Join Koura on Episode 14 of Filmmaking (Actually) to learn about...business! Defined as the practice of making one's living by engaging in trade, commerce, and dealings, it's important to know how to run a business in order to sustain yourself, whether that business is filmmaking itself, or what you do in order to make films! Listen as Koura explains how she runs her Etsy shop with her business partner Callie and husband Spacey, and apply the lessons that she has learned to your process as a creative. And, you know, you might (actually) learn something!
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Below please find a transcript of this episode. Episodes are also available as audio-only podcasts here or with subtitles in this video:
What Does Business Have to Do with Filmmaking (Actually)??
Hi! I'm Koura, and welcome back to my podcast “Filmmaking (Actually)” ta-da! I've been trying to figure out which episodes to focus on, as it's really important to us that our episodes are helpful and useful information, and we know that filmmaking is a little bit different right now. As a self-run small business, I was thinking that this might be a good topic to cover as economy is a big topic right now. What is business, how does it relate to being a filmmaker, or really any creative (actually)?
So film is a weird world in that so much of it seems to be subjective when it comes to the business side. And I'm going to emphasize the word “seems” to be subjective. You know, one director of photography might work for free, and another one might charge you five thousand dollars a week. You can find a graphic designer to do your poster for ten bucks on Fiverr, and then someone will do it for five hundred dollars on a Facebook post. What about when you're that graphic designer or DP or whoever and you have to compete in a world with work for free people, or Fiverr people, or whatever?
First, I'm gonna say what I say pretty much every episode. I'm an indie filmmaker, so I don't really stick to the, like, quote unquote “industry” as it were. That is to say I found what works for me and that's what I stick to and that's what I want to share. As I go forward, I might find that there is something that works better, so then I start doing that. Growing is all about learning and being able to acclimate and change. So you might try some of this and it might not work for you, and that's okay too. Or you might find something else that works better and that's awesome! Filmmaking is an art, not a science. And aside from a few small cornerstones, the rest of it really is the wild west and you're welcome to do it. I actually encourage you to do what works for you. I'm here to share what works for me in the hopes that it can help to work for you or help you find what works for you.
Before I dive too deeply into the financial world of working as a creative, I want to talk about a basic business outline. This is like for plain and simple, some might say a quote unquote "normal business." I'm going to use something super simple here, and I'm going to use it to make a shameless plug for the Etsy shop a friend and I have had for about seven years.
So we have this shop called “The Ladies Crafty” and we recently started making cloth masks for sale. We used to make watercolor paintings on wooden boxes and household items so this was a bit of a shift for us. Okay, bear with me, this is going to seem random, but it's gonna tie in, I promise. The first thing we had to do was put together materials so we could start making masks. We needed fabric and thread and sewing needles and scissors and special tools for cutting fabric and ripping thread. We needed pins to hold the fabric together and a pin cushion to hold the pins. We needed wire to put in over the noses and we needed materials to use for ear loops and ties. We needed packaging materials and shipping envelopes and packing slips and ink for the printer to print the packing slips, and we needed tape to seal the envelopes and to stick the labels onto the envelopes, and we needed to pay for shipping. Spacey and I had to pay for the electric bill of running the sewing machine and the lamp and the printer and the computer. We needed thank you cards because, you know, we're a small Etsy shop and we like to put those in the orders.
