KNOW YOUR WORTH… AND YOUR RATE
So, you’ve decided to freelance as a crew person in TV and film. One of the biggest mistakes made by those new to production and freelancing is mismanaging rates, both by selling themselves short and by not knowing how to structure proper rates for billing. If you’re new to the industry, and looking to pursue a freelance (a.k.a. self-employed) career, this post is for you. It’s a brief overview, not a comprehensive guide. Please also note, this pertains to freelancing in the United States. Things may work a little differently elsewhere in the world.
Welcome to the World of Small Business
As a freelancer, you’re not just labor for hire on a film or TV show. You’re a small business, and need to manage yourself as such. Just like any small business, it’s more than just the work and requires budgeting and marketing. Further, if you own and operate gear, this needs to be treated in a particular way.
You’re self-employed, so you need to figure out your cost of living, your personal expenses. But you also need to factor into your overall budget the cost of operating your small business. Those costs include cell phone, web hosting, travel, networking meals, gear purchases, expendables… the list goes on. With an idea of your overall expenses and budget, you’ll have an idea of how many days you need to work per month to cover your bases, and to make a profit.
As a business, you need to sell your product. This industry runs on reputation and word of mouth, so referrals are crucial, but that doesn’t mean you don’t need to put some of your budget into marketing yourself. Marketing includes (but is not limited to) printing business cards, subscribing to a website hosting plan, and attending conventions and networking meetings.
The idea of maintaining a website may seem dated, but the reality is that a site for your freelance business is still a very helpful tool. You’re not likely to book much (if any) work from people stumbling across your web pages; it’s more about aggregating your information on a website that you can share with potential clients who have already contacted you.
The Day Rate, and How to Bill It
There are, generally, two situations in which you’ll find yourself when it comes to getting paid. Some shows are set up with payroll services, meaning that you’ll be filling out time cards and receiving a W2 from each employer come tax time. For productions that don’t use payroll, you’ll be invoicing the client and receiving a 1099 from each. The biggest difference is that taxes are withheld from payroll, but independent contractors with 1099s are responsible for reporting their own income and paying taxes on that income.
No matter which type of work you take on, you need to understand your day rate, your hourly base rate, your overtime rate, and your gear rate. It’s also important to understand industry rates, and to make sure that you aren’t selling yourself short. Some productions will come at you with the lowest rate they think they can get away with, and you shouldn’t be afraid to actively negotiate to get your rate. It’s also important not to be afraid to walk away from a job if they just aren’t going to pay you what you’re worth.
One frequent mistake I see from beginners is taking flat, “all-in” rates. The flat rate means that you get paid the same for the day whether you work 10 hours or 16 hours. “All-in” means, for those who own and operate their own gear, that gear is included in the flat rate.
A flat rate that doesn’t allow for overtime means the more hours you work in the day, the less you get paid per hour. The proper arrangement is to set a day rate based on a “guaranteed 10”, which means you get paid 10 hours whether you work only 7, or the full 10. Some shows and many films insist on a guaranteed 12. Either way, calculating base rates and overtime rates is a crucial piece of knowledge.
A guaranteed 10 is based on 8 hours of straight time, plus 2 hours of time-and-a-half overtime. A guaranteed 12 is 8 hours of straight time plus 4 hours of 1.5x overtime. These numbers are reverse-engineered from the 10-hour or 12-hour day rate. Here’s how it works:
Let’s say that you’ve set your day rate at $700/10. You need to figure out your hourly base (straight time) rate is.
Because a guaranteed 10 is 8 hours of straight time plus 2 hours of overtime, we can look at the day rate as 700 = 8x + 2(1.5x).
Let’s simplify the overtime. 2(1.5x) = 3x, so 700 = 8x + 3x.
Or, 700 = 11x.
700/11 = 63.636363. We can round that to 63.64
So, your base rate (straight time) is $63.64/hour. That means your overtime rate $95.45/hour.
But what about the guaranteed 12? Well, that’s 8 hours of straight time plus 4 hours of OT.
700 = 8x + 4(1.5x)
700 = 8x + 6x
700 = 14x
700/14 = 50
Base rate is $50/hour. Overtime rate is $75/hour.
This brings up one issue: if your 10-hour and 12-hour rates are the same, you’re making less per hour on a 12. The solution, then, is to take your 10-hour rate and add the extra OT hours on that rate to come to your 12-hour rate.
So, at $700/10, the hourly base rate is $63.64 and the OT rate is $95.45. Add two more hours of OT, and the 12-hour rate is now $890.90. Importantly, whichever rate you set, hours worked past the guarantee are billed hourly at the OT rate (in some situations, OT past 12 is billed at 2x hourly base rate).
Remember: you’re a small business, and you have to negotiate your rates as you see fit.
