Starting a Photography Business Pricing Your Services
Whether you are a freelance photographer or have your own photography store, you will be providing goods and/or services to clients. More likely than not, there will be businesses out there who offer very similar or even the same thing that you you do - unless you have come up with something so new that is unique to your company (your Unique Selling Point or USP). One of the ways that you can compete is with price. This has to be carefully thought out before any decisions are made. If you set your price too high, then you will be unobtainable for your target market and customers will look elsewhere. Set your prices too and you may get the penetration into the market that you want but you may find it difficult to raise them. Furthermore, you will be operating at a loss which is never a good idea for a business especially one that is just starting out.
So what should I consider when dealing with pricing of my products and services? Well depending on what type of photography you intend to pursue, this can vary. However, there are some basics that you need to cover. They are:
- Daily fee - how much you will charge in order to pay for your overhead and have enough left over for a decent profit. If you deal with events such as weddings, then you may charge this or an hourly fee. But you will have to agree on this before any contracts are signed. You may choose to use both but make sure that this is clear. You may wish to add a creative fee on top of this.
- If you are providing the photographs for an advertising organisation or magazine, then you can charge a fee depending on how and when the picture is used. This is known as a usage fee.
- Any reasonable expenses that you will incur during an assignment should be added to the calculations when determining what prices you will charge for this. Again, this depends on the type of photography you choose to specialise in. If you are required to travel, then these can be added also.
Royalty vs flat fee
Each of these has their advantages and disadvantages. With a royalty-based package, you continue to make an income from your work long after the initial project may have expired. However, the up-front price may not be the highest. A flat fee means that you get all your money pretty much at the same time (or within a short/specified space of time) but then that is it. For example, if you are hired to do a wedding, then you can charge a flat hourly rate in addition to any of the photographs that have been ordered. In order to guard against being left out of pocket because of last minute cancellations, then make sure you have in place a non-refundable deposit of about 30-40% ( I do not know about these things or what the industry norm is with this, but I am happy to be put right). Or they could cover at least half the hours that you would have worked plus a set of prints (depending on how many they had ordered).
If you have taken pictures that are going to be used as stock photographs, then they are priced per picture. There are some key factors that determine the price. They are:
- How unique the photograph is
- What kind of rights are being sold
- The potential audience it will reach
- Whether the price range is okay for the person buying the picture
A picture that is being used in a magazine with a circulation of 500,000 will be different to a picture that will be used for a picture dictionary of 10,000.
As a freelance photographer and/owner of a photography business, your pricing strategies and objectives have to at meet the most