How to Set a Total Budget for Video Production Costs
If you are looking to hire a video production company or agency you have likely come to the realization that until you determine a total budget for the project, you may not get very far.
Video production costs can be very confusing as different packages, pricing structures, cost sheets etc... can vary greatly from company to company.
In this post I'm going to give you a clear understanding of how to come up with a realistic and accurate total budget for your video production.
You will be able to contact video production companies and submit your request for proposal with confidence in the budget you have set, so you can maximize both your response rate as well as the quality of proposals.
*Learn how to write a great RFP (request for proposal) here
We are going to cover:
How Video Production Companies Create Proposals
While I understand the desire to get multiple proposals from different companies - a process I completely agree with - it's important to understand that a high quality, creative video production agency cannot be hired the same way you would hire most other professionals.
Because there are so many different directions and possibilities involved in a creative video project, it's literally impossible for any video company to know how to begin putting together a quote without a very deep understanding of the project.
If you were to ask an architect, "How much does it cost to design and build a house?" their answer would be a long list of questions, the first of which would surely be: "What is the total budget for the design & build?"
Video production is a lot like designing and building a house. The production company will need to know:
As much detail as possible about the video you want to create
The total resources that will exist for the design & build
If you request a proposal from video production companies without providing both of the above, you are likely only going to get inaccurate proposals, built on guesses.
Generally, high quality video production companies don't even have the time for these guessing games, and so you'll likely only get proposals from smaller companies that are more interested in winning the job than they are in making sure it's done right.
Going back to the house analogy, until an architect understands exactly what you want to build, why you want to build it, where you want to build it and how much money is budgeted to build it... it's not possible to design accurately.
Similarly, until a video production company understands exactly what kind of video you want, why you want it, where it's going to be played and how much money is budgeted to build it... it's not possible to create an accurate proposal.
All of that being said, here are the steps that are involved in our proposal process at Intrigue Studios.
Initial Contact & Video Project Details
Request for proposal (RFP) submitted (optional)
Intro meeting to review project info (optional)
Intrigue submits a proposal in the form of a creative brief
Creative brief approved for further development
Visual treatment & concept pitch
Concept(s) Pitch Meeting
Project green-lit for production, development begins
Keep in mind that the above sequence of events might be modified on a case by case basis, but the key takeaway is that a high quality video production companies proposal is usually in the form of a creative brief, not a line-item quote.
What Is Production Value?
So now that we understand why it's so important to set a clear production budget before you submit RFP's, now let's take a look at how that total budget equates to the final product.
If you've been anywhere near video production for any period of time you have probably heard the term "production value" used. This is a very loaded term that can either have one of two different meanings - or it can represent both of those meanings simultaneously.
The overall quality of a video relating mainly to its technical quality. (visual production value)
The extracted value from a video in terms of the results that it generates. (creative production value
As you see above, I like to further differentiate these two meanings by categorizing them as follows:
Visual Production Value
As the visual production value has to do mainly with the technical quality of the video, it is most affected by the equipment that is used during production. As a result, visual production value is easily increased by simply increasing the budget.
Creative Production Value
As the creative production value has more to do with the results that the video generates, it is most affected by the strength of the video's concept and narrative. This is an area where a really good idea can increase the creative production value of a video by 10x, and the costs for executing that idea may be relatively low.
The Difference Between Value & Cost
It's important to understand that cost and value are two very different things. The project's cost is the dollar amount required to produce it, while its value is how much the video will be "worth" once it's complete.
As we have already discussed, by increasing a video's production value, whether creative or visual, you can dramatically increase the value of the final product - and those values can sometimes drastically outweigh the "costs" of doing so.
However, this principle should always be explored with caution as the opposite is also possible. We've seen companies invest tens of thousands of dollars to upgrade the visual production value of a project without considering whether or not it would have any impact on how the video was received by it's target audience.
Don't get me wrong - I'm all for upgrading production and adding crew, locations, equipment, v etc... it's just important to be sure that an increase in production value will translate to an increase in profitable results. If it will, then adding production value is a no-brainer. If it won’t, then you’re likely wasting money that could be better spent elsewhere.
What is a Realistic Total Budget for Video Production?
If you are reading this post it's because you likely want to determine a realistic budget for your video project, and you either have no idea where to begin - or you just want to validate some figures you already have in your mind.
Whatever the case, in order to come up with an accurate number you’ll have to consider the following:
Maximum Profitable Budget
The first thing you need to do is determine the lifetime value of the video's anticipated results. In other words, you need to know how much profit you will make if the video has maximum effectiveness.
The reason this is so important is that it will allow you to quickly determine a maximum budget cap for the project.
If, for example, you expect a TV commercial to result in an additional $2,000,000 in sales over the next 1-2 years, then it wouldn’t be unreasonable to set a $200-$300k max production budget for the video.
If, however, you are planning to run a marketing video that you estimate will result in an additional $250,000 of potential market share over the next year, then you will likely only want to risk a maximum of $30-60k on the video's production.
Whatever your situation, you need to determine a maximum production budget for the video based on its projected results. This doesn’t mean you have to actually spend that entire amount, it’s just important to know where this cap is before you start requesting proposals.
Factors Affecting Cost
It’s important to understand that on the “costs” side of production there are many factors that come into play, and a video production project can be scaled up or down dramatically by simply making adjustments to these factors.
The reason this is important to keep in mind is that you want to be able to understand the ways that a video production agency will make adjustments to a video production's scope in order to keep it within budget.
At Intrigue Studios this is something that we take the lead on while in development, so you wouldn’t have to worry about how to best make these adjustments. But the more familiar you are about these factors the better, as it will allow you to make more educated assessments as when you are reviewing proposals as well as concepts.