So step one was putting together money to get all of those things. Now, here's a cheat. If you don't have money to invest in starting a business, figure out what you can offer right now, with nothing more than what you already have. And you can hopefully use this podcast episode to help work out your profit margins so you can grow. And I know profit margin is like a big fancy business world word, but it basically just means the difference between the cost of making the thing and how much you actually charge for it. But the idea is to work out your profit margin so you can grow and get more gear or materials so you can offer more things. But I'm getting ahead of myself. For us step one was getting those things. We were able to invest a very small amount of money (Spacey and me, and my friend Callie and her husband Nick) and we were able to get the tools we needed to get started. We made a list of all the materials that go into making each mask. So step one is to make a list of all the materials needed to make your thing and that includes everything. So, like for us, it's the packaging materials, the cost of gas to go to the post office. Every piece of paper and piece of tape and pencil and bit of string, anything that you use to go from having air in front of you to having a thing in front of you. And some of these things might be like three cents worth, and on the small scale I'm talking about, don't worry about like, “Oh I need to figure out, you know, the exact penny!” If you are making a million of something, being off by five cents is totally going to blow your business. But if you're making like 10 or 12, if you're off by 50 cents total, you're probably not gonna go bankrupt.
That said, I'm not advocating for sloppy books, I'm just saying like, in the example of making masks, it's kind of hard to figure out exactly how many inches of thread are needed for every single mask. And, you know, divided by the number of inches of thread on the spool times the price, like, just call it, you know, five cents or something, you're fine. To tie this back to the creative side, let's say you're drawing and you're using different colored pencils. You don't need to measure your pencil before and after and determine what percentage of your pencil you used on the drawing. I mean, unless you want to, but usually if you're in a fairly close ballpark you're probably okay. The point is you want to make sure that your rates are covering your material usage. And the reason for that is because you want to be able to keep making your thing and not run out of materials.
Okay so you've listed out all of the different parts of what you make and how much those materials cost. Now you're at the million dollar question: How long does it take you to make it, and how much money do you need to make per hour to be able to keep making what it is that you're making? Part of running a business is trying to figure out how to make things more economically, or faster, or in a way that doesn't take as much time and as much resources while still maintaining product quality. And for what it's worth, that to me is the difference between a good business and a bad business, is a good business understands that you don't jeopardize quality in favor of cost. Anyway sorry, slight soapbox there. But, for example, for the masks that we were making. We put a gentle wire that goes over the nose, and, at first, we were putting it in one place but it didn't really work as well, so I moved it into the actual seam of the mask. In order to do that I had to do all this extra sewing to get it to stay in place and it was really obnoxious and took a long time. And then I figured out a way to sew it even better and more efficiently and it actually is more comfortable, and now that's how we do it!
So it takes some trial and error along the way as you learn and as you grow. And honestly part of your pricing should really include how far along on the process are you? Like should other people be paying for your learning curve? Can you charge a little bit less as you learn and then up the cost? I know for the very very first couple of masks we made, we actually threw in an extra one for our first, I don't remember, I think it was like five or ten orders because we were learning. So as everything kind of came together, we gave everybody an extra free mask as part of it. So all of that to say that all of the actual production part of making a thing is part of the cost of the item. What it costs you to make, package, and have the item fully finished and ready to be handed or shipped to the buyer.
Now you get into your profit. This is where a company makes money to sustain beyond a sell one, make one, sell one, make one. Eventually you want to be able to make two, or four, or however many from the first one you sold. Or, you want to be able to make it out of a higher quality or with nicer packaging or whatever. (I'll just flip this to the film industry real quick.) Maybe you're a photographer and you want to use a nicer lens, or you want to have a better camera, or faster computer, or whatever. You don't want to stay in an exact same…. you know, took a picture, sold a picture, took a picture, sold a picture. You want to be able to upgrade. So like when we first were shipping we used plastic Ziploc bags because our envelopes were paper and the masks are cloth and we didn't want to just throw them in the mail like that. If the envelope got wet the mask would get damaged; we just didn't want to risk it so we put a plastic bag inside. Now as we went along and we had some profit, we were able to restock nice plastic envelopes to upgrade from the Ziploc bags. We were also able to get better tags for our packaging. We originally had used some fabric that we already had on hand, and then when we ran out we were able to buy more fabric. And there were people who asked us for, like, I'm going to call them designer prints, but like specific characters or specific themes or more expensive fabric, and because we had worked in a slight profit margin we were able to use the money we made through the shop to upgrade our materials and what we were able to offer without needing any further investments.
