Pricing…what is the right way to price photography?
Pricing is always a difficult subject to talk about. It is also one of those subjects where a new photographer will hear a lot of conflicting information regarding what is right or what is wrong. The perspective that I am going to share might be a bit different than most. First, let me tell you a little bit about myself as I think that will help shed a little bit of light regarding my thought process.
I have been in business as a full time photographer for 12 years. For the past six years, I have had a large natural light studio in Downtown Chicago. Chicago is the 3rd largest city in the United States. I have been servicing the high-end market in my area for the past 10 years. I also specialize in children’s photography. This means that I do not take on any other genre of photography. Those last two points play an important part in how I personally choose to price. In this article, I am going to list ideas that are universal to those in any market. I am going to avoid listing actual figures because what one should charge in New York will be drastically different than what one should charge in Alabama. The cost of living is drastically different.
So lets begin!
Where to start
There are a few things a photographer should take into account when they are choosing their pricing. First, you must remember we ALL must begin somewhere. You have to think about a few of these key points…
- What are your expenses?
- How much do you want to make?
- Who do you want to service? ( your target market)
- What does your work look like?
- How long have you been in business?
- Where do you live? (small town vs. big city)
The first thing I like to ask photographers is: “ What do you want to make per year?”
Starting with that figure helps you figure out if you are charging just right or not enough. Once you have a figure in mind you will need to start subtracting expenses. Even if you do not have a physical studio location, the money you make will never be purely profit. You will need to think about subtracting things such as…
- Your time
- Phone, cell phone, monthly costs
- Camera(s), lenses, lighting equipment
- Editing software
- Professional services: accountant/attorney
- Product Costs
- And much, much more…
Before you present your pricing to the public, you will need to tally up your expected expenses, and subtract that from your profit. In the beginning, you’ll need to make guesses and estimates for some of your expenses. That is why most businesses do not turn a profit during their first year. So you will raise your prices a bit as you find your expenses rise as well.
One pitfall that new photographers make is they think only in terms of profit. They do not think in terms of expense.
Now you need to think about mark up. How much should you mark up your product? First, you need to figure out what your tax rate will be so that you will know how much to mark up your products.
So lets take it step by step….
- How much do you want to make per year? When I started my business, I came up with a figure that I wanted to make. Everyone has their own figures, and your figure is your own figure. There are a LOT of variables that go into choosing a high figure, or a figure that is on the lower side. The important thing to remember, is your figure is correct…because it is your own. Remember, we all have to start somewhere. However, on the flip-side, if your figure is on the higher side, knowing this info upfront when planning your price list, is an awesome way to help you figure out what to charge. When I started, my figure was on the high side. However, I purposely chose to choose a high figure. I only mention that to say that no figure is too lofty if you plan, and price yourself appropriately!
- What are your expenses? Write down everything that you will have to pay for and tally it up. This is a very important step. You want to make sure that your expenses do not exceed your gross. One of the main reasons many photographers go out of business shortly after they start is because their expenses greatly exceeded what they bring in. You also want to make sure that you aren’t just breaking even. If you’re charging too little, you will find you’re working for basically nothing. You will be paying out any money you bring in.
- Now the part that starts to confuse photographers is actually pricing the product. Many new photographers simply can’t understand the market percentage of say an 8×10 print when it only costs them $5 to buy. To many photographers pricing an 8×10 at $35 when it costs them $5 to buy sounds like a crazy mark up. You know what many do not factor in to that price? Your time. Even if you are just snapping the shutter, and you’re not editing anything, you still need to factor in your time for creating the image. If you are someone who just sells digital images, then you would still perform the same task. You should price your time in each image you place on that disk, and price the disk accordingly. Many photographers sell CD’s for $200 dollars, and those disks contain about 100 images on there. Guess how much you’re selling each image for? You’re selling each image for $2. What if you sold a disk that contained 10 images for $200? Then each image is being sold for $20. Doesn’t that sound like a better profit? I am not against selling digital images as long as they are priced for profit. Making $2 an image is not a profit, and a beginner photographer can most certainly charge more than $2 an image. You’re worth more than that!
- Next comes one of the most important factors in the pricing game, your target market. In the beginning, we all look at what other photographers are charging to help us know what we should be charging. Next we think that we are too new in the photography game to charge enough to turn a profit. Next we look at what WE would pay to determine what we should charge other people. All these tactics are incorrect in my opinion. You need to define and then research your target market, rather than what the masses charge. Currently, my session fee is $375. When I began, I charged a mere $85 session fee. I found it hard to really know if my work was good enough to command higher prices, and I felt future clients wouldn’t pay someone who was new any more than that. In the beginning, I felt an $85 session fee was VERY high! I was able to see if my work commanded clients. I was able to see what products sold. Once I felt confident to dramatically raise my prices, do you think those in my original target market would pay that? No they wouldn’t. So once my prices began to raise, I had to change markets.
High-end/low-end – photographers for everyone:
There’s a lot of “high end vs. low end” pricing talk in the photography industry. I am not a photographer who believes everyone needs to be a high end photographer. I do believe that there is a market for everyone. The photographers that learn and recognize how markets work are the ones who turn a profit and who succeed. I learned about market behavior very, very early in my business career. Back to the high end vs. low end mantra, remember that you can’t sell a Mercedes in a lower middle class area. Just as you would have a hard time selling a Kia in the upper class areas where the 1% of America lives. Perception is reality, and you need to price yourself amongst those you plan on servicing. There’s business in every sector of the market, so never raise your prices to what is considered high end in your area if you aren’t planning on servicing that market.
If you find yourself saying that no one in your market will pay a lot, then you’re probably right. Just make sure you are turning a profit based on the information I listed above. If you are interested in making a higher profit, then you will need to change markets!
Let’s say you’ve already started, and now you’re ready to raise your prices. What should you raise them to? If you find yourself in that position that I firmly believe this is a marketing issue FIRST. If you don’t know who you want to service then it is impossible to know what you should raise your prices to. The very first thing an intermediate or advanced photographer should do if they find themselves ready to make a significant price hike is to find out who they want to service, and how they will gain their attention. There are other things that weigh into your prices such as your current clients and how/if you want to maintain them. It is inevitable that you would lose some of your current clients, in order to gain new clients with a brand new price list. However, pricing at the intermediate level and the advanced experience level would require a new blog post as there are a lot of things that factor in besides the prices you choose. Marketing plays a huge role.
Hopefully this blog post can help your thought process as you begin to plan your price list. Its important to have the proper frame of mind in order to chose the proper pricing. What questions do you have? List them below so they can be addressed in future articles.
Audrey Woulard, the author of this article for MCP Actions, is a 100% natural light photographer based out of Chicago, IL. She specializes in children’s portraiture and commercial children’s works. She shoots out of her 2200sq natural light studio in Downtown Chicago as well as on location.