View Full Version : Charging policy for vizualisation industry...

10-29-2005, 05:55 AM
To all freelancing vizualisation artists and business owners.

I'm to be starting a vizualisation and design presentation business in South Africa next year. I am currently working on the main business plan and at the moment I am devising a charging policy.

I know that some of you out there have had your fair share of trial en error, and I was wondering if I could ask some advice on this matter. Your'e experience and 2c worth will be highly appreciated!

To make my point clearer I will use a basic scenario:

Lets say Company X is an architectural company designing a grand 5 bedroom house on the beachfront at some exotic location. What the architect requires is a presentation to demonstrate his building plans by means of a photorealistic 3D flyaround/-through vizualisation to his client.

I approach Co X and we discuss the building plans, the presentation needed, its length, the shots and level of detail required, and also most importantly the deadline as well as cost guidelines.

We decide that the project delivery date is 10 days later and I'm off to spend about 16 hours a day, labouring for the next ten days to deliver the most photorealistic and detailed vizualisation I can possibly manage.

Now my next question in mind is, how do you charge your client and how much do you charge?

The options are that you will agree on a rough estimate on the entire viz project and you require an advanced deposit paid for say 35% of this total estimate.

This off course goes hand in hand with a contract where the client agrees to use you and only you for this project's vizualisation, as well as you agreeing to deliver the product by the delivery date, otherwise yourself would suffer penalties such as discounts towards the client.

I can live with the contract, the deposit payment and things such as that, but the general guideline on how much to charge I am in the darkness with.

Do I try and calculate and project the an estimated amount of time I believe I would be spending on the project and charge say a fixed rate per hour, or do I go ahead, and suck a figure out of my thumb?

Generally I would think the best is to budget the amount of time by means of thorough project planning and management. Now with budgetting, there is always the risk of under-budgetting, which will have you suffering serious penalties and losses in income as well as losing valuable customers, and over-budgetting which could leave clients feeling that you're simply taking too much time on the project.

The risks on over-budgetting deadlines seems a lot less than under-budgetting, and I believe that one will get better and better with setting delivery deadlines as you get to know yourself better in terms of the pace you are working at etc.

So the main concern is the price, can you give me some information on how much a typical company would charge and how they would charge their clients?

10-29-2005, 04:44 PM
it helps to scout out your competitors really. Go out and try to find other quotes for the same type of work. then give a reasonable price that either delivers more for the money competitively, charges more then competition for superior work and takes into account that super tight deadlines, usually carry a premium. and also take into account render time and budget for time and for costs if you need to outsource. Always pass on costs like these onto the client unless you can safely and reliably do the renders on your machine.

Your costs are always dictated by the market value. So dont ever take someones numbers literally. You know how much money you need to live off and how much time you will spend making this project, so base your rates on that and your local competition.

10-29-2005, 04:52 PM
The premium for tight deadlines sound good for two reasons, first of all, it generates more income. Secondly, it allows a project to be completed faster having you free and ready to line up a second project.

Captain Obvious
10-29-2005, 07:17 PM
On the other hand, working on tight deadlines means less time to idle away here. ;)

Seriously though, I'm also curious about this sort of thing. Are there are any freelance people in Sweden doing visualization? I figure the prices are different here, compared to the US or whatever.

10-29-2005, 07:24 PM
Off course the cost of labour in different countries are different. An identical project will cost you less money if you for example fired a modeller from China, where getting someone from the US would probably cost a lot more.

In my case, South Africa has a lot of cheap labour, you can charge a lot less money for the international market, and still make a substantial profit.

Problem is, I have no indication of price in any other, let alone my own. I think I'm going to have to request some quotes on a fake project from other competition. I'd have to be careful though, as people don't like you investigating and interrogating their business like this. I am looking at starting off with possible overspill jobs from these guys, you know, pick up the breadcrumbs and have them outsource some modelling jobs to me.

