Making Money Making Video
Sticky Video Production
What do we mean by sticky? Those videos you remember, the ones that get stuck in your head. Might as well get this out of the way right up front – video, when it’s done right, is nearly always highly lucrative for all involved.
As a matter of fact, some of the worst movies ever made still managed to turn a profit, and the most popular YouTube video of all time basically features a fat Korean guy prancing around like a cowboy who’s been shot full of LSD and turned loose in a cathouse full of money. It’s not bad, it’s not normal by any means, but it is super sticky.
So just think: IDEAS WIN, STICKINESS WINS. So rule number one, if you want to make money you have to create an audience.
“Fat stacks of Benjies, yo!”
At this point you’re probably thinking you’d like to be hooked up to an opportunity like that, and that’s where this article comes in.
We’re going to tell you the process of getting from a good idea to a money-making video. There’s no formula to it but if you hit every point along the way, or maybe even just most of them, you should emerge with plenty of reasons to be smiling.
Why you can take our word for it
At House of Sticks, we’re video producers. We run a video production company. It’s what we do to make our living. We do this full time. We can produce anything, from a small corporate gig all the way up to a full feature film. At least some of the people reading these words could be people that we work with in the future. So it’s definitely in our best interests, and yours, if we’re completely on level with our readers about all this.
Whether you’re a client, a script writer, or even an actor, and we work together, it’s better for both of us if you know what to expect (and what’s expected of you) before we even get started.
Are we worried about some rival production company taking this advice and using it to compete against us? Actually, no. For a start, if they’re good enough to compete, they’ll have already learned all this stuff in through a long process of on-the-job learning. Learn this in school? No way.
Video Production demand is crazy
The demand for content is so massive that no individual producer or production company could ever meet that demand alone. There’s plenty of room in the industry. So what you’re about to read is 100% the authentic voice of experience. That’s rock solid.
To get money out, somebody needs to put some in
Making any kind of video with commercial potential is never going to be free. Of course the definition of success is different for everyone, but in the end it all boils down to someone making more money than they had before. Somewhere along the line, in order to make money, a substantial investment needs to be made. Keep in mind the good, cheap and fast venn diagram. There can be different types of investments, like investing time into a passion project like Blair Witch, but in this article the investment is money for talent. This money could be available all at once, or it could be spread out into portions, but the important thing to know is that quality costs money, and you should always make sure the vision for the project and the budget are friends.
Its all about the production budget
If you are an up and coming film maker, use this list to make sure you have all your bases covered. There are plenty of rookie mistakes when it comes to money and video production. If you are a company wondering what to budget for your production needs, keep in mind all of the items below are needed to some degree to make your vision a reality. A good video production company will be able to match a budget to a vision and tell you what needs to change.
The foundation of any good video is a well-written script. A great director can’t make a great movie with a mediocre script. Ironically, even though it is the most vital component, it will be one of your lowest expenses. For the amount of work they put in, writers are ridiculously underpaid compared to everyone else in the business, and there’s usually an agent taking a 15% cut out of whatever they make.
IDEAS WIN, STICKINESS WINS. So rule number one, if you want to make money you have to create an audience. Eyeballs equal revenue.
Paying for people
Your next big expenditure is personnel. This includes everyone from the star of the show to the guy who fetches coffee for everyone. The right thing to do is hire the best talent you can afford. Period. If you don’t already have a crew of go-to people, ask for some contacts. Remember, all of these people are freelancers and don’t eat if they don’t work. Talk to them, figure out what their rates are and what you can afford. The more experienced, talented and adorned, the more expensive.
On the crew side of the credits list, you can divide them into three categories: creatives, technicians, and general staff. The creatives include the director, writer, on-screen talent, musicians, DP etc. These are the people responsible for the vision of the project. General staff are the producer types – the people that organize and plan. Technicians are the people that get stuff done. You need all three for a successful project. Make sure you budget for them.
Creatives are expensive, but they also have the most control over the project and the final outcome of the project. The decision of who to fill the creative roles is vital. As an example look at the number of Spiderman or Batman reboots that have been made. The good ones are made by good directors with a good vision. If you’re working with the traditional ad agency, the copy writer probably came from the agency or you have them in house.
Producers make the world go round. Make sure you have one. Typically, creatives aren’t good book keepers or organizers and when your on set, there needs to be a division of labor so the vision can get the attention it needs. Have at least one person responsible to just produce.
Technicians are people like grips, gaffers, electrics. Nothing would get done without this labor. They do all the heavy lifting and very rarely get recognized for it. Get a lot of them. Its better to have someone standing around than everyone scrambling and not getting all the shots because you wanted to save $500. Obviously not all of these people are needed on every production, it depends on what you’re doing and where. Keep in mind, for smaller productions, it’s not unusual for one person to work in several different jobs. In fact, almost every production has a little of crossing over.