The other issue with flat, all-in rates is that gear is included at no additional cost. If you own and operate gear, the gear should be billed separately. Why? Because it’s working, too. You have an investment in that equipment, and it needs to be able to pay for itself. Once it’s paid for itself, it needs to keep earning income that allows for inevitable repairs, replacements, and upgrades. If you aren’t billing for gear, you’re losing money every day you put it to work.
Nothin’ But Net
One more important note about invoices: always set payment terms. An invoice without a payment term is a client with no immediate obligation to pay. The widely-used standard is Net30, or payment received within 30 days of the invoice being sent. There are companies that insist on Net45, or even Net60 or (ugh) Net90. Again, you need to negotiate your terms. Push for Net30 wherever you can. Being self-employed, you need to know when your next check is coming in.
To further solidify payment expectations, and other terms, it’s recommended to get everything together in a Deal Memo (another term for contract). Some productions will provide you their deal memo, which will specify labor and gear rates, and net payment terms. Read these deal memos carefully: production companies have them written to favor the production companies, not the freelancers. If you want to generate your own standard deal memo, and some freelancers do, consult an attorney as this does mean drafting a legal contract.
Get It on the Schedule… C
Finally, as a small business handling invoices, you’ll inevitably face the annual obligation: taxes. This is where it may be time - and is extremely helpful - to hire a professional. Find a good CPA, preferably one who understands how to navigate freelance TV and film production.
Keeping track of expenses and receipts, gear purchases, mileage, invoices, etc., is crucial. Knowing how to put it all together can be intricate. This all boils down to itemizing your taxes on a Schedule C. There are plenty of things that can be deducted as business expenses, including the fee you pay your CPA, but this is where my advice stops at “hire a pro”.
It’s Feast or Famine
Last, one must keep in mind that the world of freelance is fickle and inconsistent. There are times when work seems to be spilling out on the floor, and times where it feels like the next job isn’t ever going to happen. Getting into freelance work without understanding this can lead to a lot of anxiety and disappointment. Acknowledge the instability.
Just as important, this is a business of referrals and reputation. Every job, no matter how big or small, is an interview for the next. Even jumping on a team for a local film festival could mean meeting someone who works professionally outside of those projects, and that could be the person who keeps you in mind for paid projects down the road. Your ability to work well on set with others, and to deliver results in doing your job, will get your name passed on to other productions.
So, you’ve decided to freelance as a crew person in TV and film. One of the biggest mistakes made by those new to production and freelancing is mismanaging rates, both by selling themselves short and by not knowing how to structure proper rates for billing. If you’re new to the industry, and looking to pursue a freelance (a.k.a. self-employed) career, this post is for you. It’s a brief overview, not a comprehensive guide. Please also note, this pertains to freelancing in the United States. Things may work a little differently elsewhere in the world.
Welcome to the World of Small Business
As a freelancer, you’re not just labor for hire on a film or TV show. You’re a small business, and need to manage yourself as such. Just like any small business, it’s more than just the work and requires budgeting and marketing. Further, if you own and operate gear, this needs to be treated in a particular way.
You’re self-employed, so you need to figure out your cost of living, your personal expenses. But you also need to factor into your overall budget the cost of operating your small business. Those costs include cell phone, web hosting, travel, networking meals, gear purchases, expendables… the list goes on. With an idea of your overall expenses and budget, you’ll have an idea of how many days you need to work per month to cover your bases, and to make a profit.
As a business, you need to sell your product. This industry runs on reputation and word of mouth, so referrals are crucial, but that doesn’t mean you don’t need to put some of your budget into marketing yourself. Marketing includes (but is not limited to) printing business cards, subscribing to a website hosting plan, and attending conventions and networking meetings.
The idea of maintaining a website may seem dated, but the reality is that a site for your freelance business is still a very helpful tool. You’re not likely to book much (if any) work from people stumbling across your web pages; it’s more about aggregating your information on a website that you can share with potential clients who have already contacted you.
The Day Rate, and How to Bill It
There are, generally, two situations in which you’ll find yourself when it comes to getting paid. Some shows are set up with payroll services, meaning that you’ll be filling out time cards and receiving a W2 from each employer come tax time. For productions that don’t use payroll, you’ll be invoicing the client and receiving a 1099 from each. The biggest difference is that taxes are withheld from payroll, but independent contractors with 1099s are responsible for reporting their own income and paying taxes on that income.
No matter which type of work you take on, you need to understand your day rate, your hourly base rate, your overtime rate, and your gear rate. It’s also important to understand industry rates, and to make sure that you aren’t selling yourself short. Some productions will come at you with the lowest rate they think they can get away with, and you shouldn’t be afraid to actively negotiate to get your rate. It’s also important not to be afraid to walk away from a job if they just aren’t going to pay you what you’re worth.
