Alternative way of charging stills and animations for real estate's sales campaing

[barbara klump]

Hello guys!

For over 5 years I have been working for a 3D studio serving primarily real estate developers.

In Brazil, we typically charge our work per animation seconds and units of stills.

My thought is: is the price we charge to deliver visual materials to real estate sales campaign, even exceeding market averages,  is compatible with the value of the property being sale?

Moreover, I have been thinking about the realtor's comission. In Brazil, realtors earn 5% of the sale. In a majority of cases, luxury property sales campaign pays more to just one realtor sale than it pays to the whole 3D visual material. This points to a conclusion: 3D studios are not charging properly.

Should 3D studios start charging by commissions on sales (in construction phase when 3D materials are required), instead of charging per unit (still image and animation)?

Exemple of a high end apartment building project with 30 units in nowdays scenario:

3D studio's work: 30 stills images

3D Studio's earnings: R$35k (USD 7k)

Property's price for each apartment: R$1 mi (USD 200K)

Realtor's comission earnings for each sale: R$50k (USD 10k)

Real state's final cost between 3D studio and realtors (counting at least 15 sales during construction phase using 3D materials): R$32k vs R$750k

 

I believe exploring a commission-based model for architectural visualization holds immense potential for being more equitable and performance-driven partnership with developers. 

Please leave your comments about it below.

Edited January 12 by barbara klump
grammar and currency correction

[James Vella]

6 hours ago, barbara klump said:

3D studio's work: 30 stills images

3D Studio's earnings: R$35k (USD 160k)

That's an average of $5,333 USD per render correct? If so then that's about the same as what high-end 3D viz studios are charging per still image renders. So what's the problem?

You can always try for commission if you think its worth while, but sales is completely different to marketing material, in my opinion.

How many sales people does a 3D studio have compared to the artists who make marketing material in that studio? Probably about 2 sales people per 10-15 artists right? Most of the time those 2 sales people bring in all the work that the artists do, which means those 2 people are suppling 15 artists (lets say average $70k per year). Which means they are bringing in more than $1m per year of work, PLUS business expenses/taxes/licenses/admin/owner income/managers etc. Which means those sales people who work at your studio if working on a commission of say 35% should be getting paid $350k per year, minimum. So why do you think you should be paid on a commission basis if you are not doing the sales work?

[barbara klump]

14 hours ago, James Vella said:

That's an average of $5,333 USD per render correct? If so then that's about the same as what high-end 3D viz studios are charging per still image renders. So what's the problem?

You can always try for commission if you think its worth while, but sales is completely different to marketing material, in my opinion.

How many sales people does a 3D studio have compared to the artists who make marketing material in that studio? Probably about 2 sales people per 10-15 artists right? Most of the time those 2 sales people bring in all the work that the artists do, which means those 2 people are suppling 15 artists (lets say average $70k per year). Which means they are bringing in more than $1m per year of work, PLUS business expenses/taxes/licenses/admin/owner income/managers etc. Which means those sales people who work at your studio if working on a commission of say 35% should be getting paid $350k per year, minimum. So why do you think you should be paid on a commission basis if you are not doing the sales work?

I updated the currency between R$/USD, the previous one was incorrect.

James, the topic is not about division of payments inside the studio, it is about charging real estate developers proporcionally to the property value. I used realtor's commission for example (a completly different profission with no conections with 3d studio), because their earnings follows the property's price being sold. It's not about trying to steal someone's function commision, but negotiate with our clients a more equitable way of compensate the quality and talented work the studio delivered.

 

[Works like, hypothetically:

Phase 1: The developer sends a new project of a residential building to the studio. 

Phase 2: The studio delivers all the material required by the clients. (no payments until now)

Phase 3: Sales campaign are happening and units are being sold through 3D material. (the studio start receiving the payment through commission on each sale done)

Phase 4: The building is done and 3D material is not required anymore. (studio's commission stops)

Obs: Realtor's commission stays the same as always. ]

 

 

[James Vella]

Phase 3 - Commission for what? You are doing marketing material. Like I said its not based on commission its based on pro-rata (images/renders). When people make a billboard image for Nike they don't get paid per billboard, or per sale, they get paid for the image which is a small part of their campaign. Sure it may seem like its the most important (from the studio/artists perspective) but there's more to the message than that.  Like I said sure you can try but if you are doing 3D work for real-estate you are already at the bottom of the market. 

If you want to make better income selling 3D content then sell to developers, they are the ones with the money & vision. You can bundle up an entire package for Branding, Website, Floorplans, Photography, Filmed content, and mash that together with your bottom end market (3D Visuals) and then you can bring your bottom dollar up (substantially!). You are fishing in the wrong pond in my opinion. I've worked in all parts of the hierarchy and the 3D visuals is always the lowest common denominator, so you need to push your business in a way that entices clients to trust you so you can push their brand to the top of the market place. 

This is why a logo can cost $500,000, and you are struggling for average wages on a 3D render. You need to offer something of value to the right client who needs more than 1 service. If you can't do that then you are going to be stuck with real-estate, and that's not a good place to be in the long term  (especially for a studio). 

