VFX Negotiation Case Study I: Tactics

A fellow reader sent an email asking advice about contract negotiations. I’m not an expert on negotiations. However I wanted to post this as a case study of the common tactics used during negotiations. To protect the worker’s identity, let’s call him/her Jamie.

Jamie wanted to break into the VFX industry and agreed to work for a facility that offered no overtime and a 50% paycut with the promise of a promotion to a better position and original salary at a sister facility the following year.

A year passes and Jamie’s contract is up. Jamie is the go-to person when it comes to getting the job done. Jamie feels that nobody can do what Jamie is able to do. The facility looks like it’s ready to offer that promotion, but first they invite Jamie to sign an agreement to a year extension of the current contract. They state that the terms of the promotion and raise will be discussed at the performance review instead.

In my humble opinion Jamie is being royally screwed. There are a lot of old tricks being used that I’ve fallen for before:

A Verbal Contract Isn’t Worth The Paper It’s Written On

This is one of the most common tricks used in the Hollywood industry so it should be no surprise that the quote above is called Goldwyn’s Law of Contracts. It’s named after movie mogul Samuel Goldwyn.

Jamie agreed to take a paycut with the promise of a future promotion. However none of this was in writing. So if the people Jamie made the agreement with break their promise or leave the company, there are no real repercussions.

Thou Shall Not Believe Thine Own Hype

Scott Ross recently wrote a post on what he calls The Eleventh Commandment.

Jamie believed that he/she was good and irreplaceable. Now it’s probably true that Jamie is incredible, but what I’ve found is that’s not what gets the big raise or promotion.

I can tell you of so many occasions where people I consider untouchable would have to leave because and incompetent manager in charge of negotiating their deal had no idea how important that person was. It’s the same story over and over: Management decides to fuck around, the talent leaves, and production realizes we’re screwed.

No Amount Of Loyalty Goes Unpunished

This is sort of a play on the old saying no good deed goes unpunished.

This is sort of unrelated to Jamie’s situation but I’ve seen VFXers make the common mistake of thinking their loyalty to the company will be rewarded. I wrote in a post where a wage survey was done and the artist who had the most years at the company found he was the lowest paid person on the team.

I know artists who were offered much better salaries at other facilities with longer term contracts and turned them down thinking their current employer will reward them if they just stick with them for another project. It rarely happens and the next part is the reason why.

In This Town, Pull Is Everything

Leverage, your ability to pull the other side in a direction that is favorable to you is the ultimate force that will dictate your ability to win a negotiation.

Usually the person with the most amount of leverage is the one who can walk away. Jamie would probably be in a better negotiating position if he/she started pinging other facilities for a position. It’s very likely there would be better offers given that Jamie took a huge paycut. Jamie could then use other offers as leverage against the current employer to deal.

For the most part, in the VFX industry, if you want a significant raise, you are going to have to leave the company you are at. Negotiations are usually a game of brinkmanship that get taken over the edge. When I made that realization, I was able to get a 50% raise in my salary each year over a 4 year period.

If You’re Good At Something Never Do It For Free

The quote above is from The Joker in The Dark Knight. Like Jamie, he claims he can do something nobody else can do: Kill the Batman. The others laugh and ask if it’s so easy why hasn’t he done it? The Joker wittingly responds with a quote in the video above.

Jamie already had experience doing something well and agreed to take a paycut to prove to a new employer that he/she could do it well.

I’ve made a similar mistake. I was asked by an employer to do some important development work that would give me some unique skills that nobody else had. My negotiations were up in a couple of months and I thought it would be a nice feather in my cap.

When it was time to negotiate, management decided to not to offer a raise. I asked that I be taken off the development task since I was doing this extra work with no raise and they refused citing that because I was willing to do it for my current salary, there was no need for the raise. Again, no good deed goes unpunished.

So what did I do? I returned the favor and found a company willing to pay me 25% more and they were left holding the water for the development work. Which leads me to my final piece of advice

Some Employers Thrive On Their Employees’ Benevolence

The mistake I made in the previous situation was that I was reluctant to take advantage of the weak position my employer was in: They needed major work done now and I decided to do the work first and negotiate later. When it was their turn to reciprocate, they took advantage of me and they will take advantage of Jamie’s current situation. We love our industry and the people we work with, but you have to give tough love.

