I’m a fan of People’s Court with Judge Marilyn Milian, and she often says that when you enter into a business deal, you’ve got to have a written agreement – even if you have to write it on a piece of toilet paper with a crayon. When it comes to my Miami Based Video Production Company, I’ve come to wholeheartedly agree with her.
I’d advise every video production company and even freelancers to have a standard contract created by a local attorney that you can personalize for each client. Once in a great while you may need an attorney to help with unusual changes, but for us that’s been rare.
This may cost you money up front, but it can potentially save your business in the long-run, and it can certainly save you from a lot of stress. I’ll explain why.
First, why doesn’t every video production company use contracts?
The reality is that some of my production friends and colleagues have chosen not to use contracts. One reason for this is that attorneys are expensive and their budgets are tight. Another reason is that they fear it will cause them to lose clients who may be uncomfortable with having to sign a legal document.
When I first started my own company in 2002, I didn’t use contracts for both of those reasons. First, money was very tight, and I couldn’t see paying the hundreds it would take to get a standard contract created. Also back then I really needed each and every client I could get in order to stay above water. I was concerned that a contract might seem intimidating. I worried that clients might drop us if they were required to sign a binding document full of legal language.
I eventually learned that 99.9% of our clients have no problem signing our agreements, and those who won’t sign are not worth the difficulties they may have brought to us. I also learned that the costs that result out of not having a contract are much higher than the one-time cost of having one. Without a contract, you leave yourself and your company open to a variety of problems and even financial losses.
Here’s what a good video production contract can do for you and your video production company:
- A good contract can tell your client exactly what you will do.
In your contract you have the opportunity to write a detailed description of exactly what services you’ll be providing. You’ll want to be very specific. This helps your client to have realistic expectations for the project.
For example we’ve learned that it’s essential to specify the number of revision rounds a client is entitled to without additional fees.
For many years we didn’t include that in our contracts, and we experienced consequences. Clients felt free to keep adding new changes to their videos without paying anything additional for the editing time. Many clients were reasonable, but once in a while we’d have clients who stretched the limits of what was fair and reasonable. We were ending up spending far more time on the changes then we budgeted for. Since we didn’t set any boundaries in the contract, we couldn’t ask for more money for the increased editing time.
This often happened when a client was taking change requests from multiple people within their company. This is known as approval by committee. Often a client would give us their personal change requests, and we’d make the requested changes. Then someone else from their company would weigh in and we’d have to make more changes.
We’ve found that when we offer two rounds of revisions in an agreement, our clients naturally become much more organized, and the process goes much more quickly and smoothly. Telling your clients exactly what to expect from you is good for your business, and good for your bottom line.
- A good contract can tell your client what you won’t do.
Sometimes explaining to a client in writing what you won’t do is just as important as telling them what you will do.
For example, we recently created 3D 360° virtual reality videos that were to be used in trade shows. I realized that in order to display the virtual reality videos at the trade shows, the client would be purchasing virtual reality goggles that would work with their Samsung Android phones. They’d also need to have a consistent Wi-Fi connection. These are all things that my company would have no control over.
When there’s something that you have no control over that could impact your project, it’s best to include something about it in your contract.
We included the following statement in the contract:
“At the end of the project we will send the animations to the client to load onto Samsung phones and VR Goggles. The client will purchase these devices, and Ball Media Innovations is not responsible for the operation of the devices.”
That said, we always give our all to make our clients happy. If there ever was an issue we’d certainly work with the client to help resolve it even if legally speaking it wasn’t our responsibility. At the end of the day it’s always best to have a satisfied client.
Here’s another example. We sometimes have clients who want us to shoot an amateur non-actor reading off a teleprompter. This is a fairly common request in the business and medical video world. Usually we advise our clients not to choose this route. In my experience, no matter how intelligent, and despite extensive direction and coaching, most amateurs will not come off well reading from a teleprompter. We get much better and more natural results by using interview techniques to draw the information out of the amateur talent.
Despite this, sometimes clients insist on going with the teleprompter reading.
If we have an amateur performer with a lot of lines, and we’re not confident in the performer, we’ll add something like this to the contract:
“The client will be providing an on-camera talent who will be reading off a teleprompter. Although we’ll be providing a highly experienced director who will do their best to coach the talent to sound as natural as possible, we are not responsible for the talent’s performance. Please note that we would be happy to provide a professional actor for an additional fee.”
- A good contract can protect you and your company from misunderstandings.
I can’t tell you how many times I’ve had clients expecting or demanding something that we hadn’t promised. No matter how specific I am in our pre-contract discussions, and how many times I’ve included details in a written form like an email, we still experience this.
We tend to be flexible and we like to exceed our client’s expectations when we can, but sometimes it’s just not financially feasible to throw in what they’re expecting.
It’s important to have a detailed contract to refer back to.
This problem becomes easy to remedy by just whipping out the contract and emailing them a quote taken from it, showing them exactly what they signed and what they paid for. It works every time. Then if they still want the additional service, we can offer it to them at a reasonable rate. I find that our clients respect this and we are able to maintain client satisfaction without losing our shirts.
- A good contract can protect your clients, and inspire trust.
A contract that protects both parties will inspire confidence in your clients. They’ll see that you’re not out to take advantage of them, and they’ll have written proof of what you’ve agreed to do for them. If a client sees that you’ve got a clear, legal agreement that outlines exactly what is to be done, it can and should give them peace of mind.
- A good contract can keep you out of court.
The last thing anyone wants to do is to go to court. It’s not good for your reputation. If you have a legal document that’s clear and specific, any misunderstandings should be easily managed without having to escalate a disagreement into a court case.
- A good agreement helps you to get paid.
An agreement allows you to set the payment terms, and allows you to have your clients legally commit to them. Should your client not follow through on their financial obligations, you’ll have a legally binding document that you can use to take to court as evidence.
Thankfully we’ve never needed to do this because the terms in the contracts work really well. We always require two things:
- A deposit that covers at least all of my company’s actual out-of-pocket costs.
- Final payment before the final, approved video is delivered to the client (we give them video with time code on it for approval purposes). We NEVER give the client the final video before we’re paid.
With these provisions, we’re never at risk of losing money on a deal, and we have all of our costs covered just in case. So for example if a client’s business goes under and they disappear in the middle of a project, we can still pay our crew and artists for any work they did.
Investing in a contract is super smart!
Yes, it will cost you, but it might be one of the best investments your business will every make.
In my next article in this series, I’ll discuss some of the specifics of what we include in our contracts.