10-30-2005, 01:37 AM
...... I think I'm going to have to request some quotes on a fake project from other competition. I'd have to be careful though, as people don't like you investigating and interrogating their business like this. I am looking at starting off with possible overspill jobs from these guys, you know, pick up the breadcrumbs and have them outsource some modelling jobs to me.

Its always good to work for the competition, that way you get a good overview about how they work and how the market works. Otherwise "try and error" is your way to go.

Whenever someone ask for your bid and he takes a competitor ask them why they haven't choosen you, and if your price was okay. Most people are willing to tell you if you ask in a friendly way. But your first step should be to visit your future clients with some of your work, that way they know that you exist and even give you more backround information because you are a newcomer.

BTW, i think the LW-community section would be better for this kind of question.

10-30-2005, 01:30 PM
(Flat rate)
I'll determine the cost for the job based on the needs of the client. The contract is written to specifically apply to those goals...or products.

Also within the contract are costs for changes...I charge for changes on an hourly basis.

10-30-2005, 02:16 PM
I don't work in the visualization arena, but I would have to agree with nthused. Price per project. In all honesty, until you get a reputation going for yourself, either through advertising or word of mouth, you'll probably have to undervalue yourself. I'm finding that right now - I started my company in January 2005, and have been pulling 15 - 22 hour days since for what seriously seems like a pittance. But, the word is starting to get out, I'm having other companies offering to rep my services, and individual clients are starting to hear good things. Ergo, I am now able to charge more per project.

Following the above, charging on a per-project basis allows more "wiggle room" between projects. Clients aren't going to talk to each other and have the exact same projects, so, if you charge Client X say $1500.00 when you're first starting out, then your reputation grows and you up your price to $2500.00 (and I'm pulling these numbers out of random orifices - please don't think there's any actual basis behind them) for Company Y - even if Company Y talks directly to Company X and they compare prices, there's always difference in project that you can claim as the difference in price. And honestly, you won't be lying.

The only thing to beware of following this model is if you develop a working relationship with Company X in the early days and they continue to expect to pay the same price for projects in the future. In all honesty, I'm trying to find my way around this exact situation right now and have no words of wisdom or even speculation to add on the subject - just pointing it out as a caveat to consider.

10-30-2005, 05:08 PM
Thanks Maxx, I'll keep this specific caveat in mind. It is a very tricky situation you have there, maybe you could raise the price annually and partially blame it on inflation and greater expenses such as rising fuel prices, or maybe you have new additional staff to pay...darn, it's tricky!

I'll let my customers know in advance that I'm doing an introductory special rate package which is valid for the next six or eight months, and if bussiness isn't going to well then, just extend the introductory package period.

I think people sometimes like to hear things like: "I'll do this at a special price for you because you are my best customer..." You know, they want us to suck up to them a bit. It's a bit of a clichè though, but I'm sure you get the idea.

I won't be suprised that I'll be doing 16-20 hour days for a couple of months, I'm definitely not planning on doing 9 to 5's. I want to make my business work, and I'm going to give my best.

10-30-2005, 05:17 PM
My prices have increased with same clients over the years (since about 2001 or so). But the quality of work has gone up with that price as well, as I have learned more...and of course because I've learned what I should have been charging the whole time...

I'm with you on the tons of hours worked, Maxx ...but I think these kinds of hours is the same in most businesses that people start...just the price one pays.

On the subject: In my experience there is VERY rarely a "standard" job - as one project always has different modeling, surfacing, and rendering needs than another - I have studied what it takes monetarily to survive and to 'feed' the company and have come up with an hourly rate that would provide those costs. I then look at each job and estimate the time and materials it will take to do the work. Write the contract and go from there...

And by the way...
Additional changes are, for the most part, charged at hourly + 1/2 as those changes are taking time from other jobs (or time from my family) that I could have otherwise been working on.

I'm here to give outstanding service to my clients...not to be a slave to them...

10-30-2005, 05:30 PM
The "Customer is King" era is over, at least that is what I say. Relaxation is very crucial, and our families are most important to us, after all, they are the one's taking care of you when all else fails. A job, a boss, a career and even a business is disposable and replaceable.

