A recent conversation about pricing between photographers:
High Priced Photographer: “You low priced photographers are killing the industry! So many of you come in, sell photography at rock bottom prices and then go out of business in 2 years or raise your prices when you find out you aren’t making any money!”
Low Priced Photographer: “Seriously, get off your high horse. Everybody has to start somewhere and who said you are worth that much anyways! My husband doesn’t make that much after 6 years of college so I’m fine with what I’m making. I do photography because I love it, not to get rich off my clients.”
High Priced Photographer: “You don’t even know what it takes to run a business so you aren’t making as much as you think you are. Clients decide what photography is worth based on what it sells for and you and your type are killing the whole industry.”
Low Priced Photographer: “Are you kidding me? I know what I make and I have a spreadsheet to prove it. I make as much as I want and I’m sick of the high and mighty photographers telling me what I should be charging. I’m not greedy like you guys. I actually WANT to have my photography help and bless other people instead of just the wealthy.”
OUCH! This is a sampling of a recent attack-fest in a photography forum about photography prices. Worse things were said, people’s feelings got hurt and little improvement happened. Negatively criticizing or attacking others is a problem all its own but perhaps you’ve felt yourself on one side of this conversation before.
Pricing can be such a soft spot when running your business.
From the many photographers I’ve worked with, I understand all sides of pricing as well as how mixed up your feelings can get about it. The best approach to figuring out your pricing is to understand all 3 different ways to look at pricing and know why and when to use each.
1. Pricing Based on Competition
This way of determining prices is where you look at other photographers in your area that you admire or know and then find out what their pricing is. Then you adjust your pricing up or down, usually based on whether your photography is better or worse than theirs. Over 80% of photographers set their pricing based ONLY on their competition. This way of pricing is pretty easy to do and helps you to understand what clients may be looking at when deciding to hire you or another photographer. However, photographers aren’t in business for the same reasons as you. Some want to have their hobby pay for itself, some are providing for their family, and some want to own an island. None of those are bad, but you have no idea what other are actually making so copying their pricing is a little like trying to copy their camera settings to get a certain shot. It might work but you’d be lucky if it did – really lucky. And remember that if the average photographer is making less than $15/hr and the top end photographers are making a lot, you may be copying pricing that will earn you less than $5/hr without even knowing it! Nothing creates worse business decisions than thinking you’re making $30/hr and actually making $5/hr.
2. Pricing Based on Profitability
This way of figuring out prices is to figure out the time and money it takes for you to offer your photography and then figure out what you need or want to make. First you figure out how much money is left over from each session or package and how long it took to do everything for that (driving, preparing your gear, editing, shooting, uploading – everything). Then you figure out how many sessions you’ll do in a year, and how much time and money you’ll be spending on your business outside of individual sessions like marketing, taxes and workshops. Put that all together and you figure out what you are making an hour and by adjusting your price or number of sessions, you change how much you are making and how many hours you are working. This can be a bit daunting.
It doesn’t matter if you make a lot or a little but you should at least know what you are making! Only 10% of photographers actually go through all of this method of pricing in addition to looking at competition. Prices based on profitability is great because you know how much you are making and how many hours it is actually taking you. You make much better business decision when you know this information. However, profitability pricing doesn’t mean that you will actually get that many clients for the prices in your spreadsheet. Also, figuring out your profitability is a bit of number crunching and if you are like my creative wife, the closest you want to get to number crunching is Alpha Bit cereal. You can get a free spreadsheet with video instructions by clicking here or you can read an excellent post on pricing a while back.
3. Pricing Based on Value to Clients
I hardly ever meet photographers that price this way. In fact it is less than 1% of the photographers I’ve worked with (the last one was at a workshop 10 months ago). This pricing is where you focus on maximizing what you are providing to clients based on what THEY want the most. You need to understand better than the client why they want what your photography provides. And it isn’t the number of photos or the hours you spend. If you can create photography that will make a family feel connected and boost their self esteem, now you are talking benefits. The size and quality of the canvas is just how you provide the real benefit. This usually takes some market research by asking potential clients what matters the most to them and finding out what they’d pay for it. The photographers that I work with usually change what they are offering in addition to changing their pricing. The reason this way of pricing is great is because it is based on your clients, not your imagination. Another reason is because this will help you find out what is worth the most to a client. The downside to this pricing is that it is all pretty fuzzy until you actually try selling things and see if it works.
The Best Way
Do all three. This is how any serious photographer should do it. Look at the competition as a good starting point of what is being offered and the pricing. Then run your profitability numbers to find out your break even and minimum margin numbers. Finally, find out what clients would pay for that package. Most of the time, if your pricing is less than clients are willing to pay AND more than you need to be as profitable as you want, you are good to go. If it doesn’t work, keep tweaking things until you get something that can work.