The Photography Business, Part 3: What to Charge
As we saw in Part 1 of this series, photography is a massively diverse industry. Thus, approaches to pricing vary enormously from segment to segment. We will start off with some general principles and then get more specific.
As a general starting point you must charge enough to make the business viable, both short term and long term. This means earning enough to cover:
· Recurrent costs, such as studio rental, electricity, Internet, vehicle costs, the various insurances you need (public liability, equipment, loss of income, health), etc.
· Salary costs for staff.
· Equipment and software upgrades, vehicle replacement, etc.
· Training so you can stay current (e.g., workshops, courses, trips to conferences, etc.).
· Professional membership fees
· Superannuation or retirement provisions.
· A decent living income.
Now comes the tough part: You need to calculate all of the above, erring on the side of overstating costs. Now you have the total amount of income your business needs to generate per year.
Next you need to look at the type of photography work you intend to do (or are already doing) and conservatively estimate how many jobs you will get per time interval (week or month). Then, you need to turn that into a yearly number. Divide this into your required income to get the amount you must earn per job or piece.
Let’s run some examples. Suppose you have worked out that your total business income needs to be $300,000 per annum to cover all costs, pay yourself a reasonable wage, and leave a buffer to build up a reserve to cover economic downturns. We’ll use this same figure for a number of photography businesses:
· A wedding photographer might be able to do, on average, two weddings a week, which equals about 100 weddings a year. That means you must earn an average of $3,000 per wedding.
· A stock photographer might determine they can generate 10,000 stock images a year. If that is the case (and would be a hard task), each image would need to earn $30 in a year.
· A fashion photographer might determine that they can obtain one fashion shoot every two weeks, making for 25 a year, requiring an average of $12,000 per shoot.
I think you get the idea. The question then becomes can you generate that much work at that level of income?
Unless it’s possible to double the return on each job, a wedding photographer will quickly go broke working in a town that only has one wedding a week and several competitors.
Figuring out what is realistic in terms of the amount of work you can obtain is no easy task. It is a matter of guesstimating how many such jobs occur within the area you can reach and how many other photographers compete for this work. You also have to be realistic about just how productive you can be.
Producing 10,000 stock images a year equates to 200 images a week that you must come up with the concepts for, find locations, models and props for, shoot and then process.
In a competitive environment it is always tempting to lower prices in the expectation that you will gain volume and thus compensate for the lower income per job. But in photography, this can be a recipe for disaster. Many areas of photography are not producing a product that can be sold many times; many areas of photography are in fact a service. You can only shoot a certain number of weddings a week, since there are preferences for the days of the week and times.
Portrait photography requires spending a certain amount of time with each client without reducing the quality of the experience for the client. And few people will want to come for a portrait shoot at 10 pm.
When I studied Marketing 101 at university we were taught that if a product is not selling well it is better to raise the price than lower it. That may seem counter intuitive, but it makes sense if you understand a key concept: There is no such thing as an appropriate price. What something is worth is a hugely complex question to answer and, in the end, there will be no satisfactory answer.
Sure there are rules you can try to follow. For example, you could calculate the total cost of production, double it and then double it again to get the retail price. But these are only guides. We all know of luxury goods that are not really any better made than cheaper goods. Yet these luxury goods sell for tens or hundreds of times more. People pay for such goods and services because of ideas of exclusivity, perceived quality, rarity, etc.
Indeed the desire to acquire something rare and exclusive is the reason is the idea behind the idea of producing a single piece or art or a limited edition of prints.
Of course you need to accept responsibility for your decisions, so don’t blame us if you follow any of the above ideas and lose your shirt.
One of the most important things in being in business is to have a great support team in place. For most photography businesses, this means a team of at least an outstanding accountant, lawyer and marketer. You may need to add a business coach, public relations person and investment advisor to the list. But you also need to educate yourself so that you can understand them, know what questions to ask and be able to assess the advice you are given. We will provide a reading list in a later article.
In Part 4 of this series, we’ll look at customer management.
