Business of Animation
Part 1

Vince Sidwell
and

J Schuh

Dallas Animaton/Gaming Industry
The industry is changing

• Outsourcing
• Recession
• Sales in 2009 down
• Studios closing/layoffs
• Cheaper hardware/software
• Clients expect more for less
• Clients expect fast for less

Part I
Salaried Employee

Past

• Wages and costs were high in 1990’s.
• Hardware/Software was very expensive.
• No schools teaching animation.
• Quality of animation was lower.
• Rendering was very time consuming.

Present

• Over saturation of talent
• Cheap hardware/software
• Studios are closing/downsizing
• Outsourcing to Asia
• Illegal software
• Long hours/low pay
• Hard to get experience
• Guru.com, elance.com, etc..

Can I find a job today?

• Online Job Postings
• Motionographer
• AWN
• VFX Pro
• CGSociety
• CG Hub
• Gamasutra

Marketing

• Short Guys
• SIGGraph
• “Other” User Groups
• Online Competitions
• Online Message Boards
• Volunteering
• Websites
• Nun chuck Skills

Temp Agencies

• Aquent
• The Creative Group
• Creative Circle
• Mind Find
• Art Squad
• Randstad
• The Boss Group

Future

• Low level jobs continue to leave US
• Art Directors and Creative Directors may remain
• 3D becomes more common commodity – like design
• Prices/wages even out
• Online 3D tools similar to web building tools (stock mocap/character builders)

Jobs

• Talent + Experience + Reel = Jobs
• Entry Design Jobs > Entry Animation Jobs
• Competition is fierce
• More applicants than openings
• Mystique of Film and Game jobs

Compare

• Aquent/AIGA Salary Survey
• LA Animation Guild (TAG) survey
• Simply Hired

Exerpts fromn Simply Hired
Simply Hired – Dallas/Austin Area

• 2D designer                   $35K
• Web Designer               $50K
• Creative Director           $100k
• US Design average     $44k (1-3) years
  $66K (3-6) years
• 3D Animator                  $30K-$40K

(local survey)

Simply Hired – National average
CGI Animators         $65K
Flash Animator        $72K
Flash Developer      $60K
Graphic Designer   $40K
Web Designer         $48K
Warnings

• Entertainment seems to pay lower than Game Development
• Salaries depend on the company
• Companies like EA will list jobs in different markets at same price
• Be wary of less ethicical studios
• Extended Internships
• Long Hours
• Low Pay
• Free Work

Expectations

• Not all salaried positions are glamorous
• 10 for the meal – 1 for the reel (Steve Gaconnier)
• Clients can screw up everything
• Can’t show your work
• Release
• Integrated into other peoples shot
• Cut from final
• Trash can in the corner

Expectations (part2)

• Non-Disclosures (Intellectual Properties)
• Work for Hire
• Right to Work State
• No State Income Tax’s
• Contract Agreements
• Contractor vs. Empoyee

Part II
Freelancers
History

• Not Suited for Everyone
• Requires Discipline
• Requires Record Keeping
• No Security Blanket
• You Eat what you Kill
• Work Cycles (Summers are slow)

Formula for Bidding

There is no formula

But if there was….
Level of Expertise
+
Project Specifications
+
Turnaround Time
+
Service and Support
+
Level of Demand
+
Current Economy
+
Physical Location
=
Total Cost
OR
Time
+
Expenses
+
Taxes
+
Retirement
+
Health insurance
+
Vacation
+
Administrative Costs
+
Marketing
+
Cost of Living
+
Education
+
Maintenance equip/soft

How to charge

• Per Hour
  • Easy
  • Pays accurate to time spent
  • Good if your client is picky or indecisive
  • Decreases profitability over time

• Per Project
  • Encourages productivity
  • Preferred by client and artist
  • Better suited for profitability over time
  • Requires good records

12 Realities of Freelancing

• There’s no exact formula.
• Both hourly pricing and project-based pricing have pros and cons.
• Pricing is a necessary part of freelancing.
• Mistakes are a part of the process.
• Your prices will affect your own outlook on your services and it will also impact your client’s opinion of your services.
• Level of Expectation
• Their Impression of Your Skills and Experience
• Your Level of Urgency
• Your Level of Professionalism
• Uncertainty is Common.
• The variety of prices is as wide as the variety of talent levels.
• Losing a job isn’t always a bad thing.
• Pricing can be a good way to weed out the tire kickers.
• Some potential clients will think your prices are high no matter what you charge.
• Charging more than you quoted may be necessary.
  • Car Mechanic
• Starting out you’ll probably have to charge less than you’d like.

Formula
Base = $40K a year
Add %30 for tax’s = $52K
Multiply by # of hours in typical year
52 wks * 40 hours /wk = 2080 hours
Minus vacation, sick days, administrative and non billable hours (60%)
1,142 billable hours /  $52,000 yr = 45.53 /hr
Not Done Yet!
Now add expenses to equation
$35,000 in expenses (travel, software, marketing, utilities, etc..)
Determine % of base pay
$35K / $52K = %67.3
$52K * 67.3% = $30.64
$45.53 + $30.64 = $76.17 /hr
Add %10 profit = $85 /hr

*(Designers Guide to Marketing and Pricing – Benum and Top)

Offer a Service

• Your rates should be based on a service you provide.
• Take “You” out of equation.
• Design is a commodity, you are selling a service.
• Anticipate your clients needs, pay attention to detail, exceed expectations, deliver on time.
• Don’t change your rate to often

Profitability

• I might not be the best one to ask
• Rather than raise rates, charge clients accurately.
• Keep a balance sheet

Finding the Right Balance

• Underbidding hurts your future
  • Unsustainable
• Find a number that works for you
  • Do the numbers
  • Do your research
  • May take some time
  • Do not raise prices often
• Find a specialty Niche’ market
• Maintain Customer Relationships

In January
Panel will include CPA and Lawyer