The following list are just the main factors of a video production’s cost. There are actually quite a few more, but these tend to most heavily
Final Video Length
Location Types (Studio / Onsite)
Number of Locations
Total Number of Scenes
Style (Live Action / Animation or Both)
Size of Cast
Size of Crew
Equipment Needs
Permits & Licensing
Complexity of Post Production (Visual Effects / Graphics)
Production Budget Examples
Below I’ve provided some example starting budget points for video productions of different types. Keep in mind that these budgets assume a high minimum standard of visual production value, as that is the standard that Intrigue Studios has for its productions.
But I want to be clear that while we deal with a wide range of different video production scopes, we generally always have a medium to large size crew using top of the line equipment - and we do shoot in New York, which is one of the most costly locations in the United States for video production.
So the below ranges are meant as a starting guideline than a hard and fast rule.
Starting Video Production Budgets
TV Commercial Video Production: $100,000 starting
Corporate Video Production: $50,000 starting
Marketing Video Production: $30,000 starting
Music Video Production: $40,000 starting
Educational Video Production: $50,000 starting
So are we saying that you cannot produce a corporate video for less than $50,000, or a TV commercial for less than $100,000? Of course not.
There are boutique production companies of varying sizes and many of them do great work.
And while our minimum budget for full service production at Intrigue Studios is usually $30,000, we even will take on the occasional smaller project if it has a very simple scope and full service production is not needed.
It’s just important to remember that if you want to create a TV spot that has the visual look and texture of a Super Bowl commercial - the camera department equipment (cameras, lenses, mounting) alone will likely be $300,000 worth of equipment - and the cost to rent that equipment for your shoot could easily be $10,000 - $15,000 for a single day, and that's before any lighting or sound equipment.
If you use a boutique company shooting with a $5,000 DSLR camera and a kit lens - it might be shooting in 4K, but it is just not going to have the same look as those big national spots. The important question to ask yourself is whether or not that is going to matter your brand image and perception.
How to Set Your Total Production Budget
Here is a step-by-step process to set the total production budget for your upcoming video production. If you have not read the previous sections of this post I strongly recommend that you do so before moving on.
Step 1 - Determine The Value of The Final Video
As we covered in the maximum profitable budget section of this post, the first step is to determine the lifetime value of the video's anticipated results. In other words, you need to know how much profit you will make if the video has maximum effectiveness.
This will allow you to assign a value figure to the finished video, which will make it much easier to know what is or isn’t wise when it comes to the production scope.
Step 2 - Consider The Marketing Strategy
The next thing you need to do is consider where and how the video will be distributed. If the video will be on national television it’s likely going to require much more production value than if it’s going to be advertised only on social networks.
Step 3 - Consider The Video Style
The type and style of video will also come into play when determining your budget. If you are producing a marketing video campaign that will mainly feature testimonials of clients in their own offices - that will require a much smaller crew and less equipment than if it’s a narrative commercial that will be shooting on location in the middle of the desert.
The style of video may be something that you want to leave open so the video production company can not be limited while creating and pitching concepts, but if you already have an idea of what styles your video definitely won’t be - that will make your total starting production budget all the more accurate.
Step 4 - Actual Distribution Costs (Media Buy)
It’s also important to consider your projected distribution costs. A portion of your marketing budget will be needed for the actual ad campaigns that will expose the final video to your target audience (this is the "Media Buy"). It’s important to keep this in mind so that you don’t dedicate all of your marketing budget to the production of the video itself.
I’ve noticed a common trend among smaller startups or growing companies where they imagine that if the video is good enough it will go viral organically without needing much ad spend or marketing. This is a very bad assumption.
Even though our videos tend to do very well when it comes to results and engagement, today's audience is more bombarded with media than it has ever been. You really need to put a strategic marketing campaign behind the video to at least get it some initial traction.
Whether this is done in the form of cold advertising or re-marketing to an existing list of customers, you want to make sure you consider the cost of distribution while figuring out your total production budget.
Step 5 - Audience & Platform
You also need to consider who your target audience is so you can determine the networks and platforms on which to reach them.
This is very important because different platforms and networks are better suited for different lengths and styles of video. It’s wise to have your video production company create usually multiple versions of the final video that are uniquely formatted for each different network - this is something that Intrigue Studios does very often for our clients.
But sometimes, depending on the type of campaign, the style of the video itself needs to be designed specifically to fit that audience and platform. An ad campaign being promoted on Tiktok, for example, should be MUCH different from the marketing video that you are running on Facebook.
Step 6 - Risk Assessment
The final step in setting a total production budget is a risk assessment. This is a vital step as you need to be aware not only of the cost of the video if it works, but also the cost of the video if it doesn’t work.
This is why it’s so important to not only choose the right video production company, but also to make sure that your investment makes sense when considering the results you’re after.
The reason you’re likely on this site in the first place is that you want to produce a video, so obviously you have some problem or desire that you’re hoping the video will solve. This means that not having the video will probably end up being more costly than having one, as without it - the problem won’t go away, and you’ll never get the results you want.
But there’s something that’s even worse than not having the video - and that’s having a video that doesn’t work. That’s why at Intrigue Studios we dedicate our entire process to creating videos that have the absolute maximum potential for success. Creating effective videos is the foundation of our entire brand - so we can’t help but hit consistent home-runs.
Step 7 - Set The Total Production Budget
After considering all of the above you are ready to set your total production budget. Of course it’s not in stone and may need to be adjusted - but having an accurate, realistic and well thought out starting number is going to make your life much easier.
Whether your total production budget is $30,000 or $300,000, you are now ready to start requesting proposals from video production companies and get into development for your video!
If you feel like Intrigue Studios would be a good fit for your video production project, let's start a conversation.
Contact us here to start a conversation about your video production project now!