Again, to each their own. I'm sure some will find this doesn't work, but for me, it worked, so I wanted to share. Now Cali, Spacey, and I run the shop, so that means we do things, like, we make sure all the orders are logged and tracked and packaged and taken to the post office, and the listings on Etsy need to be updated, and product photos need to be taken, and social media needs to get managed, and Instagram messages need to be replied to… and all of that is actually part of making and selling masks and none of that is part of the actual cost of making the mask. So the price that's set on selling the item has to be able to sustain all of the kind of subsidiary actions as well. And I'll be clear, to pay us a decent living wage for the amount of work that we all do the masks would actually have to be about 30 or 40 dollars. Like per mask. Right now they're currently about 12 for a regular mask plus shipping cost. If we were selling about 50 to 75 masks a week with the amount of clerical and marketing work we currently do, that would kind of work out and we could sustain with the 12 per mask cost, but because we're not selling that many, obviously we would need to do more marketing and more clerical work, which would just take more time and then it's no longer sustainable. So you kind of have to look at everything when you're setting your prices. Thankfully this is not our only source of income and we more were kind of just starting it to be helpful then to get rich. You know I want to focus on making movies, but here we are!
So to go back, the final cost of the mask is actual production cost, plus a small percent bump to put some money back into the shop to run the shop, and have funds to hand. So like, if the sewing machine breaks we have the money to fix it, or if somebody wants some specialty fabric we have the money on hand to buy it to make their request, or if we need an extra few hours of help we have money to hire someone to come in and help us. And also to pay Spacey and Cali and me a little bit for the work that we do to keep the shop running. If we were running a multi-million dollar company it would be on us to keep the company viable and make sure that the company was able to pay the people working there a fair wage, and to hire new people and maintain equipment, and all of that stuff as part of what someone running a company is supposed to do. All of the money that is made from selling the product would need to sustain that. I know I said this is specific to a business that's making and selling an item, but it actually goes for any sort of business. You living as a creative means having enough money to continue to create while sustaining yourself and covering replacement costs and restock costs of materials needed while being able to grow as a professional, be it through having money to take classes or upgrade your gear or whatever.
So how does this directly translate to film? Okay there's two sides to that: first for one person, and then for a whole production company. I'm gonna start with one person because I assume there's no, like, major production company people listening to this. But there is something that comes up that is considered priceless by some and a dirty word to others, especially when you're talking about one-on-one creative work, and that is exposure. Okay, let me start by saying that yeah, no one should work endlessly for exposure. Just no, and you always should work for fair exchange, but getting your foot in the door is absolutely legitimate and there is actually a time and place for it. That's not to say that there aren't laws about employment and wages, and you should never work for free if you have the opportunity to get paid. But for me, unless you're fully financially viable living your dream and you're fully solvent as a creative in your chosen field, you should always be open to good opportunities. It's always up to you, and you have to make sure that whatever that opportunity is it's actually worth it, and in the end either you will learn something or you will gain actual exposure that really is something that's going to pay off in the end. And you do have to be careful.
I think I've mentioned before that I've done projects where someone was like, “Well we're hiring an intern because we don't have any money, but, you know, we would love to hire a professional!” And then I worked for them thinking well, it will be good to be known by this production company, and if they're broke, at least I was helping them out, or whatever. And then I found out they had, like, a twenty thousand budget for a two-day shoot, and even though they had huge budgets and other projects, they never called me back except for one other time to work for free. And I feel like it's situations like that that kind of give quote “working for exposure” end quote a bad name. But, on the other hand, I've also had some amazing opportunities come from what otherwise might have seemed like a random thing, or, like, a “Well, why were you doing that for free?” This is a slight tangent, but speaking from the boss side of things, if you are in the position of being a boss, part of your job is to exchange with the people who are working for you. If you're making ten thousand dollars on a project and you need more help, it means you need to cut into your own paycheck to pay the people helping you, or you have to raise the budget so that you can afford to pay the people helping you, or you need to do the work yourself. That's just something I think is really Important.
