Why Pricing In The Professional Photography Business Is Not A Secret
Summary: "Why Pricing In The Professional Photography Business Is Not A Secret"
Today's guest post comes from professional rodeo photographer Al Berger, who tackles the question of pricing for the professional photographer, especially for those new to the business of professional photography. In his post, Al spells out the practical business reasons why every photographer's prices are different, and how you should determine your prices based on your own photography business running costs...
The subject of pricing our photography comes up again and again! Professional photographers (or at least those new to the business), appear to have more trouble with this area than anything else. Sometimes it’s because of personal issues around the idea of asking for money, but it’s more often due to a lack of understanding of pricing fundamentals.
Today’s post began as a question asked by one of the members of my Photography Business and Marketing LinkedIn group. By the way, if you aren’t a member of this group, but you feel that business and marketing are important to your success as a professional photographer, then you’re really missing out on a useful resource.
Here’s the original question:
Why the big secret? Why won’t photographers share their pricing to those new in the industry?
Newcomers to the business of professional photography are struggling to work out what to charge, and are facing two main issues:
- Being too cheap means undercutting the industry and themselves
- Being too expensive makes them feel like they’ll get no work
Furthermore, they feel that no other photographers will tell them what they charge, and that few guidelines are available to help them with their pricing…
Photographer Al Berger gave a very insightful response to the question, which he’s agreed to let me post here…
Photography Pricing Doesn’t Have An MSRP
Several years ago the big photography groups, ASMP, PPofA among them, were told by attorneys they would be “Price Fixing“, and could be held liable, if they attempted to set pricing for photographers, thereby resulting in a huge vacuum for photographers in regards to pricing of their images.
Every industry out there, with few exceptions, has an MSRP (Manufactures Suggested Retail Price) that is put out to set a standard. If you have priced a car, the MSRP is the same regardless of where you go. If you buy a toaster, car parts or just about anything you want, there is an MSRP.
[editor's note: The subject of MSRP and possible price fixing are more applicable to the USA. There may be different interpretations and legal requirements in other areas of the world.]
Even in photography, Kodak had an MSRP for film, paper and chemicals it sold to the stores. Look at lenses and camera bodies. Pretty much the same no matter where you go, the price is set by the manufacturers. The bigger the seller, the bigger the break they get on the pricing.
I was in Costco (a huge national retail warehouse store with low prices) the other day and asked why there are no Apple products available any longer at Costco. I was told Costco had been the biggest seller of Apple products in the world but Apple would not give them a price break for quantity. So any small local retail seller got Apple products for the same price as all of Costco, who has one buyer nationwide. So Costco decided not to sell Apple products because Apple is in effect fixing prices.
Photography Pricing Is Based On Business Principles
As far as pricing for individual photographers, it’s simply business. Your pricing should be based on your overall COG (cost of goods). Not just how much the lab sells the finished print to you, but any start up costs and all ongoing expenses you can think of. They suggest you should take the monthly ongoing expenses and multiply them by a factor of six (six months of expenses) and add the startup expenses to get the total required startup costs. Sit down and add all of your expenses, office and studio rent, business insurance, auto insurance, photographic equipment insurance, auto/transportation, photography equipment costs over 5 years (might be too long in this digital age), computers, monitors, chairs, tables, pens, pencils and all of the mundane costs associated with running a business.
Take this and divide it by the number of days you plan on working each year. For example:
- Camera bodies (2) – $4,000 (divided by 5 years)
- Lenses – 2 – $2,000 (divided by 5 years)
- All insurance – $4,100 a year
- Car – $0.50 per mile with 12,000 miles – $6,000 per year
- Office/Studio rent – $12,000 per year
- Computer(s) – $1,500
- Telephone service – $1,200
- Internet access – $600
- Couch – $500
- 6 Misc. chairs – $600
- Office table – $400
- Office supplies: $1,500 (paper for advertising, pens, pencils, copy machine paper, paper clips, copy machine, toner, printer, toner, telephone)
- Misc: glasses, cups, trash bags, trash cans, vacuum cleaner, toilet cleaner, Windex, paper towels, toilet paper etc.
I know I have missed quite a few of the expenses, like wages, but let’s work with this. Take the total of $29,600 and divide that by the number of days you are going to work each year. For example, if you’re going to work 5 days a week, you would multiple 5 x 4 weeks x 12 months and find you arrive at 240 days a year you plan on working. Divide the $29,600 by the 240 days and you find you will have to earn $123.34 dollars per day, each and every day, just to keep the doors open. This is without paying any wages to anyone, and running it by yourself without taking a paycheck. This is also excluding any print lab expenses. Now if you’re selling one 8 x 10 per day then you’re going to have to charge a minimum of $123.34 plus lab costs for that 8 x 10, just to break even. Not make a profit but just cover expenses.
