Episode 322 — Raise Your Value — Raise Your Rates
A lot of the time, artists feel like clients do them a favor by hiring them. The more you understand the ecosystem, the more you start seeing this as a service-based industry: You’re delivering value to your client, they’re delivering value to theirs — and it goes up the latter. Each step in that latter is a much bigger profit margin. They need their problems solved. They need you as much as you need them.
It’s not just about raising your rates. It’s also about what it is that you’re doing that’s aligning with the client’s needs. How do you give them value? That’s always the trick to communicate. You need to be self-aware about what services you provide.
This is the big thing we need to get over: the money friction. A lot of us get resistance in the beginning. We’re afraid that if we raise our prices too high, we’ll lose our clients. “Raise your rates and scare away your clients” is an absurd idea. Instead, you can raise your rates and if the clients get alienated, they’ve identified themselves as cheap. It’s okay for them to go!
In this Podcast, Allan McKay talks about how to raise your value, both as a brand and a business, and how to communicate it to those premium clients that will meet your worth.
[03:40] The Live Stream that Inspired This Podcast
[07:49] Change Your Perception
[13:00] Change the Power Dynamic
[18:25] Change How You Communicate
EPISODE 322 — RAISE YOUR VALUE — RAISE YOUR RATES
Hello, everyone! This is Allan McKay.
Welcome to Episode 322! This is a solo Episode on why you should stop competing on prices. I talk about how to find your niche (both as a brand and a business) and how to communicate your value to those premium clients that can appreciate your value; how much you should be making and how to raise your value.
I’m really excited about this Episode. I cannot believe this year is coming to a close. I’d love to hear your feedback about this Podcast. I’d love to hear from you: [email protected].
Let’s dive in!
FIRST THINGS FIRST:
[01:09] Have you ever sent in your reel and wondered why you didn’t get the callback or what the reason was you didn’t get the job? Over the past 20 years of working for studios like ILM, Blur Studio, Ubisoft, I’ve built hundreds of teams and hired hundreds of artists — and reviewed thousands of reels! That’s why I decided to write The Ultimate Demo Reel Guide from the perspective of someone who actually does the hiring. You can get this book for free right now at www.allanmckay.com/myreel!
[25:54] One of the biggest problems we face as artists is figuring out how much we’re worth. I’ve put together a website. Check it out: www.VFXRates.com! This is a chance for you to put in your level of experience, your discipline, your location — and it will give you an accurate idea what you and everyone else in your discipline should be charging. Check it out: www.VFXRates.com!
RAISE YOUR VALUE — RAISE YOUR RATES
[03:40] The people I coach on raising prices, there will always be people who hear information that conflicts with what they believe to be right, they will say, “Yeah, but that wouldn’t work for me because of: my country, my location, my industry, etc.” A lot of us have this expectation that you cannot make money in design or VFX, or that the industry may be saturated. That’s the invisible script we’re telling ourselves.
[04:24] It doesn’t matter which country you’re from. I came from Australia. At the time, there weren’t many VFX artists. I’ve worked in many countries with smaller industries too. There are some places that it can be political and you can navigate that. Typically, it’s about understanding the clients that you want to work with. If you aren’t designing where you’re going, you will end up wherever things take you. It’s about how you put yourself out there. If you’re getting a lot of cheap clients (and you aren’t putting strategy behind changing that), then you will get more of those cheap clients.
[05:24] The other thing to keep in mind is that now, with COVID, everyone on the planet is working remotely. This is a really important factor to keep in mind! If you say, “not in my country”, the simple fact is: Why do you need to target people in your country? Someone working in San Francisco, someone working in Vancouver, someone working in Bangladesh, what’s the difference once you go online? You can do it from anywhere. At this point, it doesn’t matter where you are. You receive the files from the clients, go make your piece, deliver it back online. Where does it say that you need to be physically in the same country?
[06:31] And that’s the best part: Not only can you target people in New York, but you can double your income just on the exchange rate of the US dollar alone. The more you look at lowering your cost of living, the more money you’ll end up making. I was talking to Stuart Lippincott who works with Adobe, Google, etc. He works in Arkansas. He is giving himself a raise by removing himself from expensive cities. This is important to understand.
CHANGE YOUR PERCEPTION
[07:49] It’s tough when the reality of what you’re used to is telling you something else. “No one will pay me that much,” [for example]. I’ve talked about the 50K Myth (www.allanmckay.com/296). My reality was that artists couldn’t make more than 50K a year. Now, I have friends who are making over a million dollars as a designer (while in the beginning of their careers, they were making $20K). All because:
- They’ve embraced the business side;
- They know how to price themselves;
- They know their value;
- They’ve put intent behind their brand and built their strategy.
