The Truth about Modeling Expenses ... Who Really Pays?

[bothsidesnow]

I thought it was an investment cause they don't mention anything about a loan. I thought agencies make this money back through the 20% they get from a model's work.
Money is used to pray for test shoots to photographers in order to produce a portfolio and perhaps paying for travels to sign to other agencies.

Another very common myth is the "20% commission" - I don't know of any model agency that takes only 20% commission - it's a bogus figure - the quoted "20%" is actually 33.3% (e.g. when a model is told a job "pays" $1000, her share is $800, but the agency will actually get $1200 from the client).
As far as I know, 33.3% commission is a minimum - higher rates apply in other countries. In Milan the standard commission is 58.3%! (this is calculated from 50% "quoted commission" + 20% agency service fee) My understanding is that commissions are capped according to national law - I suspect Italy has very lax laws to this regard (if anyone knows differently, please correct me).

Agency commission only covers management fees -- the model will be billed for anything and everything else including transport costs (apart from specific jobs where the client has offered to pay), accommodation (ditto for transport costs), test shoots, portfolio books, composite cards, showcards, website fees, courier fees etc (and it doesn't matter who she is). If a model is flown to be signed to another agency - this will be at her expense and the cost of the flight will be the first debt she accrues at her new agency.

Finally, I suspect there are agencies that have adopted business practises whereby they actually profit by keeping a number of their foreign models hovering in debt! - this can get a little complicated but basically they do it by running up a model's expenses so they can pocket her income tax payments. (agencies generally withhold 30% 'income tax' (Withholding Tax) from job payments which is in addition to their commission - now, if an agency keeps a model in debt, they'll know that she won't really owe any income tax so they don't actually remit the money they've withheld from her to the tax authority! - they just keep "holding" it...)

 

[bothsidesnow]

^ (tried to edit but too late!)
* I think UK commissions have recently changed and now must include composite cards and courier fees.
** test shoots aren't always billed to the model - it depends on the status of the photographer and the model

 

[BetteT]

Another very common myth is the "20% commission" - I don't know of any model agency that takes only 20% commission - it's a bogus figure - the quoted "20%" is actually 33.3% (e.g. when a model is told a job "pays" $1000, her share is $800, but the agency will actually get $1200 from the client).

Actually, you are right ... more or less.

It's a technicality in the way they bill, but she really does only pay 20% of the cost. But the client is billed another 20% on top of the cost.

Here is how that happens: The job pays $1,000... that is what the client will pay for the model's services. The model pays a commission on that ... or $200 ... so she gets $800 ... or 80% of the rate charged for her services.

Here is what a lot of people don't know: the client is also billed for a commission of 20% on top of the charge for the model's services ... another $200 for a total of $1200 ... modeling services plus commission.

The agency keeps commission from both sides, $400 and the model gets paid $800. So it's true that it's 33 1/3% of what the client is billed ... but it's only 20% of the actual charge for her services.

 

[bothsidesnow]

^ I suspect there are maximum commission rates (set by national law) that agencies* can take from their talent and the purpose of the 20% service fee is so that they can go above those rates - its like a loop-hole. I understand there were changes recently put in place by the British Government in 2010 so that the model's disbursement must now be calculated on the full invoice issued to clients including any service fee - hence commission rates there seemed to increase suddenly from 20% to 33.3% (when in actuality they didn't really increase at all!)

* It should be noted here that model agencies are not (by legal definition) agencies, they are "management companies". As a management company, a company can take more commission than an agency. In the legal sense, a talent agency is limited to take a maximum of 10% as commission.

** the stated commission rates in the UK are generally a little higher than 33.3% because, by law, commissions there must now include composite cards and courier fees.

 

[BetteT]

* It should be noted here that model agencies are not (by legal definition) agencies, they are "management companies". As a management company, a company can take more commission than an agency. In the legal sense, a talent agency is limited to take a maximum of 10% as commission.

That is the law in New York State too ... agents may only charge 10%. Therefore, all NY agencies call themselves "model management" companies to get around it. There was a huge lawsuit by a bunch of NY models a few years ago about them charging the 20% but I never heard the outcome of the lawsuit. I suspect the models lost ....