Creative Video Agency Project Costing

Case Study: Enhancing Profitability and Efficiency for a Creative Videography Firm

Our management consulting firm partnered with a videography firm that was struggling to improve its bottom line despite a steady flow of projects and a talented team. The firm sought a structured approach to pricing, costing, and profitability analysis, aiming to maximize revenue while maintaining its creative edge. We engaged with the firm to design and implement a strategy that would help them understand true project costs, optimize pricing, and foster a culture where efficiency complements creativity.

Developing a Pricing Tool and Project Costing System

To address the firm’s pricing challenges, we developed a custom pricing tool tailored to the unique demands of videography. This tool incorporated both direct costs, such as equipment and travel, and indirect costs, including administrative time and software. This provided the firm with a consistent and reliable way to estimate and quote projects competitively and profitably.

We then implemented a project costing module within their accounting software, creating a seamless workflow for tracking actual costs and evaluating profitability on a per-project basis.

Deriving True Project Costs

A critical part of our process was helping the firm derive actual project costs. To accurately assess this, we introduced a structured approach using mathematical equations to calculate both productive time and actual employee cost per hour.

1. Calculating Productive Time: We first determined the proportion of each team member's working hours that were spent on billable client work. This involved a breakdown of weekly hours to exclude non-billable activities, such as internal meetings and administrative tasks.

Productive Time = Total Billable Hours / Total Hours Worked

2. Calculating Employee Cost per Hour: We then derived each employee’s true cost per hour by dividing their total compensation (salary plus benefits) by the annual productive hours. This calculation ensured the firm could accurately attribute labor costs to projects, reflecting the real cost of each team member’s contributions.

Employee Cost per Hour = (Annual Salary + Benefits) / Annual Productive Hours

With these calculations, the firm was able to assign accurate costs to each project, allowing for better decision-making in pricing and a clearer view of profitability.

Changing the Culture: Efficiency as Creativity

One of the most transformative elements of our engagement was helping the team embrace a new perspective: that efficiency and creativity can coexist. We worked closely with the team to reframe operational efficiency as a pathway to enhanced creativity, where structured workflows and time management would free them to focus on creative aspects.

By shifting this mindset, the firm developed a culture of balanced productivity and innovation. Team members learned that by minimizing time on routine tasks, they could invest more energy into the creative process, leading to higher-quality work and increased client satisfaction.

Results

The combination of the pricing tool, project costing system, and cultural shift led to impressive outcomes. The firm achieved:

• 20% improvement in profit margins, with better insights into which projects were most profitable.

• A reduction in project turnaround time by an average of 15%, allowing them to take on more work without compromising quality.

• Increased team morale and cohesion as the team embraced efficiency as part of their creative toolkit.

Through our partnership, the videography firm is now positioned for sustainable growth, with a clear path to profitability and a culture that values both efficiency and creativity.