When I started this blog I pondered: Is it better to be feared or respected? What I have learned is that you should earn respect from your fellow co-workers and impose fear against those who try to take it away.

One of the biggest problems in our industry is that VFX facilities do not make a profit. That’s true but that’s not YOUR problem and from what I’ve seen, it doesn’t seem to be the owners’ problem either.

The Smothers Brothers Strause enjoy driving their Lamborghinis, Ferraris, Bentleys, flying private jets, wearing $25,000 watches, and drinking shots of Dom Perignon at Las Vegas clubs with Paris Hilton. But they don’t make a profit!

Luma’s Payam Shohadai was interviewed by the Hollywood Reporter about his new $2.045 Million home purchase in Venice:

There’s definitely a creative class of people and professionals that are making good money, but it feels very nontraditional.

But don’t ask for a raise, they don’t make a profit!

Digital Domain is losing money big time and they certainly don’t make a profit but don’t tell the executives! They are making more money and even sponsor a ballpark to boot! They’re just paper losses!

Soldier On.

26 Responses to VFX Negotiation Case Study I: Tactics

  1. Dave S says:

    in fairness to Payam, and the Strauss brothers if you works the amount of hours they worked and got paid a decent high end hourly wage you could do the same thing. AND they are also putting up the risk. Having worked at Luma and Hydraulx I saw all three respective owners there then I got there in the morning and there when I left at night. They may have a few showy things but they are working for them no doubt.
    And a 2 million house in Venice isn’t some mansion, its a nice house.

    • VFX Soldier says:

      I agree, it not an issue what they want to pay themselves. My point is it shouldn’t be yours. They don’t need your charity to survive.

    • Paul says:

      First, Marco Place is more Mar vista 90066 than Venice 90291; second a $2Mil. house in that area is not a “nice house” but rather a high end piece of architecture; third, with 10% down you’re gonna have to shell out around $11k/month for 30 years to afford one. Also those few showy things combined are probably worth more than 10 years of your salary so no, not even a high-end hourly wage would give you the mean to live like they do. For that you need to talk in the millions of dollars.

      Don’t make it sound like all this is reasonable or even justified because it really is not.

      • Dave S says:

        @ vfxSoldier I agree it should not be our concern.
        @paul he’s not putting 10% down like a first home buyer, he probably bought it cash. Its not what is or isn’t justified. I’m saying these guys work hard, harder than everyone reading this. They started a company worked their asses off and made it work. Risking everything for years, project to project. They also happen to be shrewd businessmen, Why pay someone more than they are willing to do the job? to be nice? but again its their money on the line in a turbulent economic climate. I have a lot of respect for those guys. I wouldn’t trade with any of them for what they went through to get where they are.
        Anyway we’re tangenting on a point made to think about in negotiations not to worry that “VFX companies don’t make money” so I should charge/accept less.

  2. yeah says:

    Just make sure that when the time comes to review your contract, you have another offer waiting for you.
    When you’re negotiating with your current employer, you should be willing to walk away if they’re not giving you what you think you should be on.
    If you are good, they’ll most likely give in.
    If they’re playing hardball, you take the other offer and get the better rate.

  3. hah says:

    after having worked for luma and read this.. i laughed. Those guys gave me so much grief about my rate. and Dave S.. 2 million dollars.. is 2 million dollars nice house or not.

  4. scottsquires says:

    Always get it in writing. Rule #1
    See my post on
    VFX Deal memos

    You don’t need to work for 1 year before your employer knows your net worth.

    It’s true that vfx company owners are putting in risk and it’s true that LA and most vfx towns are not cheap. However this requires a balancing act to be profitable and efficient. As an owner of an effects company in the past, we weren’t making huge multiples of the average worker there.

  5. Paul says:

    @Dave S:

    You would have to be either irresponsible or insanely rich to pay a house $2Mil. in cash.

    “I’m saying these guys work hard, harder than everyone reading this” and how’s that?! When I or anyone else here works from 8am till 8pm we’re not working hard?!