Next up you have the cost of equipment, with the most expensive items usually being cameras and lenses. Remember, you don’t need the best camera to make a great video. Match the camera to the project. The cameras don’t necessarily have to be the best on the market, hire a talented DP who can navigate this decision with accuracy and efficiency.
For example, if you’ll be shooting scenes with a lot of dialogue, make sure you get a camera with good skin tone color rendition. If you need to attach a camera to the hood of a car when it flies off a bridge, you probably want to get a cheaper camera you can take some risks with. If you need to film something with sports, get a camera that does high speed frame rates.
Other items include are: microphones, monitors, lights, rigging, tripods, dolly tracks, booms, jibs, sliders, cables, computers, and software etc. etc. etc. Most technicians will come with an equipment kit, so make sure you ask when you hire people. This is not a complete list, but those are items that are typically on the wish list of a production crew. Remember to talk to the crew and make sure the items you need you will have on the day.
While technically these guys fall into the creative arena of personnel, but they have such a big impact on a picture, its worth it to give them their own category. The art department creates the world. The furniture, the drapes, the frost on the window, the entire set. The props, the mud on the car, the blood on the shirt, the look of the golden idol, the rock that chases our hero. If you have money to spend, spend it here. Please.
Rookie mistake number one right here – it takes money to run a business. These are all the things that are not directly related to making the video, but which you have to pay to keep the lights on. We’re talking things like insurance, accounting, legal fees, utilities, stationery, fuel, all that kind of stuff; Not to mention salaries, and profit. If you’re getting started on the production side, make sure this is budgeted for. If you’re a client, keep in mind, the people you want to do business with are running a business. Most newcomers forget to account for these things and end up working for $2/hour. Actually this is one of the advantages of working with a full time production house rather than your brother-in-laws newly graduated son. If we are profitable, our level of engagement stays high throughout the entire project. Plus we have a reputation to uphold.
Now all of the action has taken place. Its time for assembly. This is typically an hourly job and not budgeted on a per project basis. Of course as a video production company we have to provide a project budget so we have to estimate the amount of time it will take to edit and make changes per client feedback.
The all important contingency
This is your insurance policy. What if you forgot to include meals for a day, or you miscounted the number of hotel rooms needed. What happens if you break a window and have to pay a deductible or get lost and have to pay extra mileage on the grip truck? The contingency is just for times like these. Its always good idea to include this, but it will also be the first thing to get cut.
If you have to spend time on it, you should be paid for it.
When setting a budget make sure you include the following:
- Pre-production – scriptwriting, meetings, planning logistics
- Cast and Crew
- Business Overhead – legal, insurance and profit are a must
- Post Production – editing, sound, licensing
Add them up and you have a budget.
Why talent is super-important
It’s not necessarily going to kill your production stone cold dead if you don’t work with the best talent in the business, but there is a threshold of talent that needs to be present to make it worth any money. Generally speaking, the more you put in, the more you get out. There is a common belief that money spend should be spent on making the picture better. We agree.
If you’re a new production company or a client, skimping on talent when you’ve got the budget to do better is always a mistake. A good cast and crew can make a significant difference to the final outcome, and audiences can be harsh judges. If anything important is hinging on the success of the video, it’s really important to get audience acceptance. Remember rule number one: making money is about creating an audience.
Choose your clients properly
Not all production companies are created equal just like not all clients are created equal. Its important to select your clients with care. Or if you’re looking to create a profitable business
The bain of our existence is low cost production company. Its hard enough to convince some clients of the value of good video production, but if your work is strong enough, your budget will be able to hold up. Clients without experience and knowledge of the industry flock to the low cost option because the video production game is an expensive one and they think “How difficult can it be to make a video? I have an iPhone.” Because of their low rates, and the subsequently low quality result it very well may sour the client toward the whole industry, and in many cases they’ll see legitimate professionals as having artificially high prices.
The business of video production
Typically a talented noob with poor business sense will fail, even though they’re getting plenty of work. It’s because they have no idea how to run actually run a business. They are funding a hobby, so they can buy more gear or make that short film. With low rates, they will have to work around the clock to make a living, and they don’t make enough money to invest seriously into the quality of what they produce. Soon, they will burn out because “there isn’t any money to be made in video production”. No sooner have they folded than the next guy with a bright idea and a DSLR is popping up to replace them, and so the cycle repeats. We’re not being elitist here, even if it sounds like it. We have just been there and seen it over and over again.
