Basically you make the video for the client, show them a preview, then they can decide if they want to use you for the full product. Which, personally I think is bullshit, and a lot of people are beginning to agree. To make the preview you are required to do preprod, prod, and postprod, to a high standard. Work you are typically paid for, and work that will cost you money to create. Which you may not be reimbursed for.
This is a pretty standard practice within the film industry. However, when applied to other industries this sounds completely ridiculous. Here's a video that shows just how ridiculous this sounds.
I'm curious to see what other people's thoughts on this are.