One frequent mistake I see from beginners is taking flat, “all-in” rates. The flat rate means that you get paid the same for the day whether you work 10 hours or 16 hours. “All-in” means, for those who own and operate their own gear, that gear is included in the flat rate.
A flat rate that doesn’t allow for overtime means the more hours you work in the day, the less you get paid per hour. The proper arrangement is to set a day rate based on a “guaranteed 10”, which means you get paid 10 hours whether you work only 7, or the full 10. Some shows and many films insist on a guaranteed 12. Either way, calculating base rates and overtime rates is a crucial piece of knowledge.
A guaranteed 10 is based on 8 hours of straight time, plus 2 hours of time-and-a-half overtime. A guaranteed 12 is 8 hours of straight time plus 4 hours of 1.5x overtime. These numbers are reverse-engineered from the 10-hour or 12-hour day rate. Here’s how it works:
Let’s say that you’ve set your day rate at $700/10. You need to figure out your hourly base (straight time) rate is.
Because a guaranteed 10 is 8 hours of straight time plus 2 hours of overtime, we can look at the day rate as 700 = 8x + 2(1.5x).
Let’s simplify the overtime. 2(1.5x) = 3x, so 700 = 8x + 3x.
Or, 700 = 11x.
700/11 = 63.636363. We can round that to 63.64
So, your base rate (straight time) is $63.64/hour. That means your overtime rate $95.45/hour.
But what about the guaranteed 12? Well, that’s 8 hours of straight time plus 4 hours of OT.
700 = 8x + 4(1.5x)
700 = 8x + 6x
700 = 14x
700/14 = 50
Base rate is $50/hour. Overtime rate is $75/hour.
This brings up one issue: if your 10-hour and 12-hour rates are the same, you’re making less per hour on a 12. The solution, then, is to take your 10-hour rate and add the extra OT hours on that rate to come to your 12-hour rate.
So, at $700/10, the hourly base rate is $63.64 and the OT rate is $95.45. Add two more hours of OT, and the 12-hour rate is now $890.90. Importantly, whichever rate you set, hours worked past the guarantee are billed hourly at the OT rate (in some situations, OT past 12 is billed at 2x hourly base rate).
Remember: you’re a small business, and you have to negotiate your rates as you see fit.
The other issue with flat, all-in rates is that gear is included at no additional cost. If you own and operate gear, the gear should be billed separately. Why? Because it’s working, too. You have an investment in that equipment, and it needs to be able to pay for itself. Once it’s paid for itself, it needs to keep earning income that allows for inevitable repairs, replacements, and upgrades. If you aren’t billing for gear, you’re losing money every day you put it to work.
Nothin’ But Net
One more important note about invoices: always set payment terms. An invoice without a payment term is a client with no immediate obligation to pay. The widely-used standard is Net30, or payment received within 30 days of the invoice being sent. There are companies that insist on Net45, or even Net60 or (ugh) Net90. Again, you need to negotiate your terms. Push for Net30 wherever you can. Being self-employed, you need to know when your next check is coming in.
To further solidify payment expectations, and other terms, it’s recommended to get everything together in a Deal Memo (another term for contract). Some productions will provide you their deal memo, which will specify labor and gear rates, and net payment terms. Read these deal memos carefully: production companies have them written to favor the production companies, not the freelancers. If you want to generate your own standard deal memo, and some freelancers do, consult an attorney as this does mean drafting a legal contract.
Get It on the Schedule… C
Finally, as a small business handling invoices, you’ll inevitably face the annual obligation: taxes. This is where it may be time - and is extremely helpful - to hire a professional. Find a good CPA, preferably one who understands how to navigate freelance TV and film production.
Keeping track of expenses and receipts, gear purchases, mileage, invoices, etc., is crucial. Knowing how to put it all together can be intricate. This all boils down to itemizing your taxes on a Schedule C. There are plenty of things that can be deducted as business expenses, including the fee you pay your CPA, but this is where my advice stops at “hire a pro”.
It’s Feast or Famine
Last, one must keep in mind that the world of freelance is fickle and inconsistent. There are times when work seems to be spilling out on the floor, and times where it feels like the next job isn’t ever going to happen. Getting into freelance work without understanding this can lead to a lot of anxiety and disappointment. Acknowledge the instability.
Just as important, this is a business of referrals and reputation. Every job, no matter how big or small, is an interview for the next. Even jumping on a team for a local film festival could mean meeting someone who works professionally outside of those projects, and that could be the person who keeps you in mind for paid projects down the road. Your ability to work well on set with others, and to deliver results in doing your job, will get your name passed on to other productions.
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