You are a creator and a company wants to work with you.
Great! Don’t undersell yourself.
Even if you think you don’t have any value yet because you’re just a small channel, you probably have more going for you than you realize, namely production cost and market value.
‘Production costs’ can be divided into:
- Material cost
Did you have expenses such as music licenses or did you buy a game? Did someone create assets for you like an overlay or a lowerThird?
- Time spent on production
Did you work on your own or did someone help you? Also how long did each person involved work? Remember there is something called minimum wage if applicable in your country.
- Equipment cost
Did you rent a camera/greenscreen for this shoot? Remember that you have already bought a recording computer, microphone, etc and you might want to amortize these hardware parts with the revenue you earn from ads AND also from brand cooperation. Also, remember to save a small buck for equipment replacement in the future.
‘Market Value’ is the other big part of how to price your content. Your market value basically depends on how many people you’re reaching and how engaged the people are who you do reach. For example, if you are a pro gamer and have people wanting to buy whatever gear it is you use, your audience is much more valuable to a company than, say, a casual laid-back let’s player. Further, different types of content tend to get quite different payouts. The following list contains CPM values, meaning money paid per 1000 views your video is getting. These are values collected by the experience of our company and backed by the sales PDF of Mediakraft MCN from 2017 (which are similar, see source).
- Integrated PreRoll ~ 40-55€
- Sponsored Video ~ 50-70€
- Brand integration ~ 80€
- Shoutout ~ 55€
- Product placement ~ 40€
- Stories (instagram/youtube/snapchat/tiktok) ~ 15-25€
- Twitter post/thread ~ 10€
Keep in mind these aren’t fixed values so you might be able to get better deals with clever negotiations. You can always contact an agency to handle negotiations for you as well if you don’t feel comfortable or would rather spend your time creating awesome content.
Seasonal market behavior means rising CPMs around the end of a quarter with the most known and extreme example having Christmas in December with the highest and January having the lowest rates of the year.
Once you summed up the production costs and market value, don’t forget to add taxes so divide the sum by (1-X) where X is the local sales tax. For me in Germany, it would be 19% VAT so dividing by 0.81 will give us the right value to write onto our bill.
On that note:
ALWAYS write an invoice with a payment deadline so you can enforce it if necessary. Remember to insist on an upfront deposit when handling large projects so you don’t put in 80 work hours just to get it canceled in the last second. A typical split would be half the payment upfront and half of it once the project is delivered.
If you have any follow up questions:
feel free to ask in the comments or via discord.