What is a production fee? (and how you can start charging one)
What on earth is a production fee and how can you start charging one for your video or photo business?
Let’s talk about it.
A production fee is a percentage-based fee that a production company would add on top of all the expenses for a project. 20% is pretty common, so if the labor and expenses for a video production are $10,000, the production fee is an additional $2k.
I’ve seen production fees range anywhere from 10% to 40%, but 20% is most common.
Production fees are warranted because the production company or the producer is doing the extra work to bring the crew together, leveraging their network and expertise, and taking on all the risk. If a client doesn’t want to pay your production fee, you can say “great—I’ll show up with my camera for the day, you can take care of all the other details.”
If you’re just being hired as solo videographer, photographer, or freelancer for a day rate, you wouldn’t charge a production fee. If you’re not puling together a lot of production details, there’s no place for a production fee. If you feel like your day rates aren’t enough to cover the work you’re doing, you probably just need to charge bigger day rates, and add on more day prep and editing days.
How do you explain a production fee to clients? Won’t they get mad?
It depends.
Clients with smaller budgets under $10k usually don’t like to see a production fee. They feel like they’re being nickel-and-dimed, and they’ve probably worked with other creators in the past at the same scope who haven’t charged them that fee. In these cases, just bake in the production fee to your rates when you deliver the quote. So, if you’re charging for storyboarding, scripting, and editing, calculate your production fee based on those day rates, then spread the production fee back into those day rates.
Clients with bigger budgets around $20k and above understand that production fees are part of the deal. For projects like that, you can outline costs for each stage (pre-production, production, post-production, etc.), add those together as a subtotal, then explain the production fee as covering “insurance, incidentals, operating costs, and profit.”
A production fee sets the precedent that the project will remain profitable in step with the expenses, even if additional expenses and deliverables are added. That’s why percentage-based fees are great: if the project gets bigger, so does the production fee, and so does your profit.
A production fee gives you a little wiggle room to cover unexpected expenses. If a piece of gear breaks or if you need something you weren’t anticipating, you’ll have some cash in the bank to cover that expense. Beware using your production fee for additional deliverables, or an increased scope from the client. Just because you have extra money, doesn’t mean they have that money, too. If they’re asking for a lot of additions, make sure you quote those as overages (and add on a production fee for those as well).
Hope this helps!
P.S. If you haven’t already, grab my production budget template for free here.
P.P.S If you’re tired of the solo creative grind, and want to start building bigger teams and shooting bigger projects, check out my producing guide.
