The Art of Bidding
We all know that creativity is key when it comes to content creation. Whether it is a broadcast commercial spot, a simple social post, or a feature film title sequence, clever and engaging creative is crucial. You only have moments to capture AND keep your viewers' attention. However, for projects to be truly successful, financial understanding is vital. Every project is unique. Demands vary widely. In this environment, mastering the art of bidding is essential. Effective planning and management of finances can make or break your projects, and maybe even your bank!
Let’s talk expenses. Live-action, motion design, and post-production projects often involve a multitude of expenses, including crew, equipment rentals, talent fees, freelance and vendor costs, software licenses, stock imagery and footage, and sometimes, travel. Without a well-defined budget, it's easy for expenses to spiral out of control, potentially jeopardizing the quality of the final product and may lead to financial strain, not only for the project itself but for the studio as well. Effective budgeting ensures that resources are allocated judiciously, allowing for creative freedom while maintaining financial stability.
For this reason, a producer must thoroughly understand the project's requirements and objectives, before attempting to put together costs. Although many producers can put together a bid rather quickly, it’s important to collaborate closely with clients and creative teams to establish and/or clarify clear deliverables, timelines, and budgetary constraints. I personally like to start with a project brief where I conduct a comprehensive needs assessment with my clients to help identify potential cost drivers and inform budget allocation decisions down the line. My project brief will cover anything and everything from the timeline, type of video production (live action or footage-based, 2d, 3d, etc.), resources needed both internal and external to complete the project, and a detailed list of deliverables.
This brief can then be turned into a detailed budget, which serves as a roadmap for the entire post-production process, outlining anticipated expenses and revenue streams. After gathering all the details of the project, I start breaking down costs into categories such as pre-production, production, and post-production. Beyond resources (team and crew), consider factors such as casting, location scout, equipment, software, meals, permits, audio needs, and contingencies such as revisions or timeline delays. I also account for both fixed costs (e.g., salaries, rent) and variable costs (e.g., materials, vendors).
Now let’s talk cash flow management. Cash flow management is also a critical aspect of budgeting, particularly in industries where payment cycles can be erratic. Producers don’t usually have to worry about the cash flow of a studio; however, you are responsible for the cash flow or “actuals” of your project. Tracking your actuals on, a weekly basis is the bare minimum to ensure you are meeting the studio's profit margin requirements. Further, if you have been given the responsibility to bid on a project, it is imperative to include your EP or Managing Director in budget conversations so that they understand any potential problems that may arise that may affect the studio's cash flow. For example, many clients are now requesting to pay invoices on a net 60-90 basis. Even for projects that deliver in much less time! This means your team may complete a project before the studio sees a penny of the total budget, which also may mean the studio is responsible for paying for external costs before being paid by the client.
These long payment terms can affect the overall cash flow of the business and if not managed well, could mean tough times ahead. To avoid cash flow problems down the line, I always establish clear payment terms with clients, freelancers, and vendors upfront. Budgeting isn't just about numbers; it's about building relationships and trust with your team and vendors. Trust disappears when people aren’t paid according to their expectations. By being transparent and fair, you can create an environment where everyone is motivated to deliver their best work, knowing that their efforts are valued and compensated appropriately.
All you producers out there know that no matter how meticulously we plan, unforeseen challenges can (and will!) arise during a project. As I mentioned above, it's essential to build contingency reserves into your budget to address unexpected expenses or delays. We’d all like to set aside a buffer of at least 10-20% of the total project budget to account for contingencies, right? However, this is often impossible due to low budgets, especially in recent years.
So how do you handle those unexpected circumstances that sneak up on us? Well, hopefully, they aren’t really sneaking up on us because we as producers have thought through every possible path the project could take. This is where good producing comes into play. When you send your bid and/or SOW, clearly state what is and what is not included in the budget. Outline the timeline, including each phase of the project, how many rounds of revisions are allowed, when client approval is needed throughout production, and the policy for delays or changes in creative. And last but not least, always include language around cancellation fees.
Budgeting is the secret sauce to making post-production projects go off without a hitch. By figuring out what the project needs, setting up a solid budget, keeping an eye on actuals and cash flow, and keeping an eye out for blindsides, you can keep everything running smoothly.