[08:51] When I mentioned tripling my rates, I was at $150K a year. That year of no, I switched from that and I made half a million dollars. We can either argue with other people [that it’s not possible] or even with ourselves. Even when you meet someone who says it’s possible. It changes your reality once you decide it’s possible. You have to take a look at what you’re doing, go back and start from scratch. If it is possible, how can you do that? Can you be more aggressive with negotiating, once you know your value? You might ask for $2,500 a week. If the client negotiates, you can settle on $2,000.
[11:00] We put so much work into what we’re doing. The time you’re putting in is one thing. But it’s all about the value that client sees. It’s not just about raising your rates. It’s also about what it is that you’re doing that’s aligning with the client’s needs. How do you give them value? That’s always the trick to communicate. You need to be self aware about what services you provide. If you do roto, for example, and in the market it’s not as valuable, you can find something else in the market that is valuable. That’s where your perceived value goes higher. Instead of roto, you do comp. Or, you’re a TD for compositing. Or, you write tools. If you’re doing things because they’re fun, then it’s just a hobby. If you want to be profitable, you need to focus on what’s in high demand and low supply.
CHANGE THE POWER DYNAMIC
[13:00] A lot of the time, artists feel like clients do them a favor by hiring them. The more you understand the ecosystem, the more you start seeing this as a service-based industry: You’re delivering value to your client, they’re delivering value to theirs — and it goes up the latter. Each step in that latter is a much bigger profit margin. They need their problems solved. They need you as much as you need them. But if you don’t put intent to building yourself as a business, they may be right in undervaluing you. If you can communicate your worth, they will meet your rate.
[14:40] It’s the same way when you compare a $1 bill to a $100 bill. It’s all about the perceived value of one over the other. We all agreed that the $100 bill is worth more. That’s the intent behind it. If you look at an iPhone, it probably costs $20 to make. But it’s being sold for $100. Why is that? Because of its perceived value. You’re buying into the brand. It really comes down to the perceived value. Typically, I will charge a client $7K a week, but I take on two jobs at the same time (as well as do my courses and team, manage my team and publish the Podcast).
[17:30] This is the big thing we need to get over: the money friction. “Raise your rates and scare away your clients” is an absurd idea. Instead, you can raise your rates and if the clients get alienated, they’ve identified themselves as cheap. It’s okay for them to go! You can deal with clients who are able to afford premium rates. Sometimes, you have clients come around and ask for a favor; but then they come back and ask for another favor.
CHANGE HOW YOU COMMUNICATE
[18:25] It’s a lot harder to have conversations later on if you haven’t established your rate upfront. You can say, “I understand that the budget isn’t there. But if it were there, can we agree that this would be my rate?” As long as they understand your worth, you will be able to take that hit. That way next time, they’ll have to budget for your worth. That’s the easy way out! What I would do is say, “I understand the budget isn’t there. Because you aren’t able to pay that, how about we lower the number of days I work?” You’re putting them into a situation of having established your worth and you’re throwing them a bone. It’s not that unreasonable. You can also do a rev split: You can split the revenue, or you can take the equipment at the end of the job (if the client doesn’t need it anymore after the job is wrapped). I, personally, am not in favor of negotiating computers, but it just shows that anything is possible.
[21:40] There is a book called Start with No: The Negotiating Tools that the Pros Don’t Want You to Know. The title says it all. When you get to a no point, you’re starting the conversation. No one wants to haggle about money, but that’s where we’re at. The big thing you need to realize is that you’re comparable to any other artist. When we were looking at reels at ILM or Blur, we wouldn’t know when a reel belonged to a student — until we saw a shot from their student film. Up until then, we’re willing to pay the mid-rate. You’re the ones setting yourself aside. You’re the ones undervaluing yourselves. When you ask for a higher rate and the studio says no, you can explain why you’re worth that money. But you have to do that through understanding what the client’s problems are and what you can do to help them solve those. I take pride in the fact that I interview my clients as much as they interview me.
[24:37] You can say something like, “What are your concerns with this project?” They will tell you, “Our simulated explosions always end up looking weird and we haven’t been able to do better.” You can then explain how you’d resolve that problem. You will show that you understand the problem and that you have the solutions. It’s all about solving their problems, and most of the time, it’s about understanding their problems first.
Thank you for listening! I hope you enjoyed this Episode. Please click the share button. It’d be a great way to support this Episode.
Next week, I will be interviewing Erika Burton who is the EVP of Global Studios at DNEG. We talk about some of the amazing films over her career, her being a VFX Producer and becoming the Head of Global Studios. Please keep an eye on that!
I’ll be back next week. Until then —
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