+ hours a week just on video projects. There are a ton of other responsibilities that go into being a business owner. For starters, you have to market your services, attend sales meetings, write proposals, pay bills, collect checks from delinquent clients, etc.

In my video production company, before I hired a full-time editor, I realized that the most I could work each week in production while still having something that resembled a life was 20 to 25 hours. I dedicated 20 hours a week to handle all my non-billable (non-production) work and the remainder of the work to my billable work.

If the assumption is that you will only have 20 to 25 hours of billable work each week, what would your hourly or day rate need to be in order for you to make the salary you need to provide for yourself and your family?

Here are a couple break downs based on various rate structures…

$75/hr x 25 hours a week = $1,875 ($1,875 x 50 work weeks a year = $93,750 in total revenue)

I’ll assume you have about 30% of that in overhead (office, loans, occasional freelance support, etc. so that brings your net revenue to $65,625 before taxes. (This is what you can pay yourself because everything else is built into the 30% or whatever percentage works for your business needs)

Can you meet your financial goals with that salary? If not, you’ll need to look at charging a higher average rate.

$100/hr x 25 hours a week = $2,500 ($2,500 x 50 work weeks a year = $125,000 in total revenue)

If your overhead stays the same (30%), you’ll have a net revenue of $87,500 before taxes.

Is that enough? If not, let’s look at another hourly rate structure.

$150/hr x 25 hours a week = $3,750 ($3,750 x 50 work weeks a year = $187,500 in total revenue)

Assuming overhead stays at 30%, that’s $131,250 in net revenue (before taxes).

Hopefully this gives you a quick primer on how the rates you charge impact the amount of money you make. Some people may complain about others who charge less per hour for their services but you really have to look at their overall goals before you can make that kind of judgment.

If they only need $65k in salary each year, charging less might help them guarantee that salary where charging more might make it harder for them to close enough deals to meet that financial obligation.

On the other hand, if you want to make more money without having to hire people, you can experiment with higher rates as well as reducing overhead at the same time. If you can get your overhead expenses down to 20% or less per year, your net revenue (or salary) can increase quite a bit without you having to charge higher rates or book more projects.

Here’s the biggest piece of advice I can give.

Don’t hire people or greatly increase your expenses in any way until you have mastered how to squeeze the most out of your revenue potential while working alone. That will enable you to learn how to properly run each part of your business before making the jump to bigger revenue potential