How a programme is costed.

 Almost the first question, which any potential client will ask, is the disarmingly simple –

 “So, how much will it cost, then?”

 This is much like asking, “how long is a piece of string?” because the question is usually asked before anyone has a clear idea of what the it one is discussing actually is.

 If there is an agreed script available in advance, together with general agreement as to the style and substance of the production, then costing it is a very straightforward matter. It becomes a sensible, business like procedure. Many would argue that it is no different from obtaining the cheapest quote for the provision of a new company car. Of course, the cheapest quote for anything remains that, and that alone, the cheapest. It does not take into consideration backup, or quality, or talent, or service, or standards. It just concentrates on the price. It’s a useful way of comparing like with like, for as long as one is sure that one really is going to get exactly the same product from each competing supplier.

 There are numerous suppliers of cars, each capable of supplying exactly the same make and model. Obviously if price were the only consideration, I’d buy from the one who offered the most attractive deal.

 But commissioning a film or video production is not like buying a car. Even when the fullest details are known, and the shooting script has been agreed, simply budgeting on the basis of the lowest price will usually prove a false economy. An example – one cameraman may have a daily rate half that of another. But if he takes twice as long to shoot the same material, and his quality is not as good, he is costing the client money, not saving it.

 Of course, in the world of corporate or business production, there is very seldom a shooting script available from the client and frequently only the sketchiest idea of what is required or would be appropriate. This is both understandable and to be welcomed. After all, if a client really were equipped to write shooting scripts and programme outlines, he wouldn’t need a production company – he’d be running one!

 So the function of a production company is not merely to be a supplier of services against a rate card. It is integral to the production, being involved at every level, from “do we need to make this programme at all?" through to “here are a number of ways our experience tells us we can use effectively to communicate this message.” In short, a production company should not just be employed just for its production knowledge, but its judgement.

 A recent trend in the attempt to de-mystify production is the ‘competitive pitch’ solution. Recognising that the only way to see a programme is to make it, this idea attempts the next best thing by asking a number of competing producers what is, in essence, this question: “if we asked you to make this programme for us, what sort of programme would you make, and how much would it cost?" The justification for this approach is that competitive pitching is an established practice for advertising agencies.

 But a production company is not an advertising agency. An ad agency has client contracts, a production company makes individual programmes. If an ad agency wins the account it will expect to use the same creative material over and over again, in different media and sometimes for months, if not years, on end. Its return is not just its production fees, but its media percentage. Thus the costs of preparing its pitch are only a fraction of its potential reward if successful. In contrast, a producer makes a one-off film. Not only will that creative input never be used again in any other production, it shouldn’t be. The expense of preparing a detailed response to the ‘competitive pitch’ question is thus a far greater percentage of the possible reward and can only ever be justified on truly massive jobs.

 So, if a client shouldn’t expect to put his production out to tender, as if it were his advertising account, how does he know who to choose to make his film, and on what basis?

 Our answer is to talk about it! We believe that it is impossible to discuss what sort of production is required without the fullest understanding of why the client wants to make it at all, what he expects it to do for him, who the intended audience is and how much he has set aside in his communications budget to pay for it. Interestingly we can think of no occasion when a client already knew the answer to all these questions or where the answers weren’t changed in some way or another following a discussion. As we said, we provide judgements, not just services. We make programmes for a living and might be reasonably expected to know what works and what doesn’t. Our advice is free, without obligation. In other words, the response you get from us has real value in the job itself, rather than value in just winning the job.

 Why do we ask to know how much is available for the production? Doesn’t this just mean that if the client says “£100,000”, then we’ll find some reason for spending that much? The answer to that is a resounding ‘no’.  The reason is simple. What’s the point, for anyone, of a producer enthusing a client at a meeting with a new and original way of doing the job, then, having costed it, finding that the client can’t afford it?  It is only by having some idea (a rough ballpark figure will do) of the funds available that the right kind of programme can be devised to fit the budget. Otherwise everyone’s expectations may be raised to an impossibly high level. Similarly high levels of disillusionment can follow shortly afterwards! Experience also proves that the finished programme must reflect the quality of the goods, services or argument being promoted; indeed we believe that if sufficient funds do not exist to achieve this it is better not to proceed at all. It might well be cheaper to try and promote, say, Rolls-Royce cars through a 'buy-one-get-one-free' offer or a 'blue-cross sale', but it would not be a proper reflection of the quality inherent in the brand.

 On the assumption that the client/producer discussion(s) produce a general agreement as to why the programme should be made (training/induction/promotional/mailshot &c); the type of programme (documentary/ drama/ humorous/ short/ long/ commercial &c), in what format – (film/tape), where (studio/location/overseas, etc) and to what general cost guidelines, both scripting and budgeting will commence.

 Budgeting

 Our system of budgeting is based on breaking the budget down into three distinct areas, viz:

·        The actual, direct costs of the job. Examples:

Director, x days at £y pd./ Offline edit suite,

z days at £n pd. and so on.

·        The overheads we incur in producing it.

Examples: Telephones/faxes/postage &c.

·        The profit we expect to make.

 Actual costs:

Once we know what sort of programme we’re making, experience tells us what’s going to be required for its execution, who are the best technicians to use, where and what facilities will be required. These will all be listed, in great detail, on the budget we send you. We not only show you what we expect things to cost, we only charge you what they actually cost (thereby passing on the benefit of any discount(s) we might be able to arrange).  Further, all our clients have an absolute right to inspect our books at any time, to reassure themselves that what we charge as an actual cost really was incurred and at that amount. We not only don’t mind this, we welcome it!

 Overheads:

Once the estimated actual costs are known we add a ten per cent markup to this estimate to cover our running overheads. Yes, we could cost the overheads in absolute detail for each job, but the time and accountancy involved would, we reckon, cost more than ten per cent!

It is important for you to know that this overhead is charged on what we estimate the actual costs to be, not what they finally are. This is because we will attempt to save you money on those estimated costs by negotiating discounts where appropriate and possible. It is actually more time consuming trying to save money than spend it, so we feel we should not be penalised financially for making the effort.

 Profit:

We expect to make a fair profit, like any other business. Our profit is a percentage on the combined total of the final actual costs and the overhead figure. Our normal baseline profit is eighteen per cent, but this is negotiable for very large jobs.

 Terms:

We work to standard film industry terms, which are: One third of the budget estimate upon placing the order (commissioning), one third on or before the first day of principal photography, and the residue (now based on the actual, as opposed to estimated costs) on completion. A programme is deemed completed once the final master tape or show print has been produced. Copies are not included as copying costs vary by volume, but competitive prices may easily be obtained.