How to turn a $4,000 job into a $44,000 job

How to turn a $4,000 job into a $44,000 job
How to turn
a $4,000 job
into a $44,000 job

Starting any kind of business is tough, and an independent video production startup is no exception. As in most industries, it’s not initially the quality of your work, but the name-dropping of your past clients that breaks the ice with prospects. But in the beginning, you don’t have a list of past clients to boast about, so getting your first few gigs can be difficult.

It seems like a catch-22: You need an impressive list of clients and a reputation to get jobs, but how do you build that impressive list at the beginning?

Most video producers only think and work in the traditional paradigm of “hey, please hire me to shoot and edit your video for $X (or $X/hour).” This model is valid and will be around forever.

But video production startups may need to consider other models to get a few projects under your belt and generate revenue in the early going. And, there are other models that might be more lucrative in the long run even when you have an established business.

In this article, I detail one idea for a video production business model that could be a viable million dollar per year plan for a small video production company.

Here’s the story:

hardwood-floors-folio2_bigThere’s a local home improvement chain featuring various types of flooring.

But they have no videos or books on the counter to help customers learn how to put down a wood floor, lay tile or carpet.

Obviously, a store like this would be wise to sell educational products, because customers who know the right way to install their floors or tile will do a better job, be more satisfied with their purchase, and be more likely to be repeat customers and recommend the business to others.

SALES CALL #1 (traditional model):

You approach store management, saying “Hire us to produce a branded how-to video, we’ll follow your crew out on a couple jobs to get the footage, then do voice-over, edit, get DVDs replicated and set up racks right on your counter. The videos will help your business in many ways:

  • happier customers – that do a better job and become loyal customers
  • more sales – “just looking” customers might pick up an inexpensive DVD even if they buy nothing else, be inspired once they know how to put a floor down, and come back and make a purchase
  • branding – position yourself as “the floor store that cares”
  • more profits – sales of the DVDs will provide a small stream of extra revenue

They ask how much, and you say you can do a great job for $20,000. You tell them after the first 700 sell at $29.95, all the rest would be almost all profit, and they could continue to sell the DVD forever (or until DVDs or wood floors don’t exist).

After the laughing subsides, you say you could probably get it done for $10,000. After dodging thrown office equipment and hot coffee, and finally dropping your price to $4,000 (you’re desperate for work at that point), you flee the building, security hot on your tail.

SALES CALL #2: (new model)

This time, approaching the head office, your approach is “our production company would like to invest in your business.” This piques their curiosity, so a meeting is set up with (different) honchos.

Your pitch is, “We find there is a huge need for knowledge for consumers wanting to redo the floors in their homes. So we are meeting with local flooring companies, and choosing which would be the best for us to invest in with a how-to DVD project we’re doing.”

(Note: “a project we’re doing“. Left unsaid: “We’re doing it anyway, with or without you- we will have no problem getting one of your competitors to sign on if you don’t convince us you are the best choice for us to invest in.”)

“We have done some research, and believe in the ability of your business to promote DVD sales. So we feel confident investing 100% of the capital into a marketing tool that will achieve several important business objectives for you (the list above- happier customers, more sales, branding/advertising). We’ll even give you a $5 profit when selling the DVDs at $29.95 to cover your salespeople’s time so there’s no downside for you. We’ll also feature your workmen on jobs, handle all costs and set up displays, and come in an hour before each of your stores opens and train your sales staff in how to sell the DVD.”

They asked, “So you’re not asking for any money?” “No, we’ll cover the capital investment, all we need is your commitment to our project. Just sign the agreement and we’ll get to work.” (note: “OUR” project- not “YOUR” project. You are choosing them, not vice versa.)

The agreement stipulated that you’d have an hour to train their staff in each of the 5 local stores, that they would keep the displays on their counters, and do whatever they could within reason to promote sales of the DVD. Basically they promise to be your free marketing and promotion team for this project for about a 17% cut of revenues.

potential results

If they say yes, what happens next? You produce the video, get it on the counters, and if each of 5 stores sells a couple DVDs per day, you’ve made a $44,135 profit at the end of the first year. If you signed a 3 year contract, your residual profit might be more like $132,000 for a project that took perhaps 4 weeks to complete. Costs were minimal since you used their teams and actual jobs for the shoots and help with the script.

If a production company could do 10 of these a year, by the third year you might have established over a million dollars in annual revenue, with fairly low costs.

That’s the idea!

4 Comments

  1. Jason Fredman 13 years ago

    Thanks for the inspiring article, Josh. I just re-discovered it this evening.

    A philosophy I subscribe to:

    PROSPECTIVE CLIENT AT FIRST MEETING: How much will this video cost?

    ME: How long is a piece of string?

    That being said, I currently find myself in a new situation – For the first time in my 15 years of production experience, I am in talks for a DVD project that plans to be marketed nation-wide. It’s not tied to a retail company, as in your articles example. More along the lines of an educational program modeled on the Baby Einstein brand.

    Up until now, all my projects have been one-offs, very short runs (under 1,000), or as a camera operator at live events.

    I’m looking for your feedback on how to go about pricing my services.

    Thanks and have a great day!

  2. Josh Mellicker 13 years ago

    Thanks for your comments!

    Here’s some thoughts on how much to charge:

    http://dvcreators.net/discuss/showthread.php?t=9550

  3. Jason Freedman 13 years ago

    Thanks for the quick reply, Josh.

    Ooops. I guess I managed to completely miss my original intention of posting!

    My quandry is not really how much to charge, rather the method of compensation:

    Flat Fee vs Hourly Rate vs Percent of Profits vs a Combination of Those Options

    I’m typically in the flat fee/hourly rate realm, but this is a whole different ball of wax in that there is the intention of putting this project out to sell to The Masses…All my previous work has been sold to a select group (event participants) or delivered singlely to the client (training/demo videos). In the first case, there’s a been a finite number of potential sales – a few hundred copies up to about 2,500.

    So, the person I’m working with (“client”) has a vision of this thing being sold everywhere from Amazon.com to Wal-Mart and all the places in between. His intellectual concepts my creative vision = a project so amazing that Disney will buy him out…or he’s lucky to recoup his costs…

    Yes, we’ll have a contract, but while I’m prepared to do this on spec, I’d like to include seeing some residual income if/when this thing takes off.

    Hopefully this post makes my question clearer!

  4. Josh Mellicker 13 years ago

    Well, unless the client has a long proven history of success in this market, I would make sure the project is worthwhile upfront without counting on massive residuals… that being said, if it’s a fun project, and you are part owner, hane fun and go for it!

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