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Probability Math and Freelance


Jesse Flaitz

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Warning: Long Post

 

I posted this on facebook too, but I prefer this forum as a medium of discussion, so sorry if you're reading this multiple times.

 

TLDR: A specific producer who I've long since stopped working for can not comprehend freelance probability theory and it's a problem. This is not exactly about rates, it's about understanding a foundational mathematical principle that is part of freelance.

 

This post stems from a conversation I had last night. It is in no way representative of all or even most producers, but it's something that happened I think is worth talking about.

 

I worked for a production company in New York for about 18 months totally maybe 30-40 days. Not a bad amount of work. The rates were on the low end of acceptable, but the jobs reflected that so for the most part I was not feeling that I was getting ripped off on rates. With one exception: additional equipment rentals. This producer seemed unable to tell the difference between the cost of renting two lavs and four. It was constant fight back and forth and eventually led to me no longer working with them due to the rigidity of their budget.

 

I don't hate the producer, he's trying to run his business model and I'm trying to run mine. I just won't work with him. We have several mutual friends and I see him around once in a while. Last night we ran into each other and started talking business. Rates aside (he had a hard time understanding how I could give up prestigious client such as themselves over $100), after I told him I had averaged around 2.4 days of work/week over the past two years, he made a comment about me not wanting to work every day.

 

Here is where I started to get worried about how producers can think that went past the general miserly mindset of the "bottom line". When I say that I worked 2.4 days/week on average, that means some times I worked 0 days/week and sometimes I worked 7 days/week. It has nothing to do with my actual desire to work (and by desire to work, I'm of course talking about my desire to work on jobs that pay proper rates. Working every day at $300/day sucks compare to working 3 days/week at $700/day) . I'd work almost every day if the jobs aligned that way, and sometimes they do for short periods (but assuming I'd work every day because I'm working lower rate jobs and there are more jobs at lower rates is just false, and the math I'm talking about is the reason it's false).

 

In freelance my ability to work is predicated on companies calling when I'm actually available to work and here is where math comes into play. Specifically probability theory. While the cause of a company to call me on a certain day isn't strictly random, it's close enough to be applicable to the theory when referencing my motive to work every day vs. my realistic ability to do so. This problem is most often referenced as the "Birthday problem" (https://en.wikipedia.org/wiki/Birthday_problem).

 

I tried to explain to the producer how it is mathematically very improbable that as a freelancer, with this type of work, that I would be able to work more than half the days in a month, regardless of my desire to do so.  And this is part of the necessity for me to charge higher rates than a full time employee might have.

Blank stare... Followed by a reiteration of his original fallacious argument.

 

Basically, I think a big part of our fight with producers stems from them having a fundamental misunderstanding of how the world functions. And I don't know what to do about that.

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I think part of the problem may lie with how you explained yourself - even though it all seemed so clear at the time.

ABC recently aired a show about Bernie Madoff and how he kept the deception afloat for so many years. Asked by a colleague to reverse engineer the investments so they might make similar buys for their clients, Harry Markopolos, an investment broker savvy in math, tumbled to the fraud. But, when he tried to explain his reasoning to people from the SEC, he became bogged down in mathematical terminology and found himself fighting blank stares and incomprehension. If he had shown the jagged, irregular, line of market returns next to the ruler-straight line of Madoff returns, I think people would have immediately understood the reason for suspicion.

Forget the math - except when someone asks for particulars.

There are two ways of buying things: retail and wholesale.

Retail is more expensive but you can purchase only what you need right now.

Wholesale is cheaper but you have to buy in quantity to get the good price.

A building contractor buys plumbers wholesale and keeps them employed for months at a time.

A homeowner with a leaking pipe buys his plumber retail, asking someone to come out specially just to deal with the one problem. That's always going to be more expensive but you don't have to pay the plumber when all your pipes are sound.

David

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19 minutes ago, David Waelder said:

here are two ways of buying things: retail and wholesale.

Retail is more expensive but you can purchase only what you need right now.

Wholesale is cheaper but you have to buy in quantity to get the good price.

A building contractor buys plumbers wholesale and keeps them employed for months at a time.

A homeowner with a leaking pipe buys his plumber retail, asking someone to come out specially just to deal with the one problem. That's always going to be more expensive but you don't have to pay the plumber when all your pipes are sound.

David

And the reason behind that difference is what I'm talking about.  I guess I expected someone in the position of a producer to understand the reason behind the difference, but at least in this case (and in the case of some other producers I've had the displeasure of negotiating with) I was wrong.

19 minutes ago, David Waelder said:

If he had shown the jagged, irregular, line of market returns next to the ruler-straight line of Madoff returns, I think people would have immediately understood the reason for suspicion.

That implies an understanding of short term variance vs. long term results (as well as scale and some other factors).  Both graphs can represent the same information portrayed in different ways.  The viewers would need to know the difference.