If you charge $75 per session and you do 5 sessions a day, then you have $375 in income for the day. Then you could price your 8 x 10 at $5 each (to cover lab costs) and you would still be making $251.66 per day. This is what most people see, and decide at this point they are making money.
Of course quite a few studios don’t do 5 sessions a day. In fact some don’t do 1 session a week. This blows the “profit” theory out of the water. So you have to make up for the difference using your prints.
Some Photography Pricing Scenarios
If you did only 1 session a day you would have to charge $53.34 for one 8 x 10 to make up the difference of the expenses ($123.34) and the session fee ($75).
If you only did 2 sessions a week, you would have to cover the expenses ($616.70) with the income from the sessions and the prints. This would leave a deficit of $446.70 to make up. If you were charging $50 per 8 x 10, less the cost of the printing of $5 per print, you would have to sell 10 prints to cover the week. Of course this would leave you with nothing for yourself, nor emergency funds to cover a new lens, should you drop one of your lenses. So if you charged $75 per 8 x 10 and sold 10 of them, you would have a difference of $283.30 to go into your bank account for the next week. If you sold each 8 x 10 for $100, you would have $533.30 to put into your bank account.
Keep in mind, we are not accounting for any wages at this time. So if working for $283.30 per week is what you want to do then in this scenario, doing 2 sessions per week, you could do so charging $75 per 8 x 10. You just have to hope you make 2 sessions per week and they buy five 8 x 10 prints from each session. Of course, I see people charging half of the 8 x 10 price for a 5 x 7, or a quarter of the price for a 4 x 5. This doesn’t make sense to me as you still have to cover the week with the print sales. The cost of printing doesn’t mean a 5 x 7 is only worth half of the $75 for an 8 x 10. I sell my 5 x 7 prints for $5 less than my 8 x 10′s. They both have the same amount of work done to them, why would I give up half of the sale price for something smaller?
Based on what I have talked about, you can understand why, when I see someone selling 4 x 6 prints for 24 cents each, and claiming to be making a profit on it, I just roll on the floor laughing uncontrollably. If the lab sells the 4 x 6 to you for 19 cents, how can you pay your rent with 5 cents? To cover the expenses of one week $616.70, plus lab expenses of 19 cents per print, you would have to sell 12,334 – 4 x 6 prints at 24 cents each just to cover the weekly and lab expenses!
Pricing Strategies Are Important For The Professional Photographer
So now you know the “BIG SECRET” on pricing. It could have been so much easier if Kodak had given us an MSRP for each print. Of course this is a rough look at how pricing is done but overall it is down the right path. By the way, I figure if the cost of the print is more than 20% of the sale amount per print, I have lost business. I generally try to keep the lab costs at around 3% to 5% of the sale. For example if I pay $2 for a print and charge $50 for it, then the COG on the print is 4%, or right in the middle of my target area.
I think most newer photographers don’t have a pricing strategy and are just looking at the print prices they pay. They don’t handle it as a business, but rather as a quick way to make a buck. I have had many wannabe photographers tell me they don’t have to charge as much as me, because they work out of their home. I always ask them if they know what to call the difference between what they charge and what I charge, and their answer is always no. I tell them the difference is called PROFIT, and it is something they are not making based on their cutthroat pricing. Selling an 8 x 10 print for $15 when it cost you $5 isn’t a profit, it is a joke.
Thoughts And Comments
Do you have a different strategy for pricing your photography that works for you? Do you agree or disagree with the ideas expressed here? Do share your own thoughts and comments below.
Join Photography Business And Marketing On LinkedIn
As mentioned at the beginning of this article, we have a thriving group of professional photographers on LinkedIn, at the Photography Business and Marketing group.
With over 2,600 members and growing, this is widely regarded by its members as one of the most useful groups of its kind, mainly because of the insightful discussions and the tight controls on preventing spam.
If you are a professional photographer, and you understand the importance of business and marketing skills to the success of your photography business, then I invite you to join the Photography Business and Marketing group today.
About Our Guest Author: Al Berger
Professional rodeo photographer Al Berger
Al began his photography career in 1983 while stationed at Ramstein AB, West Germany. He has won over 130 awards in local and international photography contests over the years. Al was a three time winner of Professional Photographer of the Year Award from the Spokane Professional Photographers Association. He has also been hired to do photographic work for such companies as: Avista, Albertsons, City of Spokane, Spokane County, American Medical Response, Johnson Matthey, Honeywell, Columbia Lighting, Washington State Centennial Games, United Press International, Goodwill Games, Washington Trust Bank, US Air Force, Speaker of the House Tom Foley, Washington State Troopers Association, Stoneway Electric, Spokane Eye Clinic, Safway Supply, Whitworth College, Perkins and Fanny Mae just to name a few. Al has also created photographic images for the political campaigns for several state and local politicians.
