How to Budget for Video Marketing

Corporate Video production can cost as much or as little or as your budget allows.
You can borrow an iphone , shoot some video and upload it to YouTube – all for free. Or you could hire James Cameron to write, produce and direct your video where you’d be looking at a budget just shy of  half a billion dollars when you include marketing costs and Hollywood accounting. Both options would result in a finished video but you’d probably need special glasses to watch the the more expensive option.
The good news for businesses looking to engage a corporate video production company is that many of the factors that affect the price of a video have been going down over the last few years. Some dramatically. Assuming you find a company that does great work (this is a critical first step by the way – if the company doesn’t do great work it’s not worth paying anything for) the first question to be answered is  ‘how much does a video cost?’ There is no simple answer to that question but here are 25 factors (ranked in order of importance to the overall quality of the video) that affect the price of a web video:

1. Corporate Video Production Expertise. Doctors, mechanics, lawyers, videographers… whatever profession you care to mention, experience and expertise matters more than any other factor and, all things being equal, you do tend to get what you pay for. There are many, many moving parts in the creation of a video but at the end of the day you are paying for the expertise and experience of the key people responsible for your video.  
   Costs: You can pay $25/hour for a recent film school graduate or $250/hour or more for a top flight video veteran. On average most production companies will charge between $75/hour and $150/hour for the people involved in key activities such as shooting, editing and directing a corporate video. (TV commercials are an exception where A-list professionals can be an order of magnitude more expensive depending on the budget.)
2. Concept / Script / Storyboard –  Doing video for the sake of video is a waste of money (although it’s great for the video production industry!) What measurable business objective are you trying to achieve?  How is this video specifically going to achieve that objective? And of greatest importance, do the people creating your video have the experience or guidance to create a video that will help move your business forward? Lighting, sound, framing and editing are all important but they don’t matter in the least if what you are creating has no value to your intended audience. Like companies that spend $10,000 on website development and little or no money on content for the site, many companies waste a lot of money on beautifully shot but otherwise meaningless video.
   Costs: Expect to spend between $60/hour and $150/hour for an experienced marketer (does it make sense to have an entertainment script writer or video production assistant develop your marketing script?) to develop a concept, script and storyboard that serves as the blueprint for you video.
3. Editing/Graphics. The editing process is highly nuanced. Editing is where you create the style and substance of the video – you sequence all of the available assets into a cohesive story that communicates your key messages in a clear and engaging manner. Editors arguably should be the most highly paid (and skilled) in the entire process – quite often they are not. I have included graphics and animation into the editing process because it is often difficult to separate the use or importance of graphics and animation from the editing process.  Some videos require simple graphic elements and some videos are completely animated – the entire video is animation. High-end 3D animation can run in to many hundreds of dollars per hour depending on the complexity and skill required in the project.
   Costs: Typical editing costs run between $60/hour and $175/hour. (Complex 3D graphics or key frame animation can cost between $100/hr and $300/hr).
4. Actors/Presenters. Do you need to hire professional presenters, actors or models to improve the quality of your presentation? Not everyone is good on camera. You may need to make difficult decisions about who should represent your company. In a broadcast commercial quite often it is not someone in your company. Even in a corporate video you may decide that hiring outside talent is the best decision.
   Costs: Presenters, models and actors can range anywhere from $50/hour to $500/hour or (lot’s) more depending on experience, demand and union costs. {Special Note: This factor could easily be listed as either the most important AND/OR the most expensive if you are hiring specialized talent such as celebrities or well know experts.}
5. Camera. The quality and flexibility of the camera you shoot with can make a considerable difference in the finished quality and editing options for your video. Are you shooting on a $ 500 DV camera, a $2,500 DSLR, a $10,000 Full feature HD camera, a $25,000 RED, a $60,000 ARRI or are you shooting on Film? The pace of technological advancement in film and video is breathtaking and the features and capabilities of cameras are changing weekly.  Bottom Line: You should be able to see the difference in the final output quality in more expensive cameras. If you can’t, then it’s not worth paying for. Your final delivery channel will also determine the need for specific cameras. Streamed video on the internet (where the vast majority of corporate videos are seen) doesn’t require high-end camera’s to capture your content because a lot of that quality will be lost in optimization for the web.
   Costs: You will spend between $25/hour and $400/hour or more depending on which digital camera package is used. Film cameras, lenses and stock will take you well over $1,000 /hour.
6. Equipment. The more experienced video production companies tend to have a wide variety of tools and equipment on hand for each shoot. Do you need a track dolly or a jib-arm to create a shot with movement? Do you have a high quality field monitor to know exactly what you are getting (or not getting) as you shoot? Do you have all the necessary audio equipment (lav’s, direction mics, booms etc) to capture the audio you need?  Lighting and framing are everything in video. Do you have lights – lots of different lights to accommodate a wide variety of shooting scenarios? Do you have a variety of lenses to create the specific feel you are after – wide angle, fixed focal length or Cine lenses for narrow depth of field, etc?
