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In the fast-paced world of film and television, every dollar counts. But are you getting the most out of your vendor relationships? We'll delve into efficient procurement strategies that save you money without sacrificing quality.
From negotiating new and existing contracts, to consolidating vendors, you'll discover how to streamline your supply chain and slash unnecessary costs. We'll also discuss monitoring your vendor experience to discover the hidden drivers that inflate your budget, so you can make informed decisions and maximize your bottom line.
Keeping your overhead in check is crucial for any producer.
Ideally, you want your overhead to hover around 35% of your total revenue. This includes those "soft costs" like executive producer fees. But achieving that sweet spot can be tough. Here's where vendor negotiations come into play.
Many vendors are willing to offer discounts for higher volumes of business. By negotiating contracts with your regular suppliers, like caterers or equipment rental companies, you can guarantee them a certain amount of work in exchange for a reduced rate.
For ongoing projects, consider a master agreement with key vendors. This agreement can lock in a discounted rate for a set amount of work, such as a specific number of shooting days.
But negotiation isn't just about the bottom line. Building positive relationships with vendors is key.
Being a pleasant and professional client who pays on time goes a long way. Vendors appreciate working with reliable and respectful partners and might be more open to concessions in return.
Transparency is also important. If your budget is tight, have an open conversation with your vendors. Explain your situation and explore options that benefit both parties. Perhaps you can negotiate a slight discount on your project, with the promise of paying their full rate on future projects.
By consistently being fair and transparent in your negotiations, you'll build a reputation as a reliable and trustworthy producer. This positive reputation will give you leverage in future negotiations, making it easier to strike that perfect balance between getting the best rates and building strong, long-term relationships with the vendors who keep your productions running smoothly.
Traditionally, productions hire separate vendors for catering, equipment rentals, and post-production services. Vendor bundling flips the script. It involves combining services from multiple vendors into a single contract with one provider. This streamlined approach can offer significant cost savings for your production.
The power lies in volume discounts. Many vendors reward larger contracts with lower rates. By bundling services, you increase the overall value of your business to the vendor. This makes them more likely to offer a discount on each individual service included in the bundle. It's a win-win: you get a better price, and the vendor enjoys a more efficient workflow by dealing with just one client for multiple needs.
But bundling isn't a one-size-fits-all strategy. Here are some factors to consider before diving in:
For smaller productions, the cost savings from bundling might be minimal. If your project requires highly specialized services, separate vendors with deep expertise in those specific areas might be a better fit.
Research potential vendors with a strong reputation for the services you need. Next, request quotes for both bundled and individual services. Comparing these costs will help you identify the most advantageous option for your project. Not all vendors excel equally across multiple services. Ensure the bundled vendor has a strong reputation for the quality of each service you require. Research their track record and request references to confirm their capabilities.
Some projects require adaptability. Bundling can limit your ability to make quick changes if needed. Ensure the bundled vendor offers flexibility within the contract, allowing you to adjust specific services if necessary.
Clearly outline your needs and expectations when negotiating a bundled package. Ensure the contract details pricing for each service, service level agreements that guarantee a specific quality of service, and termination clauses in case your needs change.
Wrapbook’s Vendor Agreement template is a great starting point for equipment rentals and can be modified for additional services.
By carefully considering your project's needs, researching vendors with a strong reputation, and negotiating effectively, you can leverage vendor bundling to maximize your budget.
Negotiation and bundling are powerful tools, but what happens when they reach their limits?
Perhaps your current vendors are unwilling to budge on price, or the specific needs of your project make bundling impractical. There's still hope! By exploring alternative vendor options, you can optimize your budget without sacrificing quality.
It's always wise to try negotiating lower rates with your existing vendors. However, their bottom line might not allow for further discounts. Before moving on, consider using additional strategies.
For example, highlight your past performance and loyalty. Can they offer a small token of appreciation, like a free equipment rental or expedited service, in recognition of your history together? Explore alternative payment terms that might be more favorable to the vendor. Could you offer an early payment discount or streamline their invoicing process?
