A Freelancer's Story: Charging a Deposit on Work

Cashflow is king. Deposits are the key.

Embarking on a freelance career in video is an exciting, rewarding and potentially lucrative career choice. The road isn't always easy, and the pitfalls appear with alarming regularity and varying severity. The best bet is to plan ahead as much as possible, take advice from those in positions of experience, and tread carefully through uncharted terrain.

In this spirit, it's important to consider the various aspects that go into a career as a freelancer.

Is it necessary to incorporate? What kinds of contracts do I need? If I charge too much will I scare off the client? If I charge to little will I fail? Will I be a shooter, or editor? Do I need to be both? Do I need to learn motion graphics as well? How do I hire a subcontractor?

The questions will be plentiful as the impending launch of YourVideoCompany.tv nears, and we'll be here will plenty of advice to help along the way. Over the coming weeks we'll try to answer as many of the above questions as possible, but today we're starting with a simple lesson.

The lesson, is to maintain cashflow using deposits. I'll start with a little story.

Recently, I was asked to quote on a video production that needed to be turned around in just a few short weeks. It's a simple talking head video with some graphics and b-roll (secondary footage), and with nearly a decade of freelancing under my belt, I knew how to tackle the quote.

First of all, with a new client, I take no risk. In fact, as my business goes on over time, I take fewer and fewer risks. At the risk of sounding cynical, clients are out for their own interests, and terms leaning in their favor will always be their top choice.

So, new client. In fact, it was a new client, brought to me through a contractor I hadn't worked for before.

This isn't a problem, but the terms had to make me excited to do the job, or it wasn't worth it.

And that's a tough lesson to learn in business: if the terms don't motivate you to do a great job, and protect you at the same time, the work isn't worth it. Those questions before about charging too much and losing clients are easy ones to answer: charge what the job is worth without shortchanging your own value, and set terms that protect you as a freelancer, and whether the client signs off or goes elsewhere, your quote was correct. Period.

So I quoted what my normal rate would be for video services, from pre-production, to shooting, to editing, to post production. I create my own motion graphics and titles, optimize audio, color correct and grade, and edit. My rate isn't the most expensive in town, but it sure isn't cheap. Remember, in addition to your time, which is valuable, they're purchase of your service includes the use of your expensive and specialized equipment. When they buy an hour of your editing services, they're getting your computer, your software, your plug-ins, the coffee you drink while you work, the desk your monitor sits on and your chair. If the coffee, desk and chair make you giggle a bit, try taking one of them away on your next editing gig.

Terms can be as simple or complex as you see fit, but I have to pull from personal experience. After years of charging one net 30 rate at the completion of a project, I got tired of the client being in a huge rush for their content, but dawdling with payment after I had delivered. Most of them had steady incomes and could afford to pay at any time, but as a freelancer I was desperate for cash flow.

So I created some Video Service Agreements. One for existing clients who were buying a la carte videos from me, one for existing clients who were looking for retainer business, and a third for new clients.

The agreement for existing clients buying a la carte videos had terms looking for 33% of the total value of the video paid up front to manage expenses incurred during production, a 33% payment after final approval of the video and before final delivery, and the final 34% was done on a normal net 30 schedule. This kept things nice and smooth, cash flow-wise for me, which kept me cool with my valuable clients.

The second contract simply allotted a set number of hours service per month for each client. Terms in that agreement laid out what to do with extra hours or overages, as well as stipulations for booking lead-time.

The agreement for new clients looks for a 50% up front deposit, and a final balance payment upon final approval of a video, but again, prior to final video delivery. This may seem harsh, but as a solo operator, one bad client experience can put you out of business, particularly in the early weeks and months of your business being underway.

So, what did the client do with my quote? They ignored the big number at the bottom of the page and balked at paying anything up front, as they didn't see a video project being worth any risk. It was worth a few thousand dollars, but no risk. My only response was "I agree completely."