You know, there's this whole thing about how no one makes money, only machines, like, print money. People earn money, and if you're working for money, if you're hiring people to help you earn the money that you're being paid, it may mean taking some of the money that you would otherwise earn to pay the person helping you. And if you don't want to pay someone, do the work yourself, and then you can justifiably keep the cash. Anyway, so back to exposure. There are times when you do actually need to work for exposure. If you're just getting started, or if you're going to be learning on a job where you're really going to have a chance to work for someone who's really established in the world you want to work in, all of that stuff is valuable! But at the end of the day, you have to decide if it really is worth it, and know that it is an investment of your time (which does have value), and it can be a worthy investment. But you can't just make a blanket decision, you know, “Never work for exposure!” or “Always work for exposure!” You really need to decide based on the opportunity presented to you at the time.
Building a really good network is part of this... and that will be another episode by the way, how to have a strong network of people who (actually) are going to support you and not exploit you. But, no matter what, you have to decide if you can afford it or not. And, you know, sometimes, once maybe you don't need exposure, you can still then turn around and return the favor by working for free for someone who doesn't have what you have. I once filled in for an actress at a friend of a friend of a friend's film set. They were a film student and they lost their actress and they needed an actress so I helped them out for the day. And somewhere out there is a small student film about Bloody Mary starring me as Bloody Mary! You know, at that point I had been helped by other people, so it made sense for me to have the ability to help somebody else. Why not? You're gonna know what's worth it for you to do with or without pay. And all I can say is don't let people take advantage of you, and think of your time as valuable as you think of your money, and invest it wisely.
Okay so how do you figure out how much to charge as a creative? Well if you're in a production company it is a little more complicated. How much money do you need to sustain production and pay people fairly for the work they're going to do? How much work are you going to do yourself versus hiring someone to do it? And how much of that work are you willing to do for free just to get the project made versus having the actual funds needed to hire someone and pay them for their work? There's a whole other episode I have lined up on what it means to make a movie for free. Spoiler alert, there actually is no such thing. Films are made for money or time, but they are never made for nothing.
So when it comes down to working out rates for yourself as a creative, basically it comes down to this: 1. Is what you're making a manufactured thing that actually has a cost of production? (Like the examples I gave with the masks.) This also could be something, like, if you're a photographer and you're going to be doing prints, what does that cost? I know there's this really incredible graphic designer who does book covers. And as part of his designs he doesn't just take a picture, he will actually hire models and sculpt dragons and paint them, and then photograph them, and then make these incredible composite images to make the book cover. So, that would include all of the materials for sculpting and the tools and hiring the models and wardrobe and makeup and paint and all of that stuff. So, yeah, what is the cost of the item, and the production time, and the facilitating support to run the business? And then 2. If it's something that is just your knowledge and skill, what is that worth, and what can you afford to sell it for?
I remember there is this incredible meme floating around the internet where a guy at a desk is asking this graphic designer “Why am I paying you a hundred dollars for something that took you 10 minutes to do?” and the designer replies “Because I spent six years learning how to do it in 10 minutes.” What is your time worth to you, and what is it worth to invest your time into a project? Now you have to be realistic, and that can be a little hard. I mean I've looked at some photos I took 10 years ago when I was like “I'm so professional!” And I cringe - thankfully it's not all of them! Maybe I should say I look at photos earlier than that… but, you know, I've also hired people to take pictures in the past and when I've seen them I'm like “What is happening??” when I see the photos. So it took me a long time to learn that fancy gear and talking the talk doesn't mean anything when it comes to actual creative value.