    Risks?! What risk…risk of dying, risk of not being able to afford the next Lambo?! Please don’t make it sound like they’re risking their lives here, if their company goes belly up they’ll still be fine, employees on the other hand…

    “Why pay someone more than they are willing to do the job? to be nice?” Maybe to be a bit socially responsible…just a tad bit? You sound like you wouldn’t mind a society with an ivory tower in the centre and zombies walking around it would you?

    • Dave S says:

      @paul Its not his first house, sell move money loan difference whatever who gives a shit.

      running and owning a business is extremely stressful. you see a lot of money come in and a lot go out, sometimes you lose money other times you gain all based on how you play the card dealt. You are seeing these guys after years and years of insane hard work. Risking their money and bankruptcy yes. If you think you could do it then do it, and I’ll work for you. What do artist risk when they work at a company? nothing, ideally. Owners have to fight to get paid, have to do a lot that you take for granted, b/c you want your risk-free life of working for a salary. I do too, but I at least respect what they do and what took to get there. You talk like it was given to them. Like simply started a company and studios paid them tons of cash and now they roll up in their benz. just like that.

      if you don’t respect the owners position how can you understand them? If you don’t understand them how can you negotiate your salary well?

      • VFX Soldier says:

        Again I’m not disagreeing with you. They do work hard and deserve whatever money they negotiated for themselves, and so should you!

        However out of curiosity, can anyone name a facility owner that has had it bad?

        I can name you a ton of artists being royally screwed. The argument is because facilities don’t make a profit that’s the way things are.

        Luma and hydraulx are located in la, don’t have satellite offices in cheap labor or subsidy protected countries. Yet it seems those owners are doing very well.

        Digital domain is losing money like crazy and the CEOs and execs are paid more now than ever.

        It seems win or lose its rare to see any owners that eat the kind of shit sandwich many of the workers are eating.

      • Paul says:

        “if you don’t respect the owners position how can you understand them? If you don’t understand them how can you negotiate your salary well?”

        Excuse me?! Am I suppose to base my hourly rate on my “understanding” of their company? That’s downright laughable.
        As in “oh yeah just give $10/hour cause you know…you’re a small boutique and I don’t want you to lose your house over my salary…poor me I’ll just stick with my studio for now until your mortgage is paid off!”

        And no I don’t have to “respect” them. Nobody has to. You get paid for your work period.

  6. k says:

    Fantastic post. I see so many kids getting into the industry who are so excited that they’ve ‘made it’ and are working at some studio they used to fantasize about, that they’re willing to negotiate against themselves. This post should be required reading at every VFX and animation school.

    Brilliant quote: “We love our industry and the people we work with, but you have to give tough love.” Too bad most of us have to get burned 3 or 4 times before we absorb this crucial lesson.

  7. Hard Worker says:

    I will admit that i’m not a huge fan of the brothers, (and have heard that their money was not always obtained in the most friendly of ways) but here’s a problem I see lately – with our entire country… (aside from the many obvious terrible problems which face our industry that I don’t support or condone) But lets not get pissed at others success.

    There was a day when I was a child, would walk outside my normal house with my father who grew up homeless and we would see a man driving a Lambo/wearing a suite. He would say to me “Son, there’s a man who worked hard to get where he is, if you work hard, maybe one day you will be like him”

    Now not to say I ever want/wanted to be the guy flaunting the Lambo, but what the hell is wrong with successful people driving a nice car or owning a nice home. A 2 mill home in Venice is just “normal”… honestly. Why can’t successful people own nice things? Why do we as a country now frown upon financial success? When you’re playing ball at a level like the brothers or the guy from Luma, it’s probably more “affordable” to fly a private jet to an event than take a public plane. (perhaps that person’s time is worth more than the jet’s fuel consumption/flight hour etc) Sometimes important people need to be somewhere fast, private and *shocker* important. Even if that is drinking booze with a paris hilton bimbo. How do you know that by spending that money and networking they aren’t locking down another deal which will fuel their company/facility and employees. That is how it works when you play at that level. When you take an Executive from X large movie studio out for drinks, you’re not going to take he/she in a 1996 Honda Civic. I dont support these artificial barriers our society has established but we have them, so conform and bite the bullet or go Occupy Wall street and cry about the price of a school loan which you accepted the terms on.

