An interesting article I read @ vincentlaforet’s site that I thought I would share.
There are four letters out there (an acronym to be exact) that have the potential to literally shape your future as a creative, and to determine whether or not you will be able to stay in business long term.
As simple as this formula is, and as basic as it will appear to you once I explain it, I am constantly surprised (shocked to be honest!) at how few people pay attention to this simple number. Even veteran freelancers don’t seem to know what their daily C.O.D.B. number is.
C.O.D.B stands for “Cost of Doing Business.” Basically it’s a number that represents what it costs you to operate your business for every day that you work.
On a basic level, you add up all of your purchases and expenses to run your business, as well as your salary (I suggest you add your salary, but some people don’t) and divide that by the total number of days you expect to work each year. That will give you a number that is the MINIMUM you must make each day to BREAK EVEN. If you make more per day on average than your C.O.D.B., you are profitable. If you match your C.O.D.B but work fewer days than what your expected, your business is in the red, and your on a path to being out of business…
What has amazed me time after time is how few of my colleagues know what their number is, and how that in turn makes it very difficult for them to grow their business over time – let alone what to charge their clients.
You should know this number by heart as it should help you determine the minimum rates you need to charge your clients on a job per WORKING day, to stay solvent as a business. Keep in mind that if you get paid per SHOOT day – and don’t get paid for treatments, conference calls, research, prep and post – you need to cover ALL of those days in your SHOOT DAY FEE of course. In other words, if you get paid 3 shooting day rates, but you actually worked a total of 12 days between pitch, prep, shoot, and post – you need to QUADRUPLE your DAY RATE (or daily C.O.D.B. day rate) to break even for those 3 shooting days you are actually being paid for.