Ask the VR Photography Experts
Q: How do you figure out what to charge for VR work? Should I charge per node or by the job? Id like to ask established professionals, but I understand that it might be illegal to even talk about pricing with each other?
A: OK, this is going to be a bit long, because there are no quick answers to your questions.
First of all, it is fine for independent authors to discuss business practices and pricing with one another. In fact, it is a good thing for us to do. An informed competitor is better than an uninformed one. Would you rather be competing with a group of individuals who are educated in the best business practices for your industry and who know what it takes to run a successful business, or would you rather be competing against folks who will do anything it takes, including losing money on every job, just so they can get your work, and perhaps destroy the business for everyone in the process? Sharing information with each other keeps us all educated, and helps make us all good competitors. Remember also, that even though we often compete with one another, we are often collaborators, as well.
What independent authors cannot do is to agree to set prices together, or agree to collectively charge X dollars for Y services (at least here in the US). That is where we would run into price fixing and restraint of trade concerns with the Federal Trade Commission (FTC) and the U.S. Justice Department. We can share methods for charging and even exact rate structures with one another, as long as we don't collectively agree to charge the same thing. (Unions, which are for employees, and cooperatives ARE allowed to do this, though).
Secondly, the fees you charge in your business should never be based upon what someone else charges in theirs, because each of our individual businesses are different, even though we may be providing almost identical products or services. Pricing should be based upon two major factors:
My shooting rate may be higher than a competitor's because I have a greater overhead to cover, or I may live/work in a more expensive region than they do. I also may have more or fewer billing days per year than they do.
Every independent business person needs to determine what their basic cost of being in business is. These are the costs of rent, insurance, advertising, promotion, utilities, professional memberships, office supplies, capital expenses (computers, peripherals, cameras, lenses, printers, etc.), insurance, vehicle costs, publications, business education, travel, salaries (including your own), etc., and most importantly... profit (without profit your business cannot grow). Don't confuse your salary (or the amount you take from the business for your personal use) with profit. They are completely different.
Then, you must estimate a realistic number of days you expect to be able to bill to clients in the year (a good way to do this is to look at previous year's totals). Divide your total costs of being in business by the number of days you actually bill to clients in a year, and you come up with a minimum billing day rate for your services. (Click here for a free Photo Business Fees Calculator to help you do this.)
Note that when you estimate/bill a client for VR work, you'll usually bill for your daily rate, PLUS all the particular job expenses involved on top of that, such as film, processing, media, travel, lodging, equipment rental, digital services, assistants, shipping, etc.
Once you have your minimum rates determined, then you need to consider the value or usage that the client will be receiving from your work and price that appropriately. A client who is using your imagery for a large scale international advertising campaign, including magazine ads, billboards, interactive kiosks, CD-ROMs, web sites, television ads and trade show displays, is receiving far more value from your work than a small local client who might only be needing the same imagery for a short run facilities brochure and use on their web site for a year. Authors charge and clients pay accordingly for value received. Therefore, you either add usage fees separately or factor them in to your overall rates.
It is critical to price your creative services and usage fees based on the needs of your business, rather than upon what a client tells you they think you should charge (or what they will pay). Clients will often come to creative authors and say "we want you to provide us with X,Y and Z, and we can pay you this much." Too often, authors will say "OK", thinking that any work at any price is better than no work. The problem is that your prices and fees are now being set by your client(s), whose sole responsibility is to look after their own interests, rather than those of your business.
How many of us would walk into a car dealer and say "I want you to provide me with the latest new Mercedes, but I can only pay you $500"? Do you think they'd jump at the chance to give you the car at a loss to them, because any sale is better than no sale? Do you think your local plumber or electrician would let you tell them what you'll pay for their services, or will they instead tell you what they charge and let you decide whether you wanted to hire them or not? Would your landlord or mortgage banker accept your coming in and telling them "I love the house, but I am only going to pay you 30 percent of what you would normally charge me to use it this month..."? No, so why on earth would photographers or other authors allow clients to determine our prices for us in this way?
On to other specifics...
In my opinion, charging by the node, rather than by the day or the job, is a very dangerous way to price VR services, no matter whether you are doing the photography, the post production or both.
A classic example is that you are being hired by a corporation, hotel, college, hospital or resort to shoot a dozen VR panoramas of their facility. After an initial review and (hopefully) scouting trip, you determine that you can probably shoot 3-4 of the scenes per day (including necessary lighting, subject availability, etc.), and you estimate the shoot to take four shooting days plus two travel days. You divide the estimated costs by the number of nodes to come up with a per node price, which the client agrees to. Unfortunately, when you arrive for the shoot, the weather is horrendous, the facility is involved in construction, the access you were assured of is not readily available, or other conditions require that your shoot a great deal of extra material and take far more time, which will also require countless additional hours of your time compositing in post production. Guess who gets left holding the bag for all these added costs? You do, because you agreed to a per node cost, rather than fees based on the amount of work involved.
Furthermore, you might have estimated and received approval from your client on a per node cost based on your creating 12 or more nodes, and you have agreed to a discount for a volume of work. However, during the shoot, the client changes their mind and decides that they really only need three or four images, or they need to cut the budget. Thus, your one week project drops to one day, yet you are still held to a low per node price, with the added problem that you may have already turned down other work, which prevents you from making up the lost income. Sound far fetched? It happens to all the time.
Better to charge a day rate (you can usually estimate that you'll be able to create X images per day) so you're covered when events beyond your control change the situation. Charge usage in addition to your day rate (based on the value your work is providing to the client) and even specify a minimum amount that will be charged in the event of a scaling back or cancellation of the project. Of course, all of this needs to be clearly spelled out before hand in your paper work or contracts with each client.
(See how three leading VR photographers share their approaches to estimating and pricing a job like this here.)
Many photographers worry about presenting paperwork requiring client signature(s) to a client. Theres no reason for this, however. Remember that you can't even get a $19.95 oil change for your car without first signing a 1-2 page service contract. Written contracts (with signatures) are not threatening to clients. Rather, these contracts clearly define what the understanding of your agreement is. It is far better to disagree over the specific clauses in a contract and correct them before starting any work, than it is to have to argue these disagreements in court and collect payments after the fact, particularly without a written contract in place.
The paper trail you should provide for every client includes the following (in the order used):
- Scott Highton