Your health should also come first, you probably work at a third of your maximum capacity and ability if you are feeling lithargic due to skipping last nights sleep to finish a project.

I suppose all these things will balance out with experience and as wisdom grows. You'll know how long to budget on projects and what not to offer to customers.

Increasing quality of work is a brilliant reason for rising prices, and of course education. You can probably earn triple more income when doing a job with a degree or even a couple of diplomas behind your name.

I feel however that experience is indisposable. You can have a pHD in whatever you want, but if you don't have any hands on experience, you'll be pretty much crap at what you do. Incompetence lurks with inexperience, and even greater danger looms over people so inexperienced, they don't even know how to learn.

I'm just concerned and slightly worried about my first price tag negotiations. People sometimes get so frightened if you announce your price and its ten times above what they expected. Some customers, and I mean no offense, are quite uninformed and have no idea how much these kind of things cost.

I've spent a couple of years working in the hotel industry, and I've learnt several techniques to sell rooms to people. Hopefully I can adapt these techniques to fit my business.

10-31-2005, 02:06 AM
.... And by the way...
Additional changes are, for the most part, charged at hourly + 1/2 as those changes are taking time from other jobs (or time from my family) that I could have otherwise been working on....

Huh ? Why do you charge more for changes, they are either part of the project or new work (means new "contract"), and of course does additional work take time from other jobs. So what ?

10-31-2005, 05:58 AM
I personally agree with nthuser on the charging for extra changes!

Lets say a customer is expecting a viz on a 50 story building in two weeks. You have agreed to a price and deadline. Halfway through week two, the architect informs you that the building will now have 65 stories instead, and many of them will be unique.

This type of demand is going to shift your availability for the next project way back, and therefore, you'll need to charge the customer extra. This charging extra policy will also encourage customers to get you working on their finalised plans rather than making changes every second day, expecting you to charge nothing extra.

Some customers are highly uninformed and because we do visualisations with computer software, they think the computer does everything for us. They expect you can make changes to a model with the clap of the fingers.

People need to be informed about this kind of extra money for extra work policy and I believe they need to now that rendering an image for an A0 sized print doens't take 15 seconds.

...and of course does additional work take time from other jobs. So what ?

Well that statement sounds blatantly careless and you're walking on dangerous grounds here. The extension of a current project means the next customer in the queue is going to have to wait longer. People get impatient, and the next thing you know is they will go hunting for faster delivery at the nearest competition they can find.

The amount of time spent on a project has to be strictly controlled. It takes a bit of judgement. I mean if someone requests the front door to be changed from one color to another, that's okay. But they need to understand that addding ten stories to their building is going to take longer, and they will have to extend the deadline. You might have in such cases have to multitask to help say another two or so customers with smaller projects that won't take that long.

I suppose it makes things difficult if you're a one man band. And when demands get higher, you'll need to get help, start employing people to offer that help. But salaries demand extra expenses, and once again you'll find you need to push up prices once more.

10-31-2005, 06:07 AM
Huh ? Why do you charge more for changes, they are either part of the project or new work (means new "contract"), and of course does additional work take time from other jobs. So what ?

Changes do take time from other projects...and many times delays those projects.

10-31-2005, 08:34 AM
Okay i have to agree for the most written above, but its a matter of time management, and thats what the client wont pay for. For example you can do renderings for one project and build a modell for another clients project. And if a client really wants to change that much he asks for a new offer AND a new deadline, and these i calculate depending on my other projects. And than there are projects that go on for months with little changes every few weeks, i still have to calculate some time for these projects too.

So in short whenever a client has some big changes he gets a new offer for time and money and i wont charge them more than normal. I wont move other projects because someone wants additional changes, that way my timeplanning goes nuts.

But as a one-man-band i sometimes work together with a colleague, when he has a lot to do than i help him and the other way, of course for money.