   Costs. Equipment cost can run anywhere from $25/hour to $100’s/hour or more depending on what specific equipment is required.
7. Crew. If you’ve ever watched a movie or television show being filmed you might wonder why you need so many people standing around idle on a set. Most business web video productions don’t require more than two people (and sometimes one is enough) but depending on the complexity of the shoot you may require a crew of three or more. If you are conducting man on the street interviews as an example, you need a cameraman, a sound man and a directer or interviewer. Concept videos like commercials will often require more people to help with the logistics of the shoot. A field production engineer who has his own equipment (i.e. field recorder, mics, boom pole etc.) typically costs between $50 and $75 per hour. A lighting technician may cost between $ 30 and $50 per hour.
   Costs: Expect to pay between $ 25 and $75/hour/person for experienced crew.
8. B-Roll / Cut-away shots. Most videos benefit from the addition of footage that supplements what is being said on screen. If you are interviewing a business owner who is talking about their new equipment you should cut away to shots of the equipment as they speak. Showing the viewer what is being described in the video is more informative (show me, don’t tell me) and also helps to keep the attention of the impatient viewer.
   Costs: The length of time and equipment used to capture the b-roll will increase production costs. You can add anywhere from 10% to 50% of the total shooting costs if you need to supplement interview footage with b-roll footage.
9. Locations and production time. Where are you shooting? How long will each scene/interview/shot take?Are you shooting in one location or many? What are the specific requirements and constraints of each location? Are you indoor or outside? If you are shooting outside is weather a factor? If so what happens if it rains? How much set-up time is required? Are the locations close together? The most important factor is the total amount of time required for production. There are few economies of scale for time – but with good planning you can do a lot within a specific period of time.
   Costs: This cost is arithmetic. Two days of shooting is twice as expensive as one day. {If shooting extends for many days or is regularly scheduled then most companies offer a discount}
10. Studio shooting. Do you require the use of a sound stage or studio? Do you need a controlled environment to shoot in? Are you shooting green screen and keying out the background in edit? The use of a studio has to be factored into the overall cost of the production one way or another. Larger companies may include studio time in their shooting costs and other companies include it as a line item as studio rental time.
    Costs: Factor in between $100/hour and $ 400/hour depending on the size of the studio. (If you need a studio you will be charged for it – one way or the other)
11. Set, props, equipment, extras. Aside from video production equipment are there other special props or pieces of equipment that need to be included as part of the costs? Do you need to rent a van, rent furniture, hire extras, hire a plane or helicopter for an aerial shot or bring in special equipment for the shoot? These all have to be factored in to the cost of the shoot.
    Costs: Depends on what is required.
12. Stock footage Do you require supplemental footage or images to support the video? There are many websites that sell high quality still and video footage. Some videos are comprised completely of stock footage, text and voice-over.
    Costs: Stock images can be as cheap as $3 and great quality HD stock footage can cost as little as $50, but for high quality images you will pay considerably more.
13. Narration Do you need a voice-over to tell your story or to tie the video together. Video is a powerful medium but it is even more powerful if you take full advantage of audio to support what is being shown on screen.
    Costs: Voice-over costs have dropped dramatically over the last five years. Many voice artists work from home and can produce great work for almost any budget. $100 – $400 for a 2 minute video is reasonable depending on the experience and demand for the specific voice artist.
14. Audio files. Do you require a music bed, special sound effects or other audio to supplement your video?
    Costs: Good quality music for video starts as low as $30 for a two or three minute track. Custom audio can cost $1,000 or more depending on the experience of the musician and what is required.
15. Teleprompter. A teleprompter can save a shoot. Even the most experienced speaker can be intimidated by lights and camera. It’s true that you can usually tell when someone is reading a teleprompter but that may still be preferable to the agony of a shoot spiraling out of control because the CEO can’t remember his lines.
    Costs: Teleprompter and teleprompter operator usually cost between $350 and $600 for a half day.
16. Geographic Location. New York is more expensive to shoot in than Central Lake, Michigan because the cost of living is higher in New York. Half day rates don’t exist in some large cities today.
    Costs: Expect to pay between 25% and %50 more if you are shooting in a large city.
17. Digitizing, transfers, rendering and uploading. Video takes on many forms during the production process. If you shot on film you have to transfer it to a format that works in your editing system. After you edit it, you have to render it to a presentation format (for web, for broadcast, etc.) and depending on where it’s going you may have to upload it somewhere (your web server / YouTube / The Academy Awards, etc). All this takes computer and human time and you generally have to pay for both.
    Costs: Sometimes these costs are buried, sometimes they are line items. Tape transfers are still very expensive ($100’s of dollars).  Rendering and uploading time are usually buried in the costs but can also be charged out at an hourly rate ($30 – $75 per hour).
