If a business does not charge a production fee, they are leaving money on the table. It's standard, and your commercial clients are accustomed to paying an additional fee. We call it a production fee, but others industries may call it a convenience charge or kit fee, among other terms. Either way, it's standard and you are entitled to this fee.
Production Fees Pay for the Business Necessities
The internet, the roof over your head, the car lease, Adobe subscription, new devices every few years, and the coffee in your cup are covered under the production fee. It would be difficult to run a successful business without these tools and necessities. At the same time, it would be confusing to list these fees on your client invoices:
- A portion of my studio rent
- My Adobe subscription
- The coffee in our office
- The utilities
Instead, there's something called a "Production Fee" that is all-encompassing, and it ranges from 10-20% of the total budget. The video will break down an example scenario to help you with this cost.
The Client Expects to Pay This Fee
If you're dealing with a commercial entity, they are accustomed to paying a production fee from their vendors. It does not require explanations or justifications. The production fee or a variation of it is at the bottom of most invoices.
I had knots in my stomach the first time I added a production fee on my invoice. It was to a big ad agency based out of LA and NY. I rehearsed what I'd say over and over. I made a list of excuses to back up this line. The creative director reviewed my invoice and said he would forward it to the accounting department. Since it took about 30 days to pay the invoice, I had my paper near my desk should they call and ask me to remove this fee.
The call never came. They never questioned my production fee. That invoice was about $15,000, and then, I added another $3,000 for the production fee. What could you do with that extra $3,000? Could you invest in a new lens or a better website? Would it pay for a couple small upgrades or would you finally be able to pay yourself a better rate?
I learned that we are leaving money on the table because of fear. Watch the video to see the breakdown and to hear all of the reasons why you're not asking for anything outside of the usual. I also have the exact script to say to your client if they do ask about the production fee.
Other Benefits of Charging a Production Fee
There are additional benefits to changing your business fee structure, and while those are discussed in the video, let's do a quick preview of such benefits:
- Protects your creative fee/rate
- Establishes that you are a professional and you will be treated like a professional
- In some cases, it could double your profits
- Provides a budget to replace old gear and new upgrades
- It establishes a level of respect for your services
- You can charge a production fee for personal photo/video clients
- You can negotiate the production fee
Just charge more up front, be honest. I don't believe in any hidden cost, that's a way to never see me again. My clients already pay for the studio while 90% of the time I shoot on location and if the shoot is in my studio, I won't charge extra for the toilet paper they may have used. When the client gets the bill and accounting starts asking what is this, you put that client/employee in an awkward situation where they don't need to be. Not saying no client will just pay the bill, but good relations to me is 100% part of trust and how you keep the client coming.
While I understand that a production fee is acceptable to charge in some corners of the photo/video world, in others, it is not. I see all benefits for the photographer in this article and no value for the customer. For those whose clients are unaccustomed to a production fee and who are likely to question it, they had better have a good explanation for it beyond "It establishes that I am a professional and I will be treated like a professional" or "It could double my profit". I realize these listed reasons are the real ones for charging such a fee, so what lie do you plan to tell the client? Why do you want to lie to clients?
The line item: photographic fee answers the question of overhead allocation.
Suggesting that an additional "production fee" that goes unexplained is asking for trouble.
Production should be itemized in a way that accounts for the expenses directly attributable to the actual production of the project. Things such as permits, parking, location fees etc.
Photographic fee (the day rate) covers the overhead and the compensation of the photographer.
A list of charges needs to be relevant and justifiable. Getting cute makes clients mad.
When it comes down to it, a client is looking at the bottom line figure, and however you break it down or justify it to them is up to you.
I typically charge a flat hourly rate plus expenses. When I get a client say "gee, that's a lot per hour", then I can break it down and say that for every one hour of shooting, I'm really working 4 hours - 1 hour before the shooting processing, planning, and setting up the shoot, and then 2 hours on the back end editing. So my effective hourly rate is 1/4th of what is listed - they usually say that then I'm pretty inexpensive!
Always great to see articles helping explain business practices to us photographers, it sure does seem like our field is full of naïveté when it comes to running a sustainable business. More articles like this are very appreciated. Thanks