Pricing for Profit | How to Make It In the Photography Business
Pricing is a topic of many threads on many different – it seems that every day new questions about it pop up, invariably followed with a plea for help. I get it: we capture priceless memories and moments – so how do you put a price on something ? At the end of the day, you can be an amazing photographer who captures beautiful images, but if you don’t set up your pricing in a way to ensure you are compensated properly for your time you will never have a successful and profitable photography business. And while all of us love photography and many have left stable high-paying jobs to pursue our dream to run a photography business, it is a and a goal of any business is to be profitable.
Pricing is a topic of many threads on many different photography forums – it seems that every day new questions about it pop up, invariably followed with a plea for help. I get it: we capture priceless memories and moments – so how do you put a price on something priceless? At the end of the day, you can be an amazing photographer who captures beautiful images, but if you don’t set up your pricing in a way to ensure you are compensated properly for your time you will never have a successful and profitable photography business. And while all of us love photography and many have left stable high-paying jobs to pursue our dream to run a photography business, it is a business and a goal of any business is to be profitable.
So where do we start? Before you dive into figuring out how much your session fee and 8×10 prints should be, I recommend you take a step back and think about your business model. Are you a JCPenny or Sears Photos type of business – or so called ‘shoot-and-burners’ – say a Wendy’s of the photography industry? Are you a high-end boutique business – a 3 Michelin Star rated restaurant equivalent? Or do you fit somewhere in between? There are pros and cons for each model and you need to find which one is right for you.
I am a foodie and have spent more than I care to admit eating out at some of the top rated places. I love going to restaurants that require reservations weeks (if not months!) in advance, places with crisp white linens, fancy stemware, impeccable service, creative dishes (and very small portions!); I know all of that comes at a premium and I don’t mind paying extra for it. For my 30th birthday my husband and I flew to Paris to celebrate this occasion (that was before we had kids!) and for dinner our concierge recommended La Tour D’Argent – a ‘Paris institution’. The dinner was absolutely incredible – views of Notre Dame at night, amazing food, great company – I do love spending time with my handsome husband. And long after that outrageously expensive bill has been paid, I still remember what a wonderful evening it was.
Then there are the Wendy’s of the world – and they thrive as well. If I need a quick lunch for my girls between their school and ballet classes and only have 30 min to spare – Wendy’s, here we come! Have you tried to go to one during a lunch hour rush – you have to wait in line for a good 5-10 minutes before they take your order! And while eating at Wendy’s is nothing to write home about, we will leave it with our hunger satisfied, money left in my wallet and very happy kids.
‘Shoot-and-burn’ businesses get a lot of bad rep, but this business model works really well for some people, and is what a segment of the clientele is looking for. If a photographer shoots a session in an hour, hands over to the client a CD of all unedited images and charges $300 for it – she is getting paid $300/hour. But remember to make this model profitable, this photographer will need to be shooting a LOT of sessions. Just like Wendy’s needs to sell a lot of chicken sandwiches to make a profit similar to one meal at a fancy restaurant.
A Boutique Photography approach is the one a lot of people aspire to but it does come at a price – both to you and your clients. As a photographer you need to spend a lot more time building and nurturing relationships with each client – from meeting with them before a session, to the session itself, editing images, helping them decide what to order, etc. You will need to research and invest in product samples, beautiful packaging and stationary, client gifts, etc. You will have fewer clients than shoot-and-burners but you will really be able to get to know each one of them and provide beautiful heirloom pieces of art for them. And clients who choose a boutique photographer do appreciate that and don’t mind paying a premium for it.
Different photography models have different expectations from their clients, they provide very different services and experiences and therefore command very different prices. So think about what model is right for you – depending on how many sessions you want to have each week, how much time you can dedicate to each session and what level of experience you can offer to your clients. Just remember – whatever model you decide to follow be absolutely clear about it to your clients.
Once you’ve figured out what your business model is, we can talk about other items that affect your pricing, starting with a Session Fee. Independent of the business model you use, your session fee should cover your time to prep for a session, shoot it and get the images ready for your client. If you follow a boutique model then you spend a lot more time on each session and therefore your session fee should reflect that. For the majority of boutique businesses, a session fee includes only time and talent of the photographer and does not include any products. However, some include a print credit in their session fee.
If you follow a ‘shoot-and-burn’ model, you spend less time on a session (no editing of images!) and therefore your session fee would be lower than that for a boutique model in your area. Another option for a ‘shoot-and-burn’ model is to bundle up a session with the cost of a CD – e.g. to charge X for a hour long session and a CD of all images. Keeping it simple will make it easier for your clients to understand what they are getting and the price for it.
The next thing to consider is the minimum order size. To do a min order or not to do it? That’s the question that’s been plaguing many photographers and they seem to be divided on it. There are pros and cons of each approach. Clients may feel more inclined to book a session with you if they don’t feel that they have to spend a certain amount; your images will do the work for you and if the clients love them you will have a great order. But having a minimum order in place helps you guarantee that you will walk away with a certain profit from each session.