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You're both right!  And for what it's worth, Jesse, you're totally leaving out the time you spend on:

  • Shoot logistics/communication/coordination
  • Gear maintenance/research
  • Taxes
  • Networking
  • Paperwork/invoices
  • Bill collection

I'm sure there are things I'm forgetting.  In order to be ready for those 2.4 days/week you do a hell of a lot of unbillable time.  Owning a small business is no joke.

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Often times (but not all the times) the producer is not really THE producer in the office that sets rates.  He may be getting that guidance from up above.  So basically when there is impasse created due to rates and equipment expectations, he may not be "getting" the whole budget issue as he may not have even laid eyes on your deal memo (again, I could be wrong and maybe he is handling you directly - my experiences have more often than not have been dealing with lower ranking field producers being driven by an office executive producer of some sort, setting rate guidelines.  Everyone pretends that this is the standard and that no one deviates from it, until you play hard ball and forcibly negotiate specifics like number or wireless mics included in the basic package).  I don't think bringing into play economies of doing business is really productive here - his business model is entirely different than yours, and ultimately there's no real interest or benefit in him understanding yours.  Basically you'd love to work with him more, but you'll need another $100 in box rental to make it happen.  This will either require renegotiating the deal memo or enabling a mechanism for you to bump the gear rate on a per day basis when extra mics are required to play.  18 months and 40-50 days is NOT the type of numbers one would see where special favors or days on weeks type of deals are handed out, so your good to go standing your ground like you are.

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You also have to keep in mind maintenance.  Every time you use a piece of gear, you put more hours on it and inevitably something eventually is probably going to go wrong with that piece of gear that will necessitate repair or replacement.  I always love it when someone tries to get free Lectro IFB's from me or something like that, as they always seem to argue, "Come on, throw in 4 more headsets" as though I was just going to be handing them freebie headphones the airline gives you or something, not a piece of kit that costs $550+ each.

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I work every day.  I don't get paid by someone else for every day, but unless I'm on vacation or sick I'm doing maintenance, looking into upgrades, studying, networking and so on.  Only people who work on episodics (which is like a temp staff position, really) or on staff with studios or networks really come close to working on shoots every day (except for hiatus or cancellation etc), most freelancers have a pretty variable schedule, sometimes seasonal but not always.   Even with a wide rep and a long working life in a given market there are bound to be gaps.  Most experienced producers have some understanding that if they want experienced talented people to be available when they want them (and ONLY when they want them) then the rate has to reflect our need to keep the lights on on other days.  If a producer can't get their mind around this and thinks rates should reflect what a staff person's day-wage is, well then they get what they get people-wise, which will be far from the best.

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1 hour ago, Philip Perkins said:

I work every day.  I don't get paid by someone else for every day, but unless I'm on vacation or sick I'm doing maintenance, looking into upgrades, studying, networking and so on.  Only people who work on episodics (which is like a temp staff position, really) or on staff with studios or networks really come close to working on shoots every day (except for hiatus or cancellation etc), most freelancers have a pretty variable schedule, sometimes seasonal but not always.   Even with a wide rep and a long working life in a given market there are bound to be gaps.  Most experienced producers have some understanding that if they want experienced talented people to be available when they want them (and ONLY when they want them) then the rate has to reflect our need to keep the lights on on other days.  If a producer can't get their mind around this and thinks rates should reflect what a staff person's day-wage is, well then they get what they get people-wise, which will be far from the best.

Exactly + 1000000000000

Well said Philip.

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Philip nailed it.  

The way to handle a client that simply refuses to understand a rental boost is to negotiate a rate up front that covers whatever they might need.  Then, rather than doing battle every time he wants to add two wireless, you can just enjoy your extra income when he's only using two.  

Ironically, in the long run the client will likely be happier since he won't feel like you're constantly coming to him for more money.  Sometimes psychology is as important to our job as knowledge of the gear is.

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1 hour ago, John Blankenship said:

The way to handle a client that simply refuses to understand a rental boost is to simply negotiate a rate up front that covers whatever they might need.  Then, rather than doing battle every time he wants to add two wireless, you can just enjoy your extra income when he's only using two.  

John hit the nail on the head I have two types of clients those that want to pay same price all the time 90% of the time I come out ahead 10% of the time they come out ahead. which I am fine with and those that I have to fight with all the time for every dollar. 

I would much rather deal with client number one anytime 

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I have quite a lot of gear. Included gear is less equipment here in the UK, and many people seem to hire in when extra gear is required, leaving production with the transportation costs and such for additional radio mics, etc. It also makes them need to "plan" when the gear will be needed. I have discovered that negotiating a flat is easier when you have lots of gear, and as Whitney points out, you mostly come out ahead. I do this with expendables too. I charge a flat. Sometimes it's a big flat, and sometimes not so much. But I have never lost on this deal, and they are thrilled to have line items that cannot go over budget.

 

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