Hourly vs. Fixed Bid Pricing: Which One Makes Sense?
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- Опубліковано 15 вер 2024
- Hourly pricing…ugh…don’t get me started. Clients always seem to ask, “What’s your hourly rate?” If you make it too high, they’ll go somewhere else. If you make it too low, you won’t make enough money.
In this video, I discuss the pros of fixed-bid pricing and the rare circumstances in which you should charge your client by the hour. (Don’t miss the special cameo by Bob Ross.)
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nice and quick video. No fluff I like it. keep it up!
Thanks
Jackpot!
When You Charge by The Hour But Finish Quickly, You Get Penalized
Don’t penalize yourself for getting to the solution fast.
Another great 🎥 with valuable advice. 👍🏼
Thank you!
Hi Michael - I just discovered your UA-cam Channel. Even though I only listend to a few minutes I immediately purchased your book. Here's why: I liked you story about when you first started and had no idea what to charge. (I could relate) and also, the cover of your book looked clean, fresh and approachable (btw, I'm talking about your latest book on pricing). I've been listening to Blair Enns, David C. Baker and lately Chris Do. I'm curious on your approach. I received your book yesterday and before I dive in I'm going to watch some of your videos to get the whole story. Looking forward to it. Cheers.
Hey Zee! Thanks for this message. So sorry for the super late reply! My UA-cam channel was neglected while I focused primarily on Instagram. Happy to say I have shifted my focus to UA-cam and I have a lot of great content coming for this channel. Thanks for ordering my book. I hope it gave you some new things to think about in. your pricing strategies.
This is wisdom!
Loving all this Mike.
Isn't fixed-bid killing the CGI industry? Sure is screwing a lot of CGI production companies and workers.
Hmmm... interesting. I'm not an expert on the CGI industry and pricing models in that field. But fixed-bid will kill any industry and any business if it isn't done properly. When cost of production exceeds the fixed-bid price, the model doesn't work. Proper fixed-bid pricing is done in a manner that maximizes profitability and rewards the vendor for working quickly. (Hourly, penalizes the vendor for working quickly.)
@@morejanda Yea, Movie Studios like to demand many lengthy changes with no extra pay. Because it's fixed bid. Look up the documentary *Life After Pi* for more details. I was reminded of it because of the massive changes made to the new Sonic movie.
@@Disthron Interesting. Proper fixed bid pricing will include a detailed statement of work with clearly defined rounds of feedback and changes. If the fixed bid is not detailed in great detail a client can take advantage of the designer. Hourly can insulate you from this, but the profit margins typically go down. Hourly based pricing in retainer or bucket of hours should also be used if a scope cannot be defined at the start of an engagement.
@@morejanda My understanding is Movie Studios have special effects houses over a barrel. Refusing to pay ball will result in an FX house being black listed and with studios becoming more and more monolithic It's becoming more and more of an issue. I mean Disney just bought Fox, two of the biggest entertainment companies around.
They probably should negotiate extra money for extra work but it would likely have to be an industry wide initiative.
@@Disthron Hmmm... ya. I've done a lot of work for both Disney and Fox and I used to work at Fox as a CD. Not in VFX...but in digital design and marketing capacities. I would say, if your information isn't first hand, be careful what you believe. People have good experiences and people have bad experiences. Frequently the bad experiences get a lot more publicity than the good experiences (a sad commentary on our world). There are good people in the studios...not trying to take advantage of vendors...and there are people that stare at each line item in an effort to maximize profit (regardless of the damage to whoever). That is pretty true in every industry. Like I said, I don't know the VFX industry, but I'm sure there are some massively profitable VFX companies out there doing a great business. And I'm sure there are VFX companies getting abused by studios. The same could be said about Health Care, Tech and any other industry. In the end. A detailed statement of work and a proper pricing structure will help any vendor have a better business.