4 reasons why you are overpaying for production house services

The cost of the production house is by far the most expensive and complex component of any large-scale video production.

And while the traditional agency-led bid model is what marketers rely on to deliver a fair and accurate price, many do not realize that there is an inherent back-end nature to this process that reduces transparency and inflates your costs.

More specifically, here are the 4 areas within the traditional bid process that will inevitably lead to you overpaying for your production:

1. The Agency-Generated Bid Spec

The bid spec is a critical document that the agency creates to inform production houses about the specifics that are to be included in the bid.

However, as agencies rush into bidding, these bid specs are far too often written with a significant amount of ambiguity in them. This can be driven by aggressive timelines, but can also be a deliberate attempt by the agency to maintain maximum flexibility as discussions with production houses begin.

Either way, the result is a bid spec document with large information gaps. This leads to significant transparency issues and a lack of alignment, as the agency works independently behind the scenes with three different production houses to fill in these gaps.

It also forces production houses to make assumptions and to overcompensate, which in the end leads to the addition of unnecessary crew, equipment and even time.

2. The established budget

Well before creative development has even begun, the agency typically receives a budget number from marketing as part of the creative briefing process.

To be clear, this is usually a planning number representing what is available to spend and has absolutely zero correlation to what is actually required to produce a specific concept.

Once a concept is approved, the agency will then develop rough costs by simply allocating this budget into the different components of the production (i.e. shoot costs, post, talent etc). Once again, this allocation is tied to the all-in budget number and not to the actual requirements of a particular spot.

Finally, as the bidding process is initiated, the agency will use the production house component of the rough costs to brief production houses; creating an artificial starting point that often provides more budget than necessary.

3. production house negotiations

Let’s face it; once a concept is approved and bidding has begun, the agency controls the entire process. And while they are sensitive to the Client’s need for cost efficiency , understandably, their primary objective is to deliver creative excellence.

Even though the agency producer is responsible for conducting a fair bidding process, they are also keenly aware of the expectations of the creative team who often have a recommend in mind well before the bid process is even complete.

This, coupled with compressed timelines, unfortunately leads to bias and corner-cutting which jeopardizes the integrity of the entire competitive bid process.

4. lack of validation prior to award

Projects are usually behind the eight ball by the time it comes to awarding the job. This creates additional pressure to sign-off on the agency recommend so that the project can then move into the production phase.

This along with the fact that most marketers don’t have the necessary background to quickly evaluate submitted bids against proposed treatments and the original bid spec makes validating the bid even more difficult.

And for those who do use a cost consultant, please understand that the value they can provide is also limited. Their cursory line-by-line bid reviews take place far too late in the process to have any significant impact as it does little to tie the bids back to the defined scope of work.

Sound familiar? Here is how we can help. 

Haynes-Vozza is a marketing production consultant that specializes in the procurement and management of production house services.

We leverage a unique blend of procurement, production and marketing expertise to help organizations achieve increased efficiency through process optimization and education.

Unlike typical cost consultants, we are a project-based firm that does not require long-term contracts or large retainer fees. Our goal is simple. We want to help your team better understand the process and its pitfalls so that they are in a better position to manage these costs more effectively moving forward.

Intrigued? Learn more about our common sense approach.