10-31-2005, 09:19 AM
I expect some may disagree with some of these, but I am offering this as personal lessons I've learned, so take on board what you feel might be useful - if any, and good luck!

If you come up with an hourly cost it will make your life a lot easier. Base it on the market value, your experience and some of the points below. Figure out how many days each project will take (based on say, 7 hours a day). If you are going to work 16 hour days, make sure you are getting paid for them.

Don't forget about your monthly outgoings - work out how much you need per month to cover insurances, taxes, bills, equipment, travel, rent, phones, internet etc. You need to add this into your hourly rate.

Add contingency - very important. Allow yourself time over how long you think the project will take. If it will take you 10 days, charge 12. This will give you some breathing room when unexpected 'features' get added and you won't have to keep telling the client its going to cost him even more money. This also gives you some room to move if the client wants to negotiate.

I agree you should charge a premium for last minute jobs - if it really is urgent, the client will pay for it.

Add some time at the end for 'reasonable' changes from the client, make sure you have costed for this. Changes you feel are 'unreasonable' you should charge extra for, or find a compromise. Tell the client why they are unreasonable, but offer a solution - tell him what you are prepared to do.

Write a proposal - outline exactly what you are going to deliver and the cost. Your contract can be based on the proposal. Everyone then knows what is going to be delivered when and how much it will cost. It will also help you argue the case for charging additional hours/days if you need to.

Remember that invoicing/chasing the client/phone calls/emails/proposals all cost you time and money, so try and anticipate these in your costing as best you can.

Not every client is a good client. If you are struggling to negotiate terms or costs with a client before the project even begins, it may be better to walk away. Some projects just aren't worth the hassle - even if you're desperate.

Every project is different so you should have no real problems if a client finds out you charged less for something else. As long as you gave them a fair price for their project you don't need to worry.

If you have old clients who you undercharged in order to get the work, don't be afraid to try and get the costs back up to your normal level. You don't owe them any special favours. You gave them a great deal when you started out and they gave you work. I think you're even. You might like to do a fixed cost discount for them if you're feeling generous - for old times and all that.

Clients don't like paying - its a fact. So it sometimes helps on long projects to phase the cost into 3 or more defineable stages. That way you can do small amounts of work and get payed for each stage without blocking out your time with no income and then waiting another 2 months before you see the money.
Cash flow is one of the biggest problems for small companies. Its not neccesarily the lack of work, its keeping the money regularly flowing. Its sometimes better to take a couple of small jobs than one big one because you won't be so tied up for long periods of time and you will have money flowing in more regularly.

Be realistic - Make sure you have an exit strategy just in case things don't work out. It can help to have someone else involved that can offer you an informed/un-bias opinion on how things are going.

Personally, I would be careful about writing a 'delay clause' into your terms. There should be no reason why YOU would delay a project. I think you might get caught out on that if a client knows he can get a discount by making your life difficult.

Make sure you keep money aside for when you hit a slow patch... and there will be plenty of those!

And finally ... it takes a long time to build a business from scratch and keep it sustainable and most won't make it through the first couple of years. So when times get hard the only question you need to ask yourself is "Would I rather be doing something else?".

10-31-2005, 05:26 PM
Solid advice there bluworld, I'll definitely be thinking about what you said here when finishing my business plan. Thanks!!!

That...last...paragraph is really scary and quite a bit discouraging, pretty much because I know you're talking the truth! But instead I'll use that to make me work even harder! Thanks for the advice once again.

Luckily I'll be staying at my parents for the first couple of months next year. I'm trying to even keep my personal living expenses to a minimum. If I can manage to stay afloat for a couple of months while building up a clientele, I believe I'll be okay.

The facts are, life is expensive though, fuel prices are rising, you have to make phonecalls, web hosting is a must for a company website, internet access for constant research and development, business cards, a printed portfolio and all these things unfortunately cost money.

Where there is a will, there is a way. If you put all your energy into it, I'm sure things will work out. It's in our humanly blood to seek ways to survive!