Monday, June 23, 2014

The Typical Cost Of A Promo Video

The typical animated promo video costs anywhere from $3K to $10K a minute.
$3K will get you a very simple animated promo video as it will barely cover the costs of producing the script, storyboard, voiceover and hiring an animator.

A good animator charges between $300 to $500 a day. If the animation is very simple a good animator can produce about one minute of content a week. At $400 a day that is $2K just to animate a simple project not counting any revisions.

Many of the people that approach Grumo to have a demo video produced cannot afford a $5K video or they think it is too expensive. I think charging even $5K per minute is actually low considering the amount of work that goes into producing a high quality animation.

Even at the $10K per minute end of the scale, a promo video is orders of magnitude cheaper than a typical similar TV ad produced by a large studio.

Large studios charge anywhere from $100K to $400K or more to produce a 30 second TV ad.
Even at $100K that is about $3,000 per second of video compared to $170 per second for a one minute $10K promo video.
The difference is a whopping 18 times cheaper!
Again that is considering a cheap TV ad versus an expensive animated promo video.
So in reality the difference is usually 30 to 50 times less in price for a typical 1 minute demo video than for a 30 sec commercial.

I think value is a matter of perception so If the studio can make it client perceive their work is worth 20 times more and the customer is willing to believe it, so be it!

The question is. Do you really believe that any of the videos produced by Grumo Media or similar studio provide 20 times less value than a typical 30 sec TV ad?
Of course not. In fact, we get told all the time that some of our demo videos are way more entertaining and fun to watch than their expensive TV counterparts.

So why this big difference in price?
I think there are two main reasons to explain this huge difference in pricing.
They are momentum and resources.

Momentum. Until very recently the equipment to produce any kind of video, live action or animated was tremendous.
So for years the costs of producing professional ads were justified to a certain degree.

This has changed dramatically recently with the advent of new technologies. To the extent where one person with a laptop and a couple of software programs can create astonishing CG imagery that rivals reality.

The advertising industry is now still living on a thin sheet ice of momentum that is bound to break very soon.
As soon as clients start noticing that small studios can produce similar or even higher quality commercials for a fraction of the cost, big studios are going to have to radically change their pricing approach in order to stay competitive and remain afloat.

Resources. Bigger studios employ a very large amount of resources towards the production of an ad.
The smallest team assigned to a simple project will have 3 or 4 full time people working on it for 2 or more weeks.
They will have a creative director, illustrator, and animator at least. Then they may subcontract voiceover, sound design, color correction and tape recording.
On top of that they have to cover all their office expenses and rent.
Given all the added costs even charging $100K or more per ad some times they have trouble turning out a profit..

This is about to change. It may take sometime for larger corporations with long lasting relationships to catch on.
But the there is a new slew of startups coming that cannot afford the big dollar ads and guess whose door will be knocking on for their company promo video.

At Grumo Media we are experts at creating outstanding promo videos at very reasonable cost.
The trick is very simple, there is no office, teams are 2 or 3 at maximum and everyone works remotely with their own equipment.

On a $10K on minute ad this is how a typical budget would look like:

# Task Description Hours Cost         Amount
1 Project brief           4      $60.00 $240.00
2 Script creation 15 $60.00 $900.00
3 Illustrations 24 $60.00 $1,440.00
4 Animation 60 $60.00 $3,600.00
5 Video rendering 5 $30.00 $150.00
6 Voice over 4 $60.00 $240.00
7 Sound effects 4 $60.00 $240.00
8 Sound track selection 4 $60.00 $240.00
9 Stock images 1 $100.00 $100.00
10 Sound rights 1 $100.00 $100.00
11 Video Editing 8 $60.00 $480.00
12 Script revisions 8 $60.00 $480.00
13 Illustration revisions 8 $60.00 $480.00
14 Voice over revisions 4 $60.00 $240.00
15 Final edit revisions 4 $60.00 $240.00
16 Meetings/Phone Calls/emails 12 $60.00 $720.00
17 Video compression 4 $30.00 $120.00
18 Video upload and delivery 4 $30.00 $120.00
TOTAL: $10,130.00
As it can be seen, a $10K video allows for certain amount of revision work which ensures the final product can meet the clients highest expectations.
When you try to cut corners and undercut your producer be aware that less time will be allocated to refining and the end product and quality will suffer accordingly.

All these costs are rough estimates. Hourly rates can vary considerably between animators. Stock images can get very expensive as well as sound track rights. Professional voiceover can add a lot to a budget if the voice over artist is famous.

I hope now you have a better idea of how much a typical promo video costs and why getting an awesome one minute video produced by Grumo Media is a smoking deal!

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