Pay Rates for freelance editors/compositors

Hi Guys,
I am new to editing and compositing and I have had a few clients but are doing it for virtually nothing, can anyone guide me in how you quote for jobs and dealing with clients?

When you first get started, that's sort of tough to figure out. You need to make money covering two factors, your time working, and your hardware/software expenditures. What your rate will be depends on where you live, too.

Here in New Orleans you can start as a newbie at $25/hour, or pro for $1000/day, and many rates in between.

I will take this opportunity to state the I see complaints about vidoegraphers who can't afford lots of drive space, and can't raise their prices. Well, that shows you may be in the wrong business, or started your business poorly. If you do this for a living, your clients must be paying for EVERYTHING, from camera to computer to NLE software to plugins and ESPECIALLY hard drive space. If you can't work out that your clients are paying for their share of your stuff, you're losing money.

I posted elsewhere this formula, but will repeat it here, since it's pretty easy. Although it may not work for your specific situation. It should give folks something to think about.

REALISTICALLY how many hours of work do you honestly think you can drum up for the year? How much do you need to make for the year in your hourly wage to justify this as a business? Divide and you'll get what you personally need to make per hour to get paid fairly for your work hours. That's step one, the "labor rate".

Step two is your "stuff". Realistically how much will you spend on hardware/software for the year? Divide that with the number of hours you figured in step 1, and that gives you how much you must charge additionally to your hourly wage to stay in business. This is where your clients are paying for your "stuff". This is the "equipment rate".

Finally, combine the Labor Rate and the Equipment Rate and there's the total you must make per hour to justify being in business. If you can't make it work, find another profession. Also, you need to re-evaluate this formula several times throughout the year and adjust as needed. It is important to recognize some jobs will pay more, some will pay less, some will pay this exact rate. You have to adjust and track these so that the average you're getting per hour works out. Even if you quote a job at a flat rate, track how many hours you put in to it so you can track it to our formula here.

The business side of videography sucks, but if you don't do it correctly, you'll end up in financial trouble. I can't tell you how many videographers/filmmakers I have known for the 15 years I've been doing this, who end up in financial trouble, because they never figure the cost of "stuff" into their rates, depend on just what the local going rate it, never actually do the math.

IF these are your first jobs, doing them for free is not wrong, in fact many of us did several free jobs so we could build up a portfolio of work to start charging for. And when you do start to charge, do NOT undercharge, or you'll screw yourself. Charge what you need from the beginning, so folks don't freak out when you have to raise your rates.

Say you start at $50/hour, but don't feel comfortable charging that as a newbie. No problem, quote that as your going rate, but let the first few clients know you'll give them a discount, and make up some pretty worded BS reason for the discount. But never start telling clients you are willing to only charge $25 as a regular price, cause then all that word of mouth will demand the $25 regular rate.

Well, there's food for thought. I'm interested to see what others have to add to this. Determining what to charge when you first start out can be as difficult as figuring out what your first camera should be, or what plugins to buy first. (Again, only buy plugins as you need them for client work, and be sure the clients pay for them.)

As for myself, I have an idea of what to charge depending on the type of work, what's involved, etc, and charge flat rates most of the time. Seems to be a trend towards flat rates rather than hourly rates now. But be very sure you not only estimate enough hours for your flat rate, but a few extra hours for when something does (not if) goes wrong.

But specific prices depend on the type of work, what is involved, where you live, and how much you need to make it financially profitable for you.

Hope this information helps in some small way.

Excellent summary by BenB. I couldn't agree more. In addition to those points, consider any advertising, print materials, etc. you may produce or purchase in association with your business and all subcontract labor you may hire out, if any, for assisting with lighting, audio, etc. This all should be a factor in determining your price.
You should also have some liability insurance that covers your equipment in the field and protects you from damaging any client property. This can be reasonably cost effective, but nonetheless an annual fee that needs to be factored and risky to do without.
For any state, federal or military projects you will probably have a contract that binds you to a price with a specific method for charging overruns or additional work. Be diligent in understanding those particulars. For work delivered to consumers rather than commercial businesses it is a bit tougher as everybody has a digital camera these days and pops stuff up on youtube in a matter of hours. See what the customer feels is a fair price then determine if that amount of work involved makes sense. Unless you are establishing a customer base from scratch, don't be afraid to turn down jobs if they are unreasonably priced.
You might also do some research to see what other video production companies are in your area and what they are charging. If you're the sole business around, you can set the bar higher.

Also see if there's a local Final Cut Pro User Group, you can get a lot of info and help from them.

Thank you for answering this question, as a newbie my time completing jobs will take longer I suspect and I am learning pre production is essential, I appreciate any one who can sound in on this discussion

BenB hit the nail on the head. The most important thing to get started in this business is clients. And definitely the way to go is to state your preferred rate but offer a discount. Otherwise you will be stuck at the first rate you quoted.

The other thing that is a factor is the nature of the job. If it's a Television Commercial you tend to charge more. If it's a long form documentary you charge less. If it's a music video you put it down as an opportunity to play with all your plugins and learn a bit more about what your NLE can do.

Rates for professional editors at the moment in Australia start at $50/hour and go up to about $100. There is a big downturn in the industry here at the moment so work is becoming harder to find. Puts even more pressure on your rates when you are competing with others who are prepared to discount themselves just to get the work.

It's a tough business but an equally rewarding one. It takes time, patience and dedication.
Celebrating my 30th year in the industry this year and wouldn't have changed a thing.