My good buddy Scott Bourne wrote this for the launch of SCU four years ago. Reading through it this morning, it couldn't be more valid. Although a piece of Scott's approach in this post is more commercial/fine art in nature, the foundation for pricing is the same. I wish I could get every photographer to read this, regardless of their specialty.
It's time for so many of you to stop waiting for the "Profit Fairy" to sprinkle her magic dust on your business. The truth is, improving profitability is relatively easy, but you have to take the time to think it through, starting with your goals.
Pricing is the "Achille's Heel" for so many of you. You price things based on what you think they're worth without any regard to your actual costs. To paraphrase something Sal Cincotta once said,
"Nothing can screw up your business more than bad pricing!"
And here's one more gem from an industry leader. Denis Reggie made this comment in a workshop at least twenty years ago, and I never forgot it:
"Don't price your work on what you can afford. It was years before I could afford myself!"
It's a new year and in 2017 let's get your business on the right track and start paying attention to pricing and your bottom line. Your top line (gross sales) is meaningless because it's not how much you make, but how much you keep. And, unless your goal is to become a formal 501c3 non-profit, making money isn't something to be ashamed about.
This is the first business day of the new year, and for many of you, it's still part of the holiday weekend. Take the time to think about your business and the importance of profitability. Let's get you out of macaroni & cheese every night and into a steak now and then!
Pricing photography is the second hardest thing you will ever do as a professional photographer. (Finding the right clients is the first hardest.) It’s very easy to make mistakes when pricing and once they’re made, it’s hard to recover from them. So start out right.
One disclaimer: Not every pricing method works for every photographer. Much depends on the current state of the market and the genre (i.e., wedding, commercial, fine art, food, etc.) I’ll try to stick to some universal ideas in these posts.
Start at the Beginning: You can’t effectively price your work until you understand what it is you’re selling.
You are not selling square inches of paper for the cost of printing them. For some reason, the first element that seems to enter some photographers’ minds when making a pricing decision is the size of the print. This “brick wall” has cost many photographers money. The most important thing to keep in mind is the value of your work, not the size of the print. You build this value by evaluating ALL the factors that go into making a salable image.
So what are you selling? How about your creativity and unique ability to capture something that others do not see? Anyone can buy a camera, but can they capture the image exactly the way you do? How about the time you have invested in training for the moment when you captured the image? That time needs to be taken into consideration. Your mechanic, doctor, accountant, and lawyer all get paid for the time they spend doing the work. Shouldn’t you be paid too? You also have to consider the level of your present technical ability. The casual amateur should not be able to get the most out of the same equipment as an experienced professional. And speaking of equipment, you must also take into consideration the value of your gear. So, as you are deciding how to price your work, make sure you take into account and charge for your logistical skills, experience, time and your ability to translate your client’s desires into a visual statement.
Know what you’re selling before you try to sell it. This will help you avoid many mistakes later.
Pricing Economics: In order to price something well, you must know the economics. Here are some key things to keep in mind:
B) Profit margin
C) The market you are serving
Calculating your overhead requires that you consider all the costs that are associated with being a professional photographer. This includes:
A) Equipment depreciation
E) Legal fees
F) Accounting fees
G) Payroll fees
O) Office supplies
Q) Professional dues
Calculating your profit may be a bit easier. You consider your cost of doing business by allowing for a percentage of your overhead to be applied to the cost of each job. From there, mark up your price to include a standard profit margin. This can be based on any number you want but a good starting point is to double the cost of your product (100 percent profit margin).
Now you also need to adjust this figure based on the market type you are serving. Is the image being used in a small or large market? Will thousands of people see it or just a few? What is the perceived value to the client? How does the client plan to use your image? Who is your competition and what choices does your client have besides you for this type of image? Are there 50 photographers in the mix or only two or three? Consider these factors to calculate your fee.
When you sell or license an image, it is likely that you will have to negotiate the price with a savvy photo buyer. Knowing how to negotiate can save you time, money and help you close profitable deals. Remember that negotiating is just problem solving. Both parties have something they need to accomplish and the negotiation makes it happen.
You must not take ANY of the issues that arise during a negotiation personally. The buyer is supposed to try to get the best deal that he or she can. That’s their job. Your job is the same.
The essential steps in the negotiating process are: establish rapport, gather information, do research, ask questions, and let the buyer do most of the talking. In any negotiation, the person who listens most is likely to gain more. In any negotiation, it’s always very important that you do more listening than talking. Otherwise, you will miss important clues, both physical and verbal, that will help you resolve the deal.
Before quoting a price, you must try to educate the client and build the value of the image you are selling. Make sure that the client understands the effort, time and expense you invested to make this image. If the image is truly one-of-a-kind or was made at personal risk, those factors translate directly into the value of what you have for sale.
Try to encourage the client to place an opening bid. If the buyer is the first one to name a price, I believe you will be rewarded with a higher fee. A good way to open the negotiation process is to ask a question like, “What’s the most you would be willing to pay to use my image or purchase my print?” If you are forced to begin the negotiation process by offering a figure, an alternative is to begin with a number that is twice your standard price plus 10 percent. Once this figure is given, you can work down from there.
But remember, if you give a number first, you run the risk of quoting a price that is much lower than the buyer was willing to pay, and you’ll never know what figure they were willing to pay. So, let your clients do the talking. Then, you should listen, take notes, and preferably wait for them to tell you what they can afford.
If the client has pricing objections, be sure to return to the rapport building and value enhancement stages outlined above. Usually, a price objection really means that there is another piece of information you have not uncovered. It is likely that there is something else you have not offered that the client really wants or needs. This is why it’s crucial to listen more than you talk and ask plenty of questions to uncover hidden needs.
Once you have taken all the necessary steps, be sure to ask for the order. A surprising number of photographic sales don’t happen simply because the seller has forgotten to ask for the sale.
(NOTE: Negotiating with magazines is not possible unless you are a famous photographer with images that are in great demand. When you approach magazines, understand that you will only get paid their standard rates.)