18. Length of the Video. The longer the video the more it is likely to cost. Web videos tend to be around a couple of minutes although this varies considerably depending on the type and purposeof your video. Filming an articulate talking head (limited editing) for 10 minutes is much cheaper than creating a 30 second commercial. So…
    Costs: All things being equal (they never are) consider longer to be more expensive, but it’s not arithmetic. An extra minute of video might only cost you %10 more if you have planned the extra requirements into the overall workflow.
19. Licensing/Union Fees. Are you using any media assets or talent that could be subject to ongoing licensing, usage or union fees? The web continues to drive all costs down including licensing fees – but they still exist. The best talent is usually a member of  SAG, ACTRA or some other union.
    Costs: Varies depending on the project and talent.
20. Direct or Third party. Are you dealing directly with the video production company or are you going through an agency or other middleman?
    Costs: You should expect that you are paying at least a 30% mark-up if you are going through a third party.
21. Interactivity. Are you creating linear video or are you building in interactivity? Is there a direct call-to-action that you want to get the viewer to follow? Do you require flash programming do build the video into a special player that will sit on a specific landing page? The future of video is interactive video.
    Costs: Expect to pay between %10 and %30 more to develop interactivity and flash support elements into your video. Back-end, database work will cost even more.
22. Hosting. Is your video is going to live on the web? If so, where is it being hosted? You might end up hosting it on different servers (your own, YouTube, a business portal, etc.) depending on your business needs.
    Costs: Hosting is either free or relatively inexpensive ($ 5 – $10 / month/video depending on bandwidth usage.)
23. Formats. How many different formats does your video have to be rendered in? Where is it going to be seen? Do you need a short version (editing down) and a long version? Does it sit in a multiplayer or is it in three different players? Should you break it up into pieces to make the length of it a little less evident and also to allow the user a bit more control?
    Costs: Adapting multiple formats for a video could add %5 to %10 percent to the cost of the job depending on how much editing is required.
24. Language and translation. Do you need close captions? Do you need language versioning? Do you need onscreen text to change per language? Do you need to dub in different narration for different markets?
    Costs: Language versioning can add %10 to %20 to the overall cost of the job. (Editing and proofing of different languages is usually much more time intensive than one language alone.)
25. Miscellaneous fees. Ya, everyone hates lawyers ‘disbursement fees’. Video production has the equivalent in ‘Miscellaneous fees’: Travel costs, meals, mileage, hotels, transportation, out-of-pocket… it all adds up.
    Costs: Usually in the $100’s and sometimes in the $1,000’s of dollars on larger shoots.
26. ‘Other Costs’. (I can’t change the title of the post so I’m going with ‘Other’ to include costs not included in the original post.)
    – Hair and Makeup: On lower cost projects a brush and a container of neutral blush (to remove an oily or sweaty appearance on the subject’s face) can go a long way. If you have both the budget and the need then it is a good idea to hire a Hair and Makeup expert to help ensure your subjects look great on camera. It’s also a good idea to have them watch the shoot to ensure continuity. These professionals typically work full-time in the industry – mostly on entertainment projects or come from the beauty industry working as cosmeticians specializing in weddings. Cost vary considerably but a reasonable range is from $30/hr to $75 per hour.
    – Location Rental: Depending on what you are shooting you may want to pay for the use of a specific location. While this option may seem like an extravagance, it could make the difference between a dull video and an engaging video. A talking head (all things being equal) is more interesting shot against an interesting backdrop. Contact your local film office – they should have a list of possible locations to shoot in your area for a fee. Costs range considerably – you can pay your local coffee shop a couple bucks to shoot during a quiet time or you can get access to a local museum for thousands of dollars.

Bottom Line?
Taking all of the above into consideration there are reasonable ballpark figures that you can use as a guidepost for budget purposes. A two to three minute web-based corporate video presentation might cost between $2500 and $10,00 if you consider the mid range of variables mentioned above. For most professionally produced web-based corporate videos you should consider between $2,000 to $5,000 as a starting point, that will give you a reasonable idea of where to begin in the budgeting process.
Budgeting Tip # 1: A reference video is a great place to start.
The best way to get a quick estimate is to have a reference video to compare to. (I.e. “How much would something like ‘this’ cost.”)
Budgeting Tip # 2: Share your budget
Every business has a budget and yet most businesses are reluctant to share budget figures hoping they will get an amazing deal if they don’t disclose anything.  I’ve been on both sides (client and agency side) and I always had better results when I said ‘Here’s my budget, here are my business objectives,  what can you do for me?” If you don’t declare a budget then the production company will have to guess at a budget. (I recently lost a job because the budget I guessed at was too high – even though the client really liked the concept that I had proposed. Does the company that guesses closest to your undeclared budget win?}
Budgeting Tip # 3: Be open minded.
Many businesses begin the video development process with; 1. A specific video type or style  in mind, 2. A prepared script and/or 3. Specific creative approach in mind.  That said, it’s still a good idea to listen to alternative approaches – presumably you are hiring a video production company because of their experience and expertise.