    Isn’t part of the motivation on ones journey as an artist/worker/whatever to strive for the things one wants? Be that a car, or a simple modest cottage in the middle of nowhere? It’s unfortunate that certain companies take advantage of their workers, that is obviously complete shit. Though you should never spite another’s success. (because everyone hopes and aims to one day be successful and a positive cog/contributor to society and their industry.)

    Hard Worker On.

    • Paul says:

      “A 2 mill home in Venice is just “normal”… honestly”
      Yeah right…and a $500k condo is a shit hole of course.
      The reason why Venice has become the BOhemian BOurgeois
      neighborhood that it is, where homeless looking bearded dudes drive BMWs and Porshes and where a shoe box with zero views cost close to $1Mil is because the riches up the hills with way too much cash on their hands decided that it was cool to buy a pad down the beach.

      There’s no such thing as working hard, the guy who washes your car works his ass off, there’s only working smart.

  8. scottsquires says:

    Nobody is jealous of real success in business. I’ve never worked for either company so can’t speak about them. Below are statements that can apply to any company.

    If they’re successful at the business and treat their workers fairly and reasonably, then good for them. If they can run the business profitable and legally and return profit for themselves and their investors, great.

    The problem comes when companies and the heads of companies treat their workers poorly or take advantage of them for their own gain. Or when management problems and mistakes are to paid by way of the workers. (long overtime, unpaid overtime, free interns, misclassified workers, etc) If they feign poverty constantly and ask workers to make a shared sacrifice (lower wages, unpaid overtime, etc) while they are siphoning off large profits then that’s a problem.

    And individuals in VFX have very little power except to quit and hope to find another project elsewhere. That puts all the power in the hands of the companies to make whatever types of demands they can of their workers that they think they can get away with.

    All of this applies to the Occupy movement as well. Just as in this case some people see this as simply people being jealous of other people’s success without seeing the real issues. For those who are interested in what Occupy is about then I’d suggest reading this:


    What the Occupy Movement is About

    It’s when people ‘earn’ their wealth through deception and by diminishing others that it becomes a problem.

  9. I'm buying a gun.. says:

    Speaking of employers not holding up their end of the bargain..

    Very recently I was on a job that lasted just a week… Originally, I had negotiated a rate with this company. They don’t pay OT, so I worked out a decent day rate. Everyone was happy. They did mention that they use a 3rd party payroll service. Many shops do this, I thought, no biggie.

    After I got the paperwork, I read that the payroll company charges the artists an “Administrative overhead fee” of 15% on your first $7,000 and 8% on everything after that.. After I found this out, I went back and told them that I did not agree with this and they would have to cover this administrative fee, or not use the 3rd party company. They convinced me to go with it for a week since everything was “set to go,” then told me we’d renegotiate if they extended me. I did get that in writing.

    I always do a bang up job, no matter what I’m doing and wherever I’m working.. So by middle of the week, they realize that I was awesome and that only 5 days of my services was not enough (no shit). They asked if I’m available to work until the end of the project. 1 or 2 more weeks.. I said I was avail, but brought up them renegotiating and covering the third party payroll fees, like we talked about. They first tried to make light of it telling me, “You can’t keep the same rate? Oh come on man, you’re happy here. You’ve got your fancy Dr Dre headphones on.” The guy seriously went on and on about how they were expensive headphones, and how I could afford them, etc. etc. Are you kidding me!?!!!!

    I really wanted the job. It was a cool project, the others on the show were great to work with, etc. I told them I had a real problem with giving 15% of my paycheck to a payroll company for no reason, but really wanted to work there. I told them I wasn’t going to “pay to work there.” I eventually broke down and asked them if they could at least up my rate by $50 a day. I figured, that would take care of most of it. Not all, but the final number was still cool with me. After all, I have enough disposable income that I can afford Dr. Dre headphones.. :/

    The company told me they needed to check with the producers to see if they could approve the “raise”. (BTW $50/day = $250/week). I didn’t hear anything for a full day. The following day, they told me, that they no longer had a need to extend me and that my last day was that Friday. I seriously could not believe it!

