Use this Easy Formula to Predict How Soon Your Video Will Return Your Investment - Fresh Level Productions

Use this Easy Formula to Predict How Soon Your Video Will Return Your Investment

Video marketing is one of the greatest additions to marketing recently, giving companies and organizations the ability to reach more people and provide more value than any other method today. While this trend is hot, many are wondering, “How do you know it’s actually working?” Trust me, I know, when it comes to spending your hard earned dollars in marketing, you want to know that it’s giving you a return on your investment.

In order to know what you’re getting from your video marketing, you must first know how much it will cost you, which really depends on your needs. The main factors that determine your overall video cost are:

  • Length of Time: The more time spent on the production of a video, the more the cost will be. Also, adding more people to the team will increase the cost.
  • Type of Equipment: If you’re doing this on your own, of course the cost will be less, but you have to take into consideration the cost of the equipment you’ll need to use. When you’re hiring a professional company, equipment costs are usually calculated into budget.
  • Amount of Talent: You can go with a one-man show, but getting people who are more experienced will increase the quality of work you receive.

Production Costs

Here are 5 categories of production to give you an idea of overall cost, depending on your needs and the quality you want to present to your audience.

  1. Beginner/Amateur: In this category, you’re doing all the work and using your own equipment. Cameras can range from $200 for a smartphone with a camera to $2,500 for a professional DSLR camera and lens. Your editing will need to take place on a computer, which will cost around $500 for a very basic model. If you already own this equipment, of course these costs become negligible and your time is your main expense.
  2. Semi-Professional: In this category, someone with more experience is helping do the work for you. They could use your equipment or theirs and the level of talent can vary, as some film on a part time or full time basis and work solo. The overall costs for a 1-2 minute long video in this category would be around $1,500-$3,000.
  3. Professional: In this category, you enlist a professional team to handle all the stage of the production process, including pre-production support, ensuring a great quality video. They bring in professional-level equipment, resources and talent and the cost can range anywhere from $5,000-$20,000 for a 1-2 minute video.
  4. Premium: In the premium category, along with higher-end equipment, your video can also benefit from the use of a studio and top notch talent/actors, which is great for leveraging promotions. Services at this level cost $25,000-$50,000 for the same 1-2 minute video.
  5. Super Bowl: Reserved for large companies with big budgets, this category includes the cream of the crop in video and film production and provide big screen, cinema quality. The price range can be $100,000-$1,000,000.

Distribution Costs

When it comes to video production and video marketing budgets, most people forget to include the cost to actually promote their video. In order to get people to watch your videos and convince them to make a purchase, you have to promote it!

The best platforms for distributing your video content can vary based on your goals, but of course, there’s your website, Youtube, Facebook, Twitter, blogs, email marketing, etc. You can manage your social media distribution on your own without any additional costs. This for many people, however, becomes tedious, especially when you have other aspects of the business to manage.

Having a dedicated team in charge of distribution and advertisement is key. The cost for such a team member can be anywhere between $500-$2500/month.

In terms of advertisements, on Facebook’s platform alone, you can expect to pay anywhere between $0.01-$0.03 per view. Keep in mind, with Facebook ads, your views are to a targeted audience that YOU define!

So, what’s the total Cost?

Let’s assume you go with the Professional category for production and hire for Distribution for a 1:30 minute video, you can expect the following breakdown:

  • Professional Production: $6,000
  • Distribution Manager: $500 for 1 month
  • Facebook Ads Spend: $750 (for 25,000 targeted views)

This gives you $7,250 for the total cost (just to give a rough estimate for this example).

How Do We Know it Worked?

Here’s the fun part! Now that you have your budget determined, you can now predict the potential return from it. The best way to do this is define your break even point. This is where your sales finally start earning a profit from your investment in your video.

Here’s the formula to calculate the number of sales you need to break even:

In our example, let’s say the price for your product/service is $750 and it costs you $300 to produce it. Your break even point is then:

BP = $7250 / ($750 – $300) = 16.1

You need to sell 16 units of your product/service to get past the break even point for your video marketing investment. The question to ask yourself is, “Do I believe effective video marketing will help us gain 16 new clients?” If the answer is yes, video marketing makes sense for your business and the great news is, after you’ve gained 16 new sales, the video marketing will continue to bring in more, providing you an infinite return on your investment! Don’t you just love video marketing??

Things to Track

Once you have your break even point determined, you can start tracking your Return on Investment for your video marketing campaign. Be sure to keep an eye on a couple things:

  • Sales: Though you can’t always determine which customers made a purchase because they watched a video, you can still determine the impact by comparing your earnings you made before and after the campaign. You can also track website traffic and your video statistics.
  • Video Stats: Views, Watch Time and Engagement. In addition to the number of views, you should also keep an eye on amount of time your viewers spend watching your video. Do they only watch a couple seconds or are they watching the entire video? Are they liking, sharing or commenting? These help you understand the effectiveness of your video and provide insight into what you can perfect in your next video campaign.

Wrapping Up

Hopefully this is helpful in giving you a better idea of how you can best predict how quickly you can gain a return on your investment in video marketing.

Marketing experts say that around 90% of consumers agreed that product videos were helpful when deciding whether to make the purchase and more than 64% said that they are likely to buy when watching video. You can truly benefit from the use of video in your business!

To talk ideas about how video specifically can generate more clients for your business, contact us today! or Email:

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