Making video successfully requires a lot more than simply knowing how to focus a lens and press record. You need a combination of talent and business sense. There’s a lot you can learn via Google. As a general rule of thumb, it’s a very smart move for anyone new to the industry to get as much on-set experience as they can before setting up their own business. Research and start small. Even working as an unpaid or intern will provide the chance to learn way more than you ever could at school, and you’ll have a chance to chat with people who have years of experience, who you might be able to hire some day. It’s ok to be the small guy.
Making friends and winning allies is always a good tactic.
Being successful as a video production company
Supposing you know how to properly budget a production, you’ve completed all your education, learned the ropes from a more experienced film industry vet as an intern, and you’ve managed to raise enough finance to launch and equip a business, where do you go from here?
First thing you’ll need is a good business plan. This is not just some dreamy document that describes your path to winning an Oscar. It is a serious plan that sets out exactly how you’re going to make money from running a business. There are all kinds of resources available online to tell you how to formulate a business plan, so we won’t bother rehashing that information here. Google has all the answers and we have an article here.
Having a production company plan isn’t much different from any other business plan. You need to have some idea of what sector of the market you’re going to serve. What kind of clients should you start with. And what the existing market looks like.
For example, if you decide that you’ll shoot wedding videos, first, make sure you can do it well. An expensive professional wedding video shouldn’t look like it was filmed by Uncle Stanley on his iPhone. There’s a certain level of quality you want to provide that matches the expectations set by the budget. But, you won’t be able to charge top dollar with out a top shelf portfolio. So if you want to get paid to make high end videos, then make a high end reel. Remember: There’s nothing wrong with finding who the best in the game is and imitating some elements.
Once you have the plan and you know who you are, you need to figure out your margins. Above we looked at setting a budget. The margin, is the profit and overhead portion. Figure out a percentage and stick to it as best you can.
Know the market
Knowing your market, and knowing how you’ll serve that market, you now need to work out how you make money from that market. Obviously one of the key things you’ll need to do at some point is advertise your services, but before you can do that, you need to be ready to answer the one question you can be sure will be asked by your clients.
How much it is going to cost? You will get that question with every client, whether is a bid or a direct question. If you can’t answer that question simply and effectively, you’re likely to lose the deal. Make sure you can put together a solid budget and be ok with losing some bids.
Know your hourly needs
To work out how much you should be charging per hour, your first step should be to add up the approximate amount that your expenses are likely to be per month and divide by the number of hours you want to work in a month. Try to be as specific as you can, though it’s not always easy to know exact numbers in advance.
Each month will have approximately 250 working hours available if you want to have any kind of life outside of work. Yes, its more than 40 hours a week, but you are the owner of the company here. If you want a 40 hour week, go get a job. Now divide the amount of money you need to survive (including all those expenses) by 250, and this gives you the MINIMUM amount you can charge per hour. You should probably add a bit to that, or your business will never be able to grow and expand, it will just barely survive.
Don’t ever go below the number you set as the amount you will accept, because you can’t afford to do it. Literally. You’re running a business, not a hobby. There are some exceptions you can allow, if:
• It’s something that will help you grow;
• It’s for a cause you believe in; or
• It’s personal
In those three scenarios, you can relax the rules a bit, as long as you can afford to make the video on less than your usual amount. Just keep in mind that with no budget or an insufficient budget, you may need to make compromises in terms of your production values you wouldn’t normally make. That can be a very slippery slope once you get on it, and it may cause you problems.
You may also consider whether you want to set up as an organization or as an individual. With an organization, you’ll probably pull in more business and potentially make more money, but be aware that you’ll also have much greater responsibility and at some point you will have to get away from the doing of the work to manage the operation.
As an individual, you’ll be relying on others seeking your services, and that can be difficult if you don’t have any existing connections. You will be limited by the number of hours in the day. You will often end up handling overflow work for larger organizations, usually in an assisting role. Once you’ve gained a reputation, you may become a go-to source for production companies who recognize your skills for what they are. It could take a while before you get to that point, so you’ll need to be a bit patient.
Relationship in the film making world are everything
Building and maintaining productive working relationships is a key factor towards any success. Unless you have one hell of a script and win some sort of competition, you’ll need people. With the right connections, you have the chance to progress step by step until everyone knows you’re who they need for their project. Make enough money from their projects, and eventually you may have made enough money to make your own or make enough money for someone else and they will take a chance on you. That’s the point when you can consider your venture to have been successful.
To get those relationships established and working may seem difficult at first. Professionalism is very important (being honest, on time, and reliable), and it’s equally important to be approachable and friendly. If you’re naturally introverted, it may be a good idea to team up with an extrovert to help you with promoting and networking while you focus on the creative and technical side of making ga great video production company.