How and How Much to Charge for Travel

I got an email from a reader of my book asking me my opinion on what to charge for travel. What a terrific question. This is a topic that on the surface seems like one nobody would be interested in reading about. Then it occurred to me that everyone in this business has to do some sort of traveling (either by plane, train or automobile) and knowing how and how much to charge for that travel is key. It’s something we can take for granted that we shouldn’t. So, since I took the time to write him a response I figured, why not make it a blog post. So I did.

First, let me cover how I think you should approach it from a smart business point of view. Then I’ll tell you how I do it.

Gas and Time Cost Money

The subtitle says it all. When I arrived in GA after driving cross country from Silicon Valley, the price of a gallon of gasoline in my town was $1.29. I remember it specifically. The vision of the gas sign is clear in my head. This was awesome I thought. Back in Cupertino where we moved from, a gallon of gas was in the neighborhood of $2.50 to $2.75. That was 2.5 years ago.

Today, that same gasoline sign I saw as I pulled into my new neighborhood reads $3.49 (+/-). The price in Cupertino is about $3.80 and the national average is $3.60. My point is this: gasoline is expensive. It costs me about $65 to fill my tank and I have to fill it about every 10 days or so. If you do a lot of driving for a job, you should expect to be compensated for that travel.

There are two main schools of thought on the best way to be compensated for auto travel: time of travel or mileage reimbursement. If you choose the former, you simple multiply your hourly rate by however long it takes you to get to the job. Some people charge “door-to-door.” That means, the time they charge a client starts from when they walk out of their front door, to the time they walk back in. If the job is 30 minutes away and the gig is for two hours, they’ll charge the client for 3 hours of time. Some will factor in a “fair” commute time and deduct this from the total. That is how the IRS looks at it. Your commute to your daily job is technically not counted in the mileage you can deduct (assuming you use the mileage calculation system for your taxes).

The other method for charging the client is using a mileage allowance.  According to the IRS site, the allowance for business travel is $0.51/mile. If the job is 100 miles away, they will charge $51 of travel. Given 100 miles could be a 2-hour drive, it’s obviously more beneficial to charge hourly.

Travel and Lodging

The other form of travel you will run into is when you have to fly somewhere and stay in a hotel. Again, there are two main schools of thought on this: have the client handle the planning and paying, or just build the cost right into your fee. In my experience, clients have preferred the latter. Give them one all-inclusive fee that covers all necessary travels costs, then YOU do the planning. Particularly for corporate clients who are already busy, they don’t want to add to their busyness by having to plan your travel schedule. When building these costs into your rate, make sure you cover all the bases. It’s easy to just get airline and hotel information and forget the other costs. Here’s a pretty good list of things to cover:

• Airline costs (including any extra fees for travel sites or brokers)
• Extra baggage costs (BOTH WAYS)
• Bridge or expressway tolls
• Hotel
• Tips and Tolls
• Travel time to pick up and drop-off rented equipment or the shipping costs for rented equipment if you use a site like BorrowLenses.com or LensRentals.com.

Per Diem for Food and Downtime

When you travel to a location for a job, there will undoubtedly be down time, maybe even a lot of it. This is time when you are not actually working. Not the least of which is the time it actually takes you to travel to the location. That is time you are NOT working and as such, should also be factored into your travel rate. Most professionals I know use a set per diem rate for things like this. For example: let’s say you’re traveling out of town to shoot a corporate gig for three days. Two additional days may be lost due to travel. You could either charge your regular day rate for those travel days, or you could assign a set “travel per diem” rate that you use that is a little less (to be fair to the client, given wide-spread internet access, you could do plenty of work while traveling if you had to. I get through a lot of emails when on the road. Therefore, it’s okay to charge a little less for your traveling rate. It’s still time away from family so it’s worth being compensated for in some way). Whatever your daily per diem, it should also factor in the costs for your food.

How I Handle It

In the words of Montel Jordan, “this is how we do it”:

• I give clients an all-inclusive rate (i.e. travel and lodging are built into the rate I quote)
• For local jobs, unless my commute to a job is more than 90 minutes each way, I typically do not charge any additional travel. My thought process is that my regular fee is set so that I’m paid enough that I don’t have to charge a client for travel unless it’s really excessive. It’s a selling tool. No extra fees. When I do charge for travel, I use my hourly rates (which is higher than most, not as high as some. 😉

That’s it. Simple.

A Word about Taxes

It seems appropos to throw in a note about how the IRS handles travel, meals and entertainment. You have an option to show on your books the actually prices paid for travel, et. al., or take standard deductions for mileage, meals and entertainment. When traveling out of town, the standard deduction amount is a set per diem for meals and entertainment based on the city. Read about it here. In most cases, this per diem may be higher than what you may actually spend. We use the per diem figures. Also note, as a business, you can only deduct 50% of meals and entertainment.

Okay. That’s it. It’s not as sexy a topic as FCPX or how to use a Zeiss CP.2 cinema lens, but it’s nonetheless something you need to know.