Contract terms


jescovi
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As a new startup, we are working to put together a contract for a large billion dollar company used to seeing contracts fitting their stature.  We are currently struggling with several areas in our contract - payment terms, copyright fees, contractor rate, and output format.

Payment Terms - The customer has a line item for Payment mechanics stating they will pay within 60 days of invoicing.  While I understand the actual term and what that means, it doesn't seem that would be a 'norm' in our industry.  So - I am asking for your help/guidance as to what your payment terms look like.  Do you require a deposit/retainer?  Do you provide a link of the finished product with 'PROOF' on it until final payment is received?  Anything related to payment terms you can share would be appreciated!

Copyright Fees - This customer wants to 'own all of the work product and Operator will retain no rights to the footage'.  To me, this is an upsell.  What do you charge for this?  Is it a flat fee, or a percentage of the product?

Contractor rate - The initial sites for this project are in Chicago - I am in Dallas.  More than likely, we will need to use a contract pilot.  What types of rates should one expect for this type of work?  This project has six sites and one is actually inside the airport property (Midway, not O'hare).  Note - this is only for video, no photos, no post-editing.

Output format - Since this is video only - what would the normal output be?  Specifically, what video format would you recommend and why? And, how do you provide the final product  - what medium - online, thumb drive, sd card, etc.?

What other areas have you struggled with and come up with regarding contract terms?

Anyone in the Chicago area want to be our remote pilot?  Send email to me below and we can send the scope of the work!

Thank you in advance!

Scott Vivian

Drone It Texas / Drone It Network

469.569.4160

svivian@droneitnetwork.com

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12 hours ago, jescovi said:

As a new startup, we are working to put together a contract for a large billion dollar company used to seeing contracts fitting their stature.  We are currently struggling with several areas in our contract - payment terms, copyright fees, contractor rate, and output format.

Payment Terms - The customer has a line item for Payment mechanics stating they will pay within 60 days of invoicing.  While I understand the actual term and what that means, it doesn't seem that would be a 'norm' in our industry.  So - I am asking for your help/guidance as to what your payment terms look like.  Do you require a deposit/retainer?  Do you provide a link of the finished product with 'PROOF' on it until final payment is received?  Anything related to payment terms you can share would be appreciated!

Copyright Fees - This customer wants to 'own all of the work product and Operator will retain no rights to the footage'.  To me, this is an upsell.  What do you charge for this?  Is it a flat fee, or a percentage of the product?

Contractor rate - The initial sites for this project are in Chicago - I am in Dallas.  More than likely, we will need to use a contract pilot.  What types of rates should one expect for this type of work?  This project has six sites and one is actually inside the airport property (Midway, not O'hare).  Note - this is only for video, no photos, no post-editing.

Output format - Since this is video only - what would the normal output be?  Specifically, what video format would you recommend and why? And, how do you provide the final product  - what medium - online, thumb drive, sd card, etc.?

What other areas have you struggled with and come up with regarding contract terms?

Anyone in the Chicago area want to be our remote pilot?  Send email to me below and we can send the scope of the work!

Thank you in advance!

Scott Vivian

Drone It Texas / Drone It Network

469.569.4160

svivian@droneitnetwork.com

I think the first question you should be asking yourself is can you actually deliver? Midway is Class C from the surface to the floor of O'Hare's Class B airspace. That is just one problem. You mentioned five other sites? Where are they and will you be able to get FAA permission to operate in the airspace. Or are you going to dump this on a contractor and hope they can push the paperwork for you?

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Here are the site locations:

Location(s):

Location ID45S: Dan Ryan Expressway at 36th St., East line, South face

41.828095, -87.629620

 Location ID 23W:  Eisenhower Expressway (I-290) 750’ E/O Kedzie, South Line, West face

41.873992, -87.705286

 Location ID 30W: Stevenson Expressway (I-55) w/o Ashland, South Line, West face

41.837291, -87.667132

Notes: Site 30W might be problematic as it technically falls just on the inside of the Chicago Midway International Airport.

 Location ID 2N: Kennedy Expressway at Peoria, West line, North face

41.889967, -87.64794

 Location ID 55S: Dan Ryan Expressway s/o Cermak at Lumber, East line, South face

41.850567, -87.644361

 Location ID 14 N:  Edens Expressway N/O Elston EL, NF

41.972822, -87.747125

 

We are not 'dumping' this on  a contractor.  We have clearly stated the requirements in our scope of work to pilots we have connected with.  The pilots that have responded have indicated they are willing to get the authorizations at sites requiring it.  Our response to the client will be based on what is achievable given their time frame and whether or not authorization can be acquired.

That was not the purpose of the post.  The purpose of the post was to solicit constructive advice on business terms.

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Going through some of this myself, I can offer the following:

Payment Terms:  Typically this is a statement from the customer that speaks to their cost accounting structure and as such, is typically non-negotiable other than to negotiate penalties for late payment.  

Copyright Fees:  This should be a negotiable point from your position.  However, something to consider is whether any of the product is of value to you.  Outside of portfolio uses, it has little value to you when all is said and done.  Your potential client sees the product as something they have purchased and considers this to be standard contract language and may be unwilling to negotiate.  The company will probably view some (if not all) the content as proprietary and worth protecting from competitors.  Perhaps a better tactic would be to ask the client for specific clips that you could use to promote your company at no charge.

Contractor Rate:  This is easily remedied by NOT establishing a contractor rate.  Offer a standard processing markup over the contractor's rate and provide invoices/quotes to the company for approval prior to proceeding with the work.  

Output:  While this is determined largely by WHAT your shooting and the light conditions, 1080p60fps should be a base minimum.  Always shoot at the highest resolution possible for the conditions.  It's not always possible to shoot at 4K at dusk or sunrise.  I assume this is a long-term contract of at least a year or more and technology will advance providing better resolutions and faster processors allowing you to improve upon your product.  As far as video format, I would survey the customer and find the format that they are comfortable with, be it something universal or Apple/PC/etc. specific.  

Your goal should be to provide the highest quality product possible for the compensation received.  As a contractor, it is your responsibility to find the efficiencies within your service and processes to provide a superior product at the best value...not necessarily the lowest price.

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