Really love the breakdown Orson. In my experience (from a very different field, but with a lot of the same pressures), the reason the "design agency" can command better margins than the "video production company" is that the design agency is aligned more with what the business actually wants-video is a means to (some) end, a profitable marketing channel that a CMO can use to drive revenue growth is an end in itself.
Yes, you're right on point. There's more money in planning a house compared to laying the bricks. And in my career I realised I was doing more than just video production, I was designing channels. It only made sense for me to call myself the title that paid more.
Very interesting video! But if you're self-employed or a freelancer, isn't the part you pay yourself as an employee almost the same as profit? Of course, minus the costs you need to live on, like rent, food and so on. I think The F*ck Up Budget is great, I hadn't even consciously thought about it before. And I've already had a few clients where I would have been better off charging the A-hole tax. Thanks for this advice!
Great Question MrJKut! So the reason I seperate what we pay ourselves and profit is basically a solution to choosing the work that pays the best. There's a myriad of psychological reasons I seperate pay and profit. I can get really guilty if I look at the books and see I'm paying myself $300 an hour (average wage here is $40 p/hour). BUT, when my books show I'm paying myself $40 an hour as an employee, and the company made $3,000 profit. There's no guilt, my brain goes: "the $40 an hour is an employee, and the $3,000 profit is the reward my company earned for handling something someone else didn't want to". Another reason is it helps you scale when the workload become too much, because I've allocated a "wage budget" or something akin to that, I can easily go out and look for talent to do the work, if someone can do it for less, GREAT! I can bring them in to complete that part of the project and know I still get to make money from the profit side of the company. There's many more reasons, but I hope that gives you an idea of the way I think. Thanks again for your question, it's a great one!
Really love the breakdown Orson. In my experience (from a very different field, but with a lot of the same pressures), the reason the "design agency" can command better margins than the "video production company" is that the design agency is aligned more with what the business actually wants-video is a means to (some) end, a profitable marketing channel that a CMO can use to drive revenue growth is an end in itself.
Yes, you're right on point.
There's more money in planning a house compared to laying the bricks. And in my career I realised I was doing more than just video production, I was designing channels. It only made sense for me to call myself the title that paid more.
Thank you for making this video! The business aspect of freelance is so often left out of journey of video editors 😅
Thanks for the great conversations in Discord! You really brought a lot of value and it's great to have you in this inner circle.
Thank you so much for this video! Keep it up!
Thanks, we plan to! We've also opened up a dedicated room in the discord for our members to discuss any questions this video brings up.
Very interesting video!
But if you're self-employed or a freelancer, isn't the part you pay yourself as an employee almost the same as profit?
Of course, minus the costs you need to live on, like rent, food and so on.
I think The F*ck Up Budget is great, I hadn't even consciously thought about it before. And I've already had a few clients where I would have been better off charging the A-hole tax. Thanks for this advice!
Great Question MrJKut!
So the reason I seperate what we pay ourselves and profit is basically a solution to choosing the work that pays the best.
There's a myriad of psychological reasons I seperate pay and profit. I can get really guilty if I look at the books and see I'm paying myself $300 an hour (average wage here is $40 p/hour). BUT, when my books show I'm paying myself $40 an hour as an employee, and the company made $3,000 profit. There's no guilt, my brain goes:
"the $40 an hour is an employee, and the $3,000 profit is the reward my company earned for handling something someone else didn't want to".
Another reason is it helps you scale when the workload become too much, because I've allocated a "wage budget" or something akin to that, I can easily go out and look for talent to do the work, if someone can do it for less, GREAT! I can bring them in to complete that part of the project and know I still get to make money from the profit side of the company.
There's many more reasons, but I hope that gives you an idea of the way I think.
Thanks again for your question, it's a great one!
This is some great information, definitely adding the A-Hole tax to my arsenal.
Hahaha, Yess!! Glad you learnt some useful information!
When you said "Fuck up budget" I smashed the like button
Hahaha, that is a life changing bucket to account for.
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