When exploring alternative vendor options, leveraging your network can be a goldmine. Talk to colleagues, fellow producers, or even other departments within your own company. Their recommendations for reliable and competitive vendors can be invaluable.
Production directories and online marketplaces are another powerful tool. These resources act as a wealth of information, allowing you to find vendors that meet your specific needs. Utilize filters to narrow down your search based on factors like location, budget, and the specific services you require.
Finally, consider online bidding platforms. These platforms allow you to post your project requirements and receive quotes from multiple vendors. This approach fosters competition among vendors, potentially driving down prices and ensuring you get the best possible deal.
Staying on budget in film and television production is a constant battle. Cost reports are a vital tool, but they often offer a limited view. This is where vendor monitoring steps in as a powerful ally, helping to identify hidden cost drivers that can silently devour your bottom line.
With Wrapbook’s Production Accounting Suite, monitoring your vendors and how much you’ve spent with them is seamless. Detail and summary vendor spend reports let you quickly drill down to see how much you’ve spent with a vendor so that you can make decisions about if the vendor will be used in the future, if there are opportunities to ask for discounts, and to troubleshoot any discrepancies between your records and the vendor’s records.
Additionally, one surprising fact is how many productions neglect the crucial post-mortem analysis. This deep dive into a completed project examines the cost report, pinpointing areas that matched expectations, areas that deviated, and how those deviations were handled. This is especially valuable for shows with multiple seasons, or projects with established parameters, where patterns can emerge over time.
Many production companies fall into the trap of unintentionally sweeping cost issues under the rug during post-mortems. For instance, a post-mortem might reveal that a project budgeted for 15 weeks of editing actually required 18 weeks with additional editors pulled in. These crucial details can easily vanish in a standard cost report.
Budgeting based on inaccurate data is a recipe for disaster. By uncovering these hidden costs through vendor monitoring, you gain valuable insights for future projects. The above editor example might expose the need to budget for 18 weeks of editing from the start, preventing future scrambling and potential overages.
Honest vendor monitoring isn't just about internal budgeting; it also strengthens your relationship with studios, networks, and financiers. When budget discussions arise, clear and detailed records showing the impact of requested changes can become powerful tools for negotiation.
The power of vendor monitoring goes beyond post-mortems. Real-time data tracking allows you to identify discrepancies early on.
For example, if a vendor invoice comes in dramatically lower than expected, investigating the reason can reveal hidden costs absorbed by the vendor to meet your needs. This information strengthens your credibility and can inform future negotiations.
Vendor monitoring isn't about micromanaging; it's about gaining valuable insights. By uncovering hidden cost drivers and fostering transparency, you can make informed budgeting decisions, build stronger relationships with vendors, and ultimately deliver projects that are both high quality and on budget.
By implementing the above strategies, you can ensure vendor negotiations feel like a win-win for everyone involved. Building strong relationships with vendors fosters trust, allowing for more flexible solutions and potentially even referrals to other cost-effective options.
Remember, the best vendor isn't always the cheapest; it's the one that delivers exceptional service, meets your specific needs, and fits comfortably within your budget. By combining negotiation tactics, exploring alternative vendors, and fostering strong relationships, you can ensure your production stays on track, delivers high-quality work, and avoids those dreaded budget overruns.
For more information on how to control vendor costs, production insurance requirements, and adventures in risk management, check out our webinar Accounting for the Reality of Unscripted featuring veteran production accountant Margot Ransom and Atlas Media Corp. Executive Producer and President Bruce David Klein.
At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice. You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.
Daniela Bailes is a working film and television writer whose work travels across genres. A proud alumnus of the Yale Writer’s Conference in New Haven, she was mentored by literary luminaries before being selected for the National Hispanic Media Coalition TV Writer’s Program, a feature writer on the Latinx Black List, and as a participant in the Sundance Episodic Lab. Her most recent work was staffing on the upcoming Paramount science-fiction series, The Shift, also selling a feature script to A+E Networks.
