There is No Film or Video Job Too Small To Create a Budget For
There are three critical steps in budget creation…
- Creating a budget that protects your profit margin; especially when you’re hiring others to be part of the project
- Communicating that budget to the client and convincing them that every dollar is necessary
- Getting the job!
These are complicated asks. But we’ve found that the best way to accomplish all three is by creating a formal budget for every project. Even if it’s a fluid budget that is going to change a lot, having something down on paper goes a long way in convincing your client that you mean business.
And when a client can see that all the various items that go into your quote – travel, permits, gear, pre-pro, shooting labor, editing, etc. – they are more likely to see every thing you’ve pitched is necessary, instead of just relying on your top-line number during a meeting.
Second, by getting everything on paper you can make sure that you’re still making a profit on this job and that you’re covering enough on each job to make the annual total project goal that you put into this video production calculator.
Last, but certainly not least, you can determine if this project is even worth your time. Let’s say you feel good about getting the full budget requested from your client, you may be making your profit goal, but then ponder this example: this project takes 15 hours of pre-production, 20 hours of shooting and 50 hours of editing for only $1700. At that rate you’re only making $20/hour but you estimate your time is worth over $50/hour. You might decide your time – and gear – is better spent on anything else.
How to create a formal budget
It is not as intimidating as it sounds. There are plenty of already-built excel templates out there so you don’t have to start from scratch. Or you can use a platform like Pipeline, which has a built in budget tool and comes with templates already saved to your account.
You can work on it two ways:
- A bottom-up approach: start figuring out what your expenses are going to be, assign a markup to each cost and have the budget spit out a total amount to bill your client.
- A top-down approach: if you already know how the project total, you can use that to figure out what items can be included in this project. This process is a little more iterative, but in experience I’ve had more project budgets start this way.
I’ll focus on the latter approach for an example. Let’s say a non-profit client comes to you and says they have $5,000 to spend on a fundraising video for their upcoming virtual event and they want both testimonials and a highlight of their facility.
You have the total budget – $5,000 – so you plug that into your budgeting tool. You know that to cover your overhead, gear payments and pay yourself you need to net 50% – or $2,500 – of that as profit on the job. You start by building your ideal budget which includes renting a studio for filming, a couple of those new lights you’ve wanted to try out and hiring a camera operator. Uh oh – all that totals $3,500 and only leaves you $1,500.
Try a second iteration: no studio, use the lights you already have, still hire the camera operator. That works: $5,000 billed to the client to cover $2,500 in expenses and $2,500 for you. You can now go to the client with a proposal, but note in the agreement that they must provide their facility for the location and that no special equipment will be rented for this project.
[Note: The amount that the above calculator provides is a gross – or the total amount you must charge on each project – whereas the “profit” mentioned just now is the net amount you make on this project after paying all other project expenses. This latter amount is what you have to pay for all non-project expenses (rent, owned gear, etc.) and pay yourself.]
Other things to consider
Insurance and Contingency: Some people like to charge a fee to cover insurance on the project, especially if you’ll be using expensive equipment or shooting at a location that doesn’t belong to either you or the client. In addition, you may want to create a contingency allotment to cover those expenses that just can’t be budgeted. Make sure the tool you’re using can easily add one, or both, to each category or as a blanket amount to the whole budget.
Revisions: Be prepared to create multiple revisions. To save time and irritation use a tool that can easily create an exact duplicate of a budget so you don’t have to start from scratch every time the client requests a change.
Fortunately Pipeline does this in two ways: you can create a new revision of a budget in that project, or save a budget as a template for use on any project.
So in short, we recommend creating a budget for every project. Whether or not you share it with the client (you should!) you’ll make sure to cover your ass-ets on every job.