5 Steps To Taming Your Price List For 2011
#7: They zoom in and out, and in and out, and in and out…
Summary: "5 Steps To Taming Your Price List For 2011"
5 steps to help you reduce the stress of producing your price list for 2011. Follow this easy plan to producing a price list you can live with.
It’s the beginning of a new year – 2011 is here and January is the perfect time to think about your price list, and how much you plan to charge for your services, portraits, wedding collections and prints.
Don’t Be Scared Of Pricing
The subject of pricing our photography comes up again and again, and this is one of those areas where we seem to struggle the most in our businesses. The simple question of “What should we charge?” causes more trouble for us than almost anything else I can think of.
Too Much or Not Enough?
At the core of the issue lies the main problem: Are we charging too much or not enough for our services? We go back and forth on the answer like a pendulum, depending how well we perceive our business is dong. If we’re doing well, we think we’re not charging enough; if no one is calling, we blame our prices (even if the prospects haven’t even seen them yet!) How much is too much anyway? Is it more than any customer would ever be likely to pay, or is it more than we might pay if we were the consumer?
Pricing just seems to cause so much anxiety in our business because it’s usually the one tangible thing we can point at, identify, and blame for all our problems.
Of course, most of the real problems are caused by malfunctions in our marketing or selling, not because our prices are too high or too low, although I do suppose those factors could be an issue if they are way outside the averages for the industry.
Let’s take a look at what we can do to try to alleviate this problem by taking it one step at a time…
Step 1 – Recognize That You Are Not Your Client
In order to run a successful and healthy business we need paying clients, and we need to charge prices for our services that will keep the cash flow running properly. To us, especially if we’re struggling, our own prices might seem scary and “expensive”, but you need to realize that you are not your client, and that your clients will pay the prices you’re asking, as long as you follow the golden rule, and ensure that the value in the mind of the buyer exceeds the asking price.
This is the one big trap that causes us to keep second-guessing ourselves and leads us to constantly fidget with our prices, trying to find that all-elusive sweet spot, so we need to work hard on this.
Step 2 – Analyze Your Local Market
By this, I’m not suggesting that you copy your competitors’ prices lists or packages, nor that you should aim to be the cheapest or most expensive photographer in town. Analyzing the local market will allow you to get a feel for the range of prices being charged in and around your community, and the types of products being sold.
Look at the average prices, the minimums and maximums, and assess the value of what is being sold. You never know, by doing this you might actually uncover an untapped niche in your local market that you can exploit.
In any case, use what you find merely as a guideline to see where you fall within the local spectrum of photographers. It will help you get a feel for the ball park, but you shouldn’t rely on these numbers to produce your own list from without going through the other steps.
Step 3 – Determine Your Costs
Your costs ultimately determine your profit. If you don’t know your cost of sales, then you will be unable to produce a price list that will provide you with a good return on your investment in materials.
I suggest compiling an Excel workbook of all the products you plan to sell, with a worksheet for each vendor. This way, you can easily keep track of how much it costs to produce each product, the amount you want to mark them up, and calculate suggested retail prices.
Step 4 – Price For Profit
It is vitally important, from a business perspective, that you price for profit. You are in business to make money, so your product prices and packages should allow you to do just that. A good rule of thumb is that your cost of sales should represent about 25-30% of the final price. That means marking up the cost of sale by a factor of 3 or 4 to arrive at a retail price.
If you price this way, without becoming emotionally involved in the numbers, you will have a much better system by which to judge what to charge.
Step 5 – Stick To Your Guns
Finally, once you’ve produced your price list, and are happy with your methodology, stick to it!
Don’t allow yourself to keep changing your prices just because you think that’s why no one is booking or buying. Those problems are more like symptoms of your own lack of self-confidence, marketing or selling skills than of poor pricing.
Be confident when you present your prices and never make any excuses or apologies for your fees. They are what they are, and the more matter-of-fact you can be about them the less of an issue they will be in the client’s mind.
Good Luck and Have a Prosperous 2011 – success in the photography business is definitely achievable if you focus on the business elements at least as much as the photography.
As always, comments are welcome, and please be nice and share with others…
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Great advice. I agree that confidence along with good marketing and selling skills are key to overcoming doubts one might have about their prices. The challenge many photographers face, however, is precisely with confidence, marketing, and selling skills and because of this the one thing that can be continuously fidgeted with becomes the price.