Pricing yourself right for the industry and sustainable growth of your business

13 06 2009

Pricing

In my last post I discussed affordable means of marketing your new photographic business, this issue I’m going to discuss pricing as well as some of the major errors new businesses make.

I get asked regularly what the “right price” is to charge for photographic shoots; the truth is however that there is no “right” price as the SA photographic community isn’t regulated, and in order to formulate a workable rate for your business one needs to understand what your personal running costs are.

It’s become a common perception among clients that since the coming of digital age photographers have it easy as there aren’t costs for film and developing – if only this were true.

Photographers nowadays are an abundant species and in order to get the paying jobs we’re forced to stay on top of the game, this means having the latest camera equipment, best lenses, suitable processing hardware and software, comprehensive marketing strategy, office facilities and perhaps a studio to name a few.

Unfortunately few of the above costs are once off, technology needs to be upgraded on average every 2 years and as the business grows more advanced technology is required.

This means that photographers who are prepared to charge a minimum fee to “get the work” may not have a sustainable business plan and will likely struggle when it’s time to upgrade.

So let’s do a quick rundown of some of the costs to factor in (these will differ depending on the type of photography):

  • Camera equipment: Camera, Back-up camera, Lenses (make a full list of all the lenses required in future), Batteries & chargers, Speedlights, Carry bags/cases…
  • Lighting equipment: Flash heads, Modifiers, Battery packs, Studio packs, Lightmeter, Carry bags/cases…
  • Editing: High end processor with good graphics, Monitor(s), Editing software…
  • Office: Rental, Telephones, Internet connection, Fax machine, Printers, Ink…
  • Studio: Rental, Maintenance, Facilities…
  • Vehicles: Fuel, Wear & Tear, Branding…
  • Marketing: See previous business article + annual increases…
  • Storage: Hard drives, Off-site backups, Indexing…
  • Maintenance: Cameras, Lights, Studio, Office, Computers…
  • Insurance: Be prepared for the shock…
  • Upgrades: Cameras, Lenses, Printers, Computing, Studio, Flashes…
  • Staffing: Salaries, Budget for expansion…
  • Day to Day: Printing, Stationary, MUA fees…
  • Living costs: Personal debts, Food…

And there’s much more.

Now as an exercise take the total monthly expenses and multiply this by 24, add the other costs and you’ll come to a total figure.  Add an approximate escalation rate of about 20% at least on equipment costs if you’re hoping to improve your current levels and total your results.

Divide this amount by 24 to get an approximate monthly running cost (bear in mind these are simply approximates and I’m no financial guru myself).

Now that you have an approximate base monthly cost calculated it’s important to ascertain how much work you are currently doing and how much must be charged in order to earn a living (no point simply covering costs).

There are a number of ways to do this but the simplest is probably to calculate an hourly fee: in order to do this it’s important to ascertain how many “chargeable” hours you have available.

A wedding photographer for instance may spend 4 hours photographing a wedding; but they spend an hour getting to and from the venue, 20 hours processing, 2 hours in pre-shoot meetings and extra time running around with sourcing albums, printers etc.

They can therefore not simply charge for 4 hours work but have to calculate the entire working period and divide that cost over 4 hours. Don’t forget to add your profit on afterward as well.

Remember that the above is based on “working hours” only; when calculating your final hourly costing you need to cover your “non-working” hours as well – these hours include admin, marketing, and even time sitting doing nothing if business is slow.

You may find you get quite a shock at the end result of your calculations, and hopefully you’ll start to understand why so many photographic businesses fail and can equip yourself accordingly.

It’s unlikely that based on these required rates a new photographer will make a fortune to begin with, but if you stick to your principles and don’t fall into the trap of undermining your business by undercharging, and market yourself well, then you should be well on your way to long-term success.

TFCD: its’ place in the industry and how it can affect your business

TFCD stands for (Trade For CD), also see TFP (Trade For Print)

When starting to create a portfolio, photographers often enter into TFCD agreements with models, make-up artists, etc. Each party enters into the agreement with the idea that the shoot will be mutually beneficial to all parties in order to build a portfolio without incurring excessive costs.

Usually each party gains and at the end of the day can use the images for portfolio purposes.

It’s advisable to keep agreements such as these separate from your business where possible (hobbyists are excluded here) as you may create the impression that you’re not confident enough in your work to charge. If client “B” hears that client “A” got a trade/discounted rate they will expect to get the same, if you aren’t prepared to do so then they feel that you regard them as less important and will likely shoot elsewhere.

The alternative is that you keep shooting “Trade” shoots and sacrifice earning potential.

Having said that there are a number of instances where trades can work; one such instance is stock photography, where a photographer potentially can generate an income over a long term from the images created. It’s important to understand the contractual agreements and releases involved here though (we’ll leave that for a future discussion).

To clarify the differentiation between business and personal portfolio work; I encourage personal experimentation and trades are often a great way to achieve a good result without breaking the bank but this need not jeopardise your business principles.

Small mistakes can damage a business and often in times of financial strain business owners tend to bend to the whims of what they perceive to be their clients’ needs, only to suffer later as a result. Try to plan for the rainy days so that you can enjoy the sun while it’s shining.

This has probably been a pretty sombre article for many readers who currently enjoy photography and had hoped to jump into the deep end and start shooting; the point is simply that you should be prepared adequately so that the business grows well and profitably.

It’s a great industry to be in and the awards are numerous if you are among the few who break through the first few years alive.

For feedback and suggestions on further articles visit the “Photography Business Advice” forum on http://www.pixmag.ning.com

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