Please help me with a Bidding problem

mscherrah

mscherrah

Active member
Hello all,

Please let me begin by telling you all a little about myself. I am a partner in a small video production company in Pittsburgh. For the past two years, we have been getting by on producing commercials to be aired locally on cable television. For some time now, we have been looking for other avenues to pursue, and finally I found one. Unfortunately, I have no experience in quoting for such large jobs.

Here is my situation, I was contacted by a company to make a minute and a half to two minute video for EACH of their 100+ products. Nothing super fancy, just straight to the point, crisp, clean video with some minor motion graphics added to each.

Normally, our rates are as follows:

$600 for a BASIC :30 second spot which includes an hour of shooting, editing adding of text, uploading to cable, and a master

$900 for a BASIC :60 Second spot with all of the same features

$1200 for a BASIC 2:00 minute spot with all of the same features

$50 per hour of motion graphic creation

Now, I am going to be realistic and know that this company is not going to be able to pay over $100,000 for all of these videos, so I want to make a bid that is going to appeal to him, but at the same time, I do not want to work for peanuts either.

Do any of you have any suggestions as how to go about quoting this company?

Anything will be greatly appreciated.

Thank you,

Matt
 
Don't quote a rate -- ask them what their budget is. What if their budget is $100,000?

They know what they're willing to pay, and they know what would be too much. So ask 'em. Remember the cardinal rule of negotiation -- he who mentions a number first, loses. Do not quote a price. Do not quote a figure. Ask them for their budget. You just might be surprised.

If he absolutely has no clue whatsoever, then say just like what you did -- these are our normal rates. At these rates, it would clock in at $100k. Is that within your budget? Then SHUT UP. Leave the silence hanging. Do not rush to fill in the silence by saying "of course, if not, we could always cut a deal, blah blah blah." Don't do it. Shut up and let the uncomfortable silence hang. If they say "um, yeah, we can do that" then ... KA CHING. Welcome to the big leagues.

If they say "oh, heavens no, we couldn't possibly afford that" then you say "well, what CAN you afford, and let's see what we can do for you." And at that point, they should give you the number.

Is it a good number? Well, only you can answer that based on how much work it'll be to get it done. Figure out how long it'll take you to do all this work. Figure out how much other work you'll be missing out on. Then decide whether the job is worth taking.

Example: If it's going to take you a month to do it, and you normally make $3,000 in a month's time, and you normally work 15 days in that month... then factor in that they're going to have to make up for all that $3,000 you're missing out on, plus they're going to have to pay for all the days off you're not going to have, so ... at least double. At least $6,000. Then, on top of that, where's the profit? Add in some for that. Would you be happy pocketing $10k for a month's work? I bet a lot of people would, if you're one of them, then maybe that's your happy number.

So now, it's between you and him to get a comfortable figure that's as high as he can possibly afford, while being as far above your "happy number" as possible. Who knows, it might come in at $25k. Might come in at $50k. He might come back and say "Well, I was thinking that we could do it all for a thousand bucks" -- and if he does, then you say "um, no, can't do it for that, maybe you should call these people:"
 
Barry,

THank you so much! Yours is really the best info I have gotten all day. I will pass this along to my partner, and I am pretty sure thie is the approach we will take. Also, thank you for reminding me about fred and sharon! A couple of years ago, I found this, and it was the best thing ever! I bet they have the large bidding process down pat.

Matt
 
Good luck, Matt. I have used that technique many times in my business and if you've got the strength to stand by it, it really works. I've gotten budgets much higher than I ever thought possible, just by letting them name the budget. And it really, really helps you weed out those who just aren't gonna be worth it.

Let us know how it goes!
 
Barry is spot on with his scenario but I always like to have some paperwork to begin the conversation. Have you ever used a bid form? Here's a link to the AICP form that's been used for years.
http://www.nypg.com/aicpForm.cfm
It's a good place to start and it helps you get your head around big numbers. It also reminds you about the little things you forget when you package bid small projects, like insurance, studio costs and shipping.

(Barry thanks for reminding me about Fred and Sharon, haven't seen it in a while and it always resets my horizons.)
 
I want to thank everyone who chimed in on this subject. The meeting is in a couple of hours, so I will let you all know how it goes.

DWELLER: Thank you for that link to the bid sheet. It will prove to be a huge help.


Matt
 
To all who have been guiding me in this venture, I have an update. We spoke with the owner of the business, and it seems he didnt know too much about the process of producing such a massive amount of videos, and he needs to meet with his staff to derive a budget that they feel comfortable with and they are going to get back to us. I dont know if this is a good thing or bad, but I am keeping hope that it will pan out.

Thanks again!

Matt
 
Well, them having a realistic idea of what they're willing to spend, is a good thing. Now you just have to see if you can give them something they like, at what they're willing to spend. It may be that they change their expectations, or in the worst case, they may decide to scrap the whole idea, but at least now you're going to get a realistic workable answer from them, so that's always good. Good luck!
 
Thanks for the thanks Matt.
I just had a thought. Since the client sounds very green about this whole thing... how about splitting the project up a bit. You could contact them and ask to bid on the first ten modules of their 100 package. You just have to remember not to shoot them a honeymoon price that they'll want everything for. Anyway, seems like a nice idea to set up a little shake down trial run. They get a start on their needs and both of you will be better informed to bid out the rest of the project.
Just a thought.
 
Matt,

No matter how this turns out, you have done the right thing. Too often people in this business "give away" the product. I think it comes from a desire to create great product and accept almost any opportunity to practice their craft. The production budgets have been driven down for years by companies such as Comcast and local tv stations "giving away" production on the premise that selling the airtime can support free production for the client. This sham was created in the 1970s when Sony came up with 3/4 U-Matic and 1" portable helical recording for the field. These combined with lugable cameras brought the costs of producing commercials and infomercials down considerably from 16mm production of just a couple of years before. Both the stations and clients embraced this way of production, forcing independents to work harder for less. Different forms of Betacam and MII replaced 3/4 and 1" but were expensive. Then Panasonic released DVCPro, a true game changer. DVCPro and MiniDV gave the independents a chance to compete with "free" productions from the stations. Gradually however, the stations too converted from the flavors of BetaCam to DVCPro and P2 again cutting their costs again. This once again put the squeeze on the independents. Then Panasonic introduced the HVX 200. Another game changer; any independent with about $5000.00 could produce high quality High Definition commercials and longer form productions.

The tv stations, especially in small markets are not in a financial position to convert to HD. It is a massive expense for a tv station and the financial pie has shrunk substantially for them in the last ten years. Cable and satellite have become king, freezing out the locals. Last year, even cable giant Comcast got out of the production business. They are no longer producing local commercials or long form video. Comcast will air 1080i or 720p HD ProRes commercials on their networks. For the first time independents have an opportunity to charge a fair price for their work and the folks who always drove down the price can usually offer only 10 year old technology and results. I have even heard of a station group owner say, "Viewers dont really care what the picture looks like, they'll watch anyway!" That is a person stuck in the 1970s. That is what they know and what they believe. However, I disagree. Going forward I think content will be king. He who controls the content will rule. It will take time to wean the clients away from "free" and loss leader pricing that they have become used to over the last 30 years. Most clients have never known it to be any other way.

Independents such as we are, need to understand that we cannot afford to produce material as loss leaders, hoping to "get the job". Sometimes it becomes necessary to pass on a job, no matter how cool it would be to do, because there are just enough dollars in the job.

You cannot loose money on every job and make it up in volume.
 
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