How Much Does Video Cost?
One of the biggest questions people have when considering video for their business is how much does it cost. Every video production company has different ways they price their services, each one with its own pros and cons. So in this article, I will be discussing 3 of the most common ways to price video, and which one might be right for you.
Hourly Based Pricing
Hourly-based pricing is probably the most common way video production companies price their services. It’s calculated by the time spent making the video(s) x the hourly rate.
This may include pre-production, production, and post-production. Here’s an example…
This option is usually the cheapest, and for businesses that value time spent on the project more than anything else, this is the right choice.
It’s great for those on a budget but it comes with many downfalls.
I’ve been making videos for years now and through that time I’ve become more efficient with my work. Videos that would’ve taken me days to finish as a beginner, I now can finish in just a few hours. The problem with hourly-based pricing is that videographers get punished for completing the work quicker.
A common response would be just to raise your hourly rate the more experienced you get. Yes, this is an option, but now a videographer can take their time on a project knowing the longer it takes, the more they get paid.
If you think about it, wouldn’t it make sense to pay more the quicker a video gets completed? This is where hourly-based pricing loses its value.
2. Project-Based Pricing
In my experience, project-based pricing is the method that most businesses prefer. The appeal is the simplicity behind it. “You want a video? This is how much it costs.”. Then a business owner can decide if it’s worth spending their money on it or not.
The way video production companies calculate project-based pricing is first determining how much it will cost to produce the video (labor, travel, equipment purchase/rental, etc. ). Then they decide how much they want to profit from the project. I
f it takes $1,000 to produce the video(s), then a video production company might charge $2,000 dollars so they gain a profit of $1,000.
This option is best for those who value the video(s) itself. The con to this though is the lack of confidence in the ROI.
If you’re spending money on a video, then you most likely want to know if it will bring the results you desire. Project-Based Pricing fails to do that.
As much as I love making videos, I’ve learned that a video without a strategy can ultimately be worthless depending on your goals.
So this led me to a new method that benefits both parties, Value-Based Pricing.
3. Value-Based Pricing
Value-based pricing is the method where the project is priced depending on the projected value it will create. This method usually comes with a strategy behind it. It’s the one that we, FitzMedia, like to use because it makes the most sense. Here’s why…
When a business approaches us for a video, they might say they want a video but in reality, they want a solution to their problem. They may want to increase leads, find qualified employees, or spread general awareness.
So the ideology behind value-based pricing is that a video production company is compensated for the results their services will hopefully achieve. Sounds fair, right?
Well, you may ask, “Can you guarantee these results?”.
Unfortunately no, and if any marketing company promises results then they’re lying because in the world of marketing nothing is guaranteed. And with a video by itself, there’s a good chance you won’t reach your goals.
That’s where video strategy comes in.
If a company is able to get your message in front of the right people then the possibilities are endless.
That’s what a video strategy can accomplish. And though no marketing strategy can guarantee results, with a properly crafted video strategy, you can be confident your goals will be met.
“…you’re now working with a partner who wants to help you reach your goals.”
This probably raises a lot of questions and the biggest one is most likely, “how much does it cost?”.
Unsurprisingly enough, it depends.
Usually, it’s calculated by a realistic metric that can be measured, and then the video production company takes a portion of the projected value.
A lot of questions need to be asked to reach that metric, but it might be put this way…
“It looks like there’s an opportunity to create $100,000 in revenue through video strategy, are you willing to pay $10,000 to reach that goal?”
The biggest worry to this method of pricing is the price itself and the risk involved, and rightfully so.
But I’m sure you can agree, in order for a business to reach big goals, a measure of risk will always be necessary.
That’s what separates thriving businesses from surviving businesses.
The appeal behind value-based pricing is that it’s no longer viewed as an expense, now it’s an investment. Rather than hiring a camera guy to film and edit a video for you, you’re now working with a partner who wants to help you reach your goals.
If you’re wanting your videos to accomplish something big, this is the choice for you.