Al has been published many times in newspapers and magazines as well as billboards and websites throughout his photographic career. Some of the more notable usages of Al’s images are: www.Dickies.com is currently running their “Life Hurts” campaign using one of Al’s photos. Cowboys and Indians Magazine has printed photos Al has taken. Priefert has purchased photos of Trevor Brazile for advertising. Al’s rodeo images have also been published Pro Sports News the official magazine of the PRCA and the official Wrangler National Finals Rodeo (WNFR). He has also been published in Western Horseman magazine.
Al is much sought after as a photography instructor and as a judge of photography contests for many groups and fairs throughout the Inland Northwest region. Al teaches for the Spokane Arts Center and teaches his own annual 3 day Rodeo and Equine Photographers clinic in May of each year. He also does individual training for photographers.
In the spring of 2005 Al moved back into the professional rodeo arena as a professional rodeo photographer. Al brought his extensive knowledge of portrait and commercial photography to the world of rodeo. Since that time he has become a very successful and sought after rodeo photographer. In the fall of 2005, Al was accepted into the PRCA as a Professional Photographer. Al is being acknowledged as one of the premier rodeo photographers in the world. He is also a member of the Pro-West and NPRA rodeo associations and is the current Vice President of the (APRP) Association of Professional Rodeo Photographers. In 2007, Al received 3rd place by the PRCA in their yearly photo contest. Recently the State of Oregon Department of Tourism has contacted him about using some of his rodeo images on their website. They commented that Al has the “Best rodeo photos they have seen and best rodeo website on the web”. Ad agencies from as far away as Austria and Dubai United Arab Emirates, have contacted Al about using his rodeo images. Al’s rodeo website www.ProRodeoPix.com receives almost 50,000 hits a month from rodeo fans all over the world. Since his website was started in December of 2006 it has received over 2 million hits.
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Amazing information! Thank you so much for sharing!!!
I’m currently reworking my prices, and even though I’ve read books on pricing, this article still helps tremendously. Thank you for another way to look at and approach the issue of how much to charge.
Bravo Mr. Berger! I too was amongst the naive shooters and burners. Thinking that profit was the difference between the cost of a print and what they paid me. It all started as a hobby many years ago and became a makeshift business when my company downsized in 2006. I worked for 6 months (not charging enough) and had to find a Job to support my soon to be born son. A successful sales management position was pulling me away from my now 2 children so I decided to try my hand at the photography business again. It’s been 6 months and I’ve almost “broke even” once you consider the COGS and Cost of Business in general. With that said I’ve made (because I’ve priced my photography properly and strived to offer impeccable service and create value) 10 X more than my first go. I owe my success to Charles Lewis and his students who have been extremely informative and supportive with all of my questions. With each client I’ve helped them become happily involved with at least a 20×24 or more adequate size. My most appropriately sized wall portrait, so far, was a 24×36. The most important thing that I have learned through everything is that price and service go hand in hand – If I were still “shooting and burning” I could not come close to justify my pricing. Yes, my work is consistent, and folks seem to be happy with it, but the fact that I follow the system of meeting the clients ahead of time, planning, providing advise, making the session fun and memorable, projecting their images, and personally delivering and hanging their wall portraits gives a REASON for the prices. Yes they have all complained and blown a gasket the first time they saw how much a 30×40 on canvas is, but the same prospects who have come to me looking for an 8×10 and wanting to invest $100, have walked away with a beautiful wall portrait and several smaller images investing over $1000 because I educated them on what they wanted and how I can help them to get it – I’m sure they would have invested twice that if I was more confident regarding pricing, but I’ll get there. So in closing, again, BRAVO Mr. Berger for your insight into the “nuts and bolts” of properly pricing. This is at the core of your business, but only a segment of the bigger picture (pun intended). Service, quality, and above all else RAPPORT will maintain and grow your photography business.
Although Al is making the important point that many photographers charge too little, the pricing advice could be improved. Profits are maximized when people use Value Based Pricing. I linked to and wrote about this article here:
http://pragmaticpricing.com/2011/12/26/bad-pricing-advice/
Brilliant article, and very needed for most photographers (me 16 years ago: doing B/W prints from home, spending long hours in the darkroom after work, charging a meagre £1 per 5×7″ print to friends and family, plus free sessions… and feeling it was a favour they did to me because it was ONLY my hobby).
Thanks for helping put the argument straight.