Lets roll back to the Nike example for a moment, their brand was publicly released in 1971. Do you think artists who make their advertisements have any type of license to their work? No it belongs to Nike, same with any commission work you do, the IP belongs to the Company. Nike spent a lot of time building their brand (which is the most important aspect of the business). The artists don't build the brand they do what they are told to do: make an image. If you want to build value with a client you help them build their brand, otherwise you are just another commissioned artist/studio that helped that Company deliver their message. If a company delivers your message, then you are entitled to a % of the value you bring that Company (and no, that does not happen with a 3D render, it occurs from building a brand - which is a message, values, a voice, a strategy and interaction at every touch point in the business which is key to the success of the business as a whole).

 

Edited January 12 by James Vella

[Scott Schroeder]

You'll never find a place to agree to a price point like this. It's absurd at all levels. The images you produce are not the reason people buy real estate. The images you produce merely help and therefore are not commission friendly. You do zero work in the actual sales center. You have zero interaction with the buyer. You have zero claim to a commission.

I can find some kid right out of school and pay them $500 to produce crap visuals and the real estate will sell just as fine if we go to a high end place that charges $50,000. Ultimately the demand is solely within the demand for physical housing, not what render company did the visuals.

Do construction workers, plumbers, painters, and electricians charge based on commission for the work they did in these spaces? No! They merely provide a service and therefore charge on a fee based system. Heck, even architects/engineers do not bill on a commission based system.

On top of this, your system assumes way to much financial risk for the visualization studio. Let's say you do $100,00 worth of work at Phase 2. The project now goes on hold for 6 moths to well over a year. Maybe the project ultimately gets cancelled, which happens from time to time. How do you recoup your money? How do you pay your artists and all of your business expenses in the meantime while you wait for the project to go live in the developers sales center? What if the project is slow to sell? 

It's far easier and less risk to get paid a % of the fee up front as a security cost and then receive final payment at the delivery date of the visuals.

[Scott Schroeder]

On 1/12/2024 at 12:25 PM, James Vella said:

Phase 3 - Commission for what? You are doing marketing material. Like I said its not based on commission its based on pro-rata (images/renders). When people make a billboard image for Nike they don't get paid per billboard, or per sale, they get paid for the image which is a small part of their campaign. Sure it may seem like its the most important (from the studio/artists perspective) but there's more to the message than that.  Like I said sure you can try but if you are doing 3D work for real-estate you are already at the bottom of the market. 

If you want to make better income selling 3D content then sell to developers, they are the ones with the money & vision. You can bundle up an entire package for Branding, Website, Floorplans, Photography, Filmed content, and mash that together with your bottom end market (3D Visuals) and then you can bring your bottom dollar up (substantially!). You are fishing in the wrong pond in my opinion. I've worked in all parts of the hierarchy and the 3D visuals is always the lowest common denominator, so you need to push your business in a way that entices clients to trust you so you can push their brand to the top of the market place. 

This is why a logo can cost $500,000, and you are struggling for average wages on a 3D render. You need to offer something of value to the right client who needs more than 1 service. If you can't do that then you are going to be stuck with real-estate, and that's not a good place to be in the long term  (especially for a studio). 

Lets roll back to the Nike example for a moment, their brand was publicly released in 1971. Do you think artists who make their advertisements have any type of license to their work? No it belongs to Nike, same with any commission work you do, the IP belongs to the Company. Nike spent a lot of time building their brand (which is the most important aspect of the business). The artists don't build the brand they do what they are told to do: make an image. If you want to build value with a client you help them build their brand, otherwise you are just another commissioned artist/studio that helped that Company deliver their message. If a company delivers your message, then you are entitled to a % of the value you bring that Company (and no, that does not happen with a 3D render, it occurs from building a brand - which is a message, values, a voice, a strategy and interaction at every touch point in the business which is key to the success of the business as a whole).

 

Even the Carolyn Davidson who created the Nike Swoosh wasn't ever paid on commission. She was paid $35 at the time of the creation. Granted, Phil Knight gave her a more generous gift later on, she doesn't make a cent from any Nike product sold.

https://en.wikipedia.org/wiki/Swoosh

https://en.wikipedia.org/wiki/Carolyn_Davidson_(graphic_designer)

[James Vella]

lol $35, a lot has changed. Am I reading this right, she got $4m in shares? If she kept that diamond ring it would probably be worth more than its weight too. I would probably disappear if I had $4m too =D 

Thanks for sharing Scott.

[Scott Schroeder]

1 hour ago, James Vella said:

lol $35, a lot has changed. Am I reading this right, she got $4m in shares? If she kept that diamond ring it would probably be worth more than its weight too. I would probably disappear if I had $4m too =D 

Thanks for sharing Scott.

If she held onto those initial 500 shares, yeah, she'd have about $4 million. The day she got the 500 shares in 1983, they were worth 17 cents per share, or $85 bucks in total.

[James Vella]

ha yeah I read that, I would expect most people that invest in shares would hold onto them for the long term, but im not most people I suppose =D (or the other way around)

 

Edited January 15 by James Vella