So which approach is right for you? If you don’t know, try answering this question: would you like to book a session if you know that all a client will be ordering is just three 8×10 prints? If, let’s say, you dedicate 1.5 hours to a session and schedule 10 sessions a week, an order of three 8×10 prints per session may provide you with a desired income. If, however, you follow a boutique approach, dedicate, let’s say, 6 hours to each session and only schedule 2 sessions a week then an order of three 8×10 prints may not be sufficient to make a living.
If you decide to put a minimum order requirement in place, the next step is to identify what that amount should be. The answer is simple: it should be an absolute minimum you are willing to make from each session. Keep in mind that this amount is separate from your session fee, which covers all session related activities.
You should keep in mind that the order amount is not equivalent to your profit. Part it of goes towards COGS (cost of good sold) and therefore is dependent on what your clients order. And although you don’t know what exactly your clients will be ordering, you will be able to ballpark your profit based on the cost of products with highest and lowest COGS. For example, item with the lowest COGS are digital files – let’s say that your cost between printing a custom CD and packaging is around $10. If your client gets $350 worth of digital images you will make $340 profit.
Now let’s assume a product with the highest COGS is a framed print – it costs you $150 to print and frame an 11×14 image. If you sell it for $400 then you will make $250 profit from that product.
So when you calculate your minimum order amount you need to make sure that even if a client only orders the minimum and purchases an item with the highest COGS you will still be left with enough profit.
How to get your own pricing
So how to you come up with your pricing? If you want to run a successful business – and if you are reading this article, chances are that you would – you need to make sure you are priced for profit. If you are not priced for profit you will never be able to turn your photography hobby into a successful career.
In the photography business, just like in any other business, there are fixed expenses and flexible expenses and you want to make sure that both of them are covered and you have profit left over.
Fixed Expenses – cost of running a business
Fixed expenses are the cost of running a business and they are independent on how many client sessions you have – i.e. they will remain the same if you have 15 or 150 clients a year. And since these costs are fixed, you can budget then at the beginning of the year. Fixed expenses include the cost of new equipment and maintenance of existing equipment, software, templates for your products (think Holiday Cards!), business and liability insurance, hosting and maintenance of your website and/or blog, memberships at professional associations and forums, marketing, education such as workshops, online classes and books, training, etc. While it is hard to estimate this expense at the beginning of the year down to a penny, you can do a ball-park estimate based on what you’ve spent in the past; or if you are just starting out, research to find out what these costs are. Are you thinking about upgrading to a brand new camera (Canon Mark III anyone?) or lenses? Include that in your estimate. Want to join Clickin Moms’ photography forum or take one (or many) of their awesome photography courses – add that in as well.
Variable Expenses – Cost of Client Orders
Your variable expenses are costs related to client orders. They consist of COGS (cost of goods sold), packaging, shipping, traveling to client sessions, etc. And since variable expenses are directly related to the number of sessions you have – the more sessions you have the higher these expenses will be. The good thing is that clients’ orders cover them!
Number of Sessions a Year
Next you need to estimate how many sessions a year you can expect to have. Your business model plays an important role here. If you are a high-end boutique studio you will have fewer sessions – as a client pool for high end boutique photography is limited. But you will be able to spend more time with each client and make more profit from each session. If you follow a mall photo studio equivalent approach then you will be able to have a lot more sessions a year but you will also make less profit from each session.
Be realistic with your expectations: if you are just starting out and are following a boutique model it is unlikely that you will have 5 sessions a week, every week. Think about how much time a week you have available (if you have other obligations such as kids to take care of, a full time job, etc. take that into account) and how much time you are planning to dedicate to each session. Also remember to account for the slow times of the year when you will have fewer sessions.
The last step is to do research on your local competition – be sure to check out photographers of different styles and levels of experience. By no means do I suggest that you should copy prices of your competitors but they will give you a good starting point (and that’s all it is – a starting point) that you can build you prices on.
Make sure to research your local area, and research photographers in the same market segment. Photography prices vary greatly depending on the location. A boutique photographer with an established business may be charging $1500 for a CD of all edited images and that may be as high as her local market can support. Or a middle of the road photographer in an area with a higher cost of living may be charging $2500 for the same CD. So make sure you are comparing apples to apples.
Don’t use your competitor analysis to undercut your competition. Thinking that if your local competitor charges X for a session, and to get more clients you should charge ½ X does disservice to you, your customer and eventually the whole industry by driving the prices down and devaluing photography services.
If you are portfolio building and don’t feel that your skill level allows you to command the prices you would like to do later on, set your prices to what you want them to be once you are officially ‘in business’ and offer a portfolio building discount. The key with offering a discount is to offer it for a limited amount of time –enough to get experience shooting and get a variety of images for your portfolio/website.
Now that you have all the pieces of the puzzle – i.e. your fixed and variable expenses, your business model, planned number of sessions a year, competitor research, you can calculate what your session fee, minimum purchase and a la carte/collection prices should be!
So independent of what your business model is and what your personal financial goals are, if you want to make it in the business of photography, make sure you think thoroughly about your pricing! And while defining a pricing structure is time consuming and not one of the easiest things in the world, once you have it done, you will be well on your way to making your dream of a successful photography career into a reality!