If a business does not charge a production fee, they are leaving money on the table. It's standard, and your commercial clients are accustomed to paying an additional fee. We call it a production fee, but others industries may call it a convenience charge or kit fee, among other terms. Either way, it's standard and you are entitled to this fee.
Production Fees Pay for the Business Necessities
The internet, the roof over your head, the car lease, Adobe subscription, new devices every few years, and the coffee in your cup are covered under the production fee. It would be difficult to run a successful business without these tools and necessities. At the same time, it would be confusing to list these fees on your client invoices:
- A portion of my studio rent
- My Adobe subscription
- The coffee in our office
- The utilities
Instead, there's something called a "Production Fee" that is all-encompassing, and it ranges from 10-20% of the total budget. The video will break down an example scenario to help you with this cost.
The Client Expects to Pay This Fee
If you're dealing with a commercial entity, they are accustomed to paying a production fee from their vendors. It does not require explanations or justifications. The production fee or a variation of it is at the bottom of most invoices.
I had knots in my stomach the first time I added a production fee on my invoice. It was to a big ad agency based out of LA and NY. I rehearsed what I'd say over and over. I made a list of excuses to back up this line. The creative director reviewed my invoice and said he would forward it to the accounting department. Since it took about 30 days to pay the invoice, I had my paper near my desk should they call and ask me to remove this fee.
The call never came. They never questioned my production fee. That invoice was about $15,000, and then, I added another $3,000 for the production fee. What could you do with that extra $3,000? Could you invest in a new lens or a better website? Would it pay for a couple small upgrades or would you finally be able to pay yourself a better rate?
I learned that we are leaving money on the table because of fear. Watch the video to see the breakdown and to hear all of the reasons why you're not asking for anything outside of the usual. I also have the exact script to say to your client if they do ask about the production fee.
Other Benefits of Charging a Production Fee
There are additional benefits to changing your business fee structure, and while those are discussed in the video, let's do a quick preview of such benefits:
- Protects your creative fee/rate
- Establishes that you are a professional and you will be treated like a professional
- In some cases, it could double your profits
- Provides a budget to replace old gear and new upgrades
- It establishes a level of respect for your services
- You can charge a production fee for personal photo/video clients
- You can negotiate the production fee