That said, there's an onset Sound Tech named Kyle Jacobson who we love working with and who has more than proved his worth on set multiple times on several projects. And over the years we have a new project, we check back “Hey, what's your rate? Putting a budget together!” whatever and like, he'll reply something like “Oh, I actually added a new mic to my gear so I increased my rate to x” and it totally makes sense and it's more than fair, and we know we're getting a higher quality because he has better gear now on top of his already amazing skill. So don't be afraid to articulate to people why you're raising your rate or why you're changing your rate. And if they make you feel bad for it, you probably don't want to work for them. I don't know, it's just my opinion.
Spacey and I, we’ve worked for free for projects when we could and we've given discounts to other people when we could afford it. Um, the creative world seems kind of loosey-goosey because it is. But you have two responsibilities in my opinion. You have a responsibility to yourself not to undercut your own value. There's another great meme on the internet about: Decide what you're worth, and then add tax. But you also, (this is going to sound a little out there, but...) you do have a responsibility to your fellow creatives to not strip the market of value by under charging what something should actually be worth. Now there's a ton of marketing that I won't get into here, as far as making sure your quality of product is known, and making sure you're connected to the right audiences and all of that. But there's a reason why an original Picasso costs more than a five-year-old crayon drawing, and part of that is marketing. You also have a responsibility to make sure that the value of your work is known and understood by your target market, and some of that, you know, you may run into the whole, you're the most perfect peach on the tree and you're talking to someone who hates peaches, so don't ever let someone's reaction to a fair price make you undersell yourself or doubt your value. You have to honestly know your worth. Know the value of working on the project, whether it's the value of actual exposure, or it's how much time and effort you're going to have to put in and what it's worth to you. And also know where to draw a line. Set your rate for what will enable you to continue to be in business, and continue to be able to create with respect to the value you have to offer with the gear you have now, and enable you to grow creatively from there.
I hope that helps. I know it seems a little subjective because unless you've got a situation like our Etsy shop where there's very solid objects and costs involved, it can seem really subjective. And because there's literally years of business school going over all the different aspects of this, and I'm not going to be able to cover all that in one podcast episode, I hope that this sort of overview gives some grounding blocks to use in determining what it costs to run your business, and what you can afford to sell yourself for. And when you should work for exposure, or for trade, or to build a network. In the end is it sustainable to you and your business? Could you work like that forever? Could you work like that for one job? Will you be able to pay your rent and to eat? You know, sometimes it's worth it to take a crap job for less than you normally would, if you don't otherwise have a job. I'd rather work for a hundred dollars for a day than not work at all! But obviously I'd rather work at my full rate than work for a hundred dollars. But, at the same time, a hundred dollars is more than zero, and if it's my only option, I'm not too proud to take it. You just have to remember that it's not a permanence, it's just that one time or whatever. I don't know, maybe I'll feel different about this in the future. But, you know, I always say I will work for money, what that amount is, is up to you. Everything else is just the marketing of that rate and the managing of the budget of your life, and there are so many moving parts to that. Just be glad that you live in a free market world where you can be in complete control of all of that. And be responsible on how you charge people and how you pay the people who work for you.
I hope that was helpful and not too all over the place, as always if you have any questions or comments you can comment on whatever platform you're listening to this podcast. You can also email us at filmmakingactually(at)gmail.com and you can also let us know if there's any other topics you'd like to hear us discuss, or if there's something that you want to add to this. I'm always happy to do follow-up episodes. All right! I think that's it! Bye!
[Music]
You've been listening to Filmmaking (Actually) with Koura Linda, Space Dream Productions' podcast. Subscribe to us on any or all the podcast platforms, but we especially recommend our sponsor “Anchor”! If you like what you hear, leave us five star ratings and positive reviews on iTunes and Stitcher. It helps more listeners like you discover the show. But the best thing you can do if you really like the show is tell a friend. Want to leave a comment or ask a question? Email at filmmakingactually(at)gmail.com. This is Spacey speaking. *Insert clever funny thing here* (Koura’s Voice: That'll be five dollars.) Right, we're charging you now. And we'll see you next time!
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