Understanding Budgeting for Your Business Video
No one-size-fits-all for a Video Budget
If you consider promoting your business with video, research is the first step to pulling it off successfully. I would encourage you to thoroughly search for a video production service that best matches your budget and understands the vision of your business and products.
When it comes to budgeting, a primary consideration is cost-efficiency and avoiding unnecessary spending. If you worked with video productions in the past, you may have collected important experiential knowledge on budgeting and spending; costs often vary across companies, areas and especially creative outlines – so it’s never one-size-fits-all.
To keep things simple, you can look at a few major line item categories to get a 30,000ft perspective on each project. They are labor/staffing costs, production equipment / locations needed from a creative standpoint, and lastly liability/insurance costs to securely produce and deliver the video.
The Cost of Employing Professional Crew and Cast
Video and TV advertisements are heavily reliant on creativity to be effective. Numerous brainstorming sessions and the staffing of talented writers make up the backbone of a good video. To ensure each department can maximize its creative potential, division of labor is introduced on the film crew. A usual crew consists of these departments:
- Writing department
- Production department
- Directorial department
- Camera & lighting departments
- Art & prop departments
- Audio department
- Post-production department
Department heads mentioned above and allow them to work collaboratively to make a great commercial and other visual art work. The other human part of a film production – and the one that your audience will actually see in the end – are actors and other performing artists such as dancers or voice-over actors.
There are a few tiers of professionals in the film industry. The highest tier is to hire union crew and cast. The second tier, when budgets are more modest, is to hire professional non-union crews. And lastly, if you’re trying to bootstrap a small project and don’t mind qualitative risk, you would hire student or amateur filmmakers. Each tier can meet different demands, and varies widely in production quality.
Cinematic Video & Audio Equipment
When you make a video, you will need to have a specifically selected combination of equipment to capture video and audio. The quality of said equipment will directly influence the quality of the final video and audio recorded with them. The majority of professional filmmakers you end up working with will demand to use professional equipment for that purpose – they usually understand the cost-benefit ratio in equipment selection. Naturally, the better the equipment, the higher the price for it becomes.
There are two options for film producers to use equipment. We either rent it on a project-by-project basis project or buy it. When filmmakers buy high-end equipment, chances are that they take out a private or business loan and use it to invest in the equipment, which can often be $50,000+ for higher end camera packages. In either case, the production will have to pay for the use of these equipment to the rental house or to the crew who can offer to bring their own equipment that they invested in. As a rule of thumb, working with less vendors or renting directly from crew usually makes a production more efficient since money is saved in the pick-up and drop-off process. Working with an established production company allows you tap into a streamlined process and existing rental relationships, which allows for flexibility and avoids costly inefficiencies.
Filming Locations and Permits
The same rules apply to locations. “Locations” are the physical places where the actual film/video production takes place. When we rent locations for filming, we will rent it from a location manager, a person who specializes in knowing hundreds of locations, or directly from those who actually own these locations. The locations can be houses, studios, private businesses that have to be shut down during filming, and/or public facilities in some cases.
Renting locations for filming usually comes with significant costs, varying often from $400-$10,000 per day, depending on how big of an impact the film production has on the place, and how good of a relationship the producer has with the location owner. If you’re filming an interview with a bare-bones crew, you leave a lot less of a footprint than if you show up with 4 trucks, 3 trailers, and a crew of 70 people.
Locations usually have various other “hidden” costs, such as cost for power, city filming permits, site manager fees and so on – costs that an experienced producer will be able to estimate upfront, while less experienced productions often discover them in the days leading up to the shoot. As a rule of thumb – the more complex the creative vision is, the more scrutiny and professionalism is required on the production company’s end to ensure that you stay on budget.
Liability and Insurance
Lastly, there is the cost of insuring a production. When we produce commercials or films, the territory comes with certain risks to people, processes and property. When we talk about risk, it is the risk of not delivering the finished video, the risk of damaging someone else’s property (equipment, vehicles or location), and lastly the risk of humans involved in the production getting into on- or off-set accidents. Each of these risks can be insured against to some degree, and will reflect in the budget each production company will present to their client.
The first risk is the risk of not finishing a project. This can happen when the project ‘s demands far exceed the available budget – and ambition outpaces execution. Due to the lack of the budget, a producer may not be able to hire crew needed to actually achieve the quality and skill demanded by the project’s creative. The solution for this is to make sure to hire a good producer and line producer who can jointly foresee all the complex expenses way ahead of the production and properly present these requirements to the client. This can often be a difficult conversation – but that’s what good producers do, they present options and solutions to difficult problems instead of promising the moon and delivering sub-par work. Estimating costs properly goes hand-in-hand with estimating schedules properly – often, complex ideas take lots of preparation and communication, and rushing any part of the production can result in important pieces falling between the cracks. The second solution is to change the creative vision of the video itself without diluting its overall purpose. It is often possible to reduce the budget by coming up with alternative, simpler video idea. If you’ve watched the recent “Fyre Festival” documentaries, you will understand the importance of matching budget and schedule to vision. That’s what good production companies will help you in by guiding their clients to understand the logistical requirements to execute successfully.
The second risk is a risk of damaging third party property. This third party property can be equipment brought to the set rental vehicles that transport equipment or props, or the filming locations themselves. Each project will have a “1st AD”, a first assistant director, who is the primary on-set safety officer and ensures no one works recklessly or hastily. On top of safety personnel, each property owner (both rental houses and private owner) will require the production company to provide production insurance to insure property that is brought to the set. This certificate of insurance (COI) will need to be delivered to each party way before the actual date of the production to make sure each owner can review the insurance in detail. Producers purchase or lease a production insurance to provide necessary certificates to access these necessary property to conduct filming. Even if the production company owns equipment or locations like a film studio, the cost of annual insurance will need to be compensated in the project’s budget to assure liability is covered when something happens.
The worst of the risks for all producers, is a risk of human accidents and injury. When we are working on sets in the United States, the production hours are usually set to 10-12 hours. This will include setup and breakdown of equipment, furniture and all the other things on set. Working for long hours can be stressful especially when it requires a lot of physical and mental effort, all concentrated in one day. Under this type of stress, the chance of accidents is higher than usual. When the budgets are very tight and one person does too many jobs at once, the chance of them overlooking a safety measurement rises as well. That is another reason why professional productions have proper division of labor on set so they distribute work to different people. When each person can concentrate on their direct responsibility, it usually allows them to work more creatively and will eventually lead to a better video in the end. When exact the opposite happens, it will increase the chance of physical injury.
To prevent this risk from happening, there are two most important solutions. The first one is to hire enough crew to be able to fully distribute tasks to individuals, and have designated safety officers on set. . The second solution is to carry worker’s compensation (“Worker’s Comp”). This covers potential medical costs for crew and cast when the accidents happens in connection with the production. To add to that, just like liability insurance, the labor union for actors (SAG) and public location management (Film LA) will require Worker’s Compensation to authorize the project. If the production cannot provide proof of either, the project can be interrupted in the permitting process. This will possibly shut down the operation of the project overall, which leads back to risk# 1, not delivering the video to the client.
All three liability considerations need to be budgeted properly for a production company to promise they can deliver the video for their client.
As you can see, there are a lot of costs when making a proper video. An experienced production company works really hard to cut all unnecessary costs, utilize economies of scale, and avoid over-spending by utilizing their years of experience and vested relationships. And when your project is in the hand of an experienced producer, you can watch the making of your video at ease, and focus on what’s important: achieving a great end result that will boost your business.