    Are these VFX companies so poor that they are squeezing this much out of their artists? If that’s the case, they really have no business staying in, well.. business. Is it sheer greed? And why do they use a 3rd party payroll? Is that seriously cheaper than hiring a book keeper to handle these things? I do not regret the 1 week, I worked there. I met some cool people and made some good contacts. Always great to see how the different company’s pipelines work as well.

    But seriously! Why do the VFX companies have to be deceptive? It ALWAYS seems like I’m getting fucked. ALWAYS! This is horrible b/c I usually end up going into a job with a negative attitude when I should be excited. Sucks because I do love the actual work. Love the people who I work along side. I just seriously hate the way this industry does things. FUCK THIS SHIT! I’m going to work at Starbucks, at least they won’t lie to you and at least they give you health benefits and a 401k..

    Blahhh…..

    • Paul says:

      What company is it?

      • skaplan839 says:

        Using Yurcor? So far, we’ve found The Mill, Digital Kitchen, Superfad, Troika and Logan. All effected artists should contact me to join the impending lawsuits to recover wages lost to this scam.

        skaplan@animationguild,org

    • skaplan839 says:

      Why? Its business .. that’s why. That’s what companies do. Its a basic tenant of business. You continue to strive and scrape and think up new ways to increase profit. As was mentioned earlier, you can’t begrudge a company doing what it has to in order to survive.

      What we *CAN* do is slap the wrists (ie. pocketbooks) of companies to don’t mind treading on Labor Laws in the pursuit of their profit. That’s why TAG has taken up the challenge of stinging Yurcor and the companies that use them.

      As many have pointed out, the industry is in turmoil. I believe people are starting to understand that when you follow the puppet strings back up, you see the conglomerates doing the pulling. The best way to level the field and bring some sanity to the industry is focusing your leverage. This goes for artists and studios alike.

      The best way for artists to focus their leverage, is to contact Jim Goodman and form a union. vfx@iatse-intl.com

      Steve Kaplan
      Labor Organizer
      The Animation Guild, Local 839 IATSE
      skaplan@animationguild.org

    • I'm buying a gun.. says:

      Yes EOR is unlawful, but I’d be totally fine if the money wasn’t coming out of my negotiated rate. And the fact that they didn’t inform me of the fees before negotiations began, is deceitful.

      I also, want to stess that I was assured we’d renegotiate after the first week. However, when that time came, they did not follow through.

      I am now unemployed again. Cheers mates!

      • Paul says:

        Well the problem is you [and I and probably many more] had zero leverage against them. Even if you performed well you stayed only one week as a contractor and started shaking things around, though justifiably that doesn’t fly well with most companies.

        When that person started bs’ing about your headphones you should have taken him for a tour of the company’s parking lot.
        And who was he to get involved in your payday a stockholder?!

      • skaplan839 says:

        The EOR is unlawful because the taxes were withheld from your gross earnings. If you haven’t yet, feel free to email me to participate in the lawsuit to recover your lost wages.

        skaplan@animationguild.org

      • skaplan839 says:

        Paul – respectfully, you are wrong. You and every artist have all the leverage with respect to your relationship with studios. As a group, you choose not to use it to your advantage.

  10. scottsquires says:

    See VFX Soldier posting
    Employer Of Record Ripoffs

    Employers do this to avoid not only paperwork (and expense of book keeper, etc), they do it for tax and regulation avoidance reasons.

    You dealt with someone from management who specifically avoided mentioning the additional % that would be withdrawn (heck an agent only makes 10%) And yes, many places are that cheap. They’re trying to keep their costs as low as possible so they can underbid other companies in the race to the bottom. I suspect they may have also considered you a trouble maker for even bringing it up and wanted to avoid future ‘problems’ from you keeping you on. Some managers would rather shoot their own company in the foot rather than negotiate fairly or to set aside their own egos.

    That’s why strength in numbers is important to try to bring up the business quality level of vfx companies relative to workers – whether that is a union or a Bill of Rights or some other process that provides a reasonable working experience.

  11. In other words, they go against the grain of the careers their parents
    had. Anna had been looking through my phone while I was naked.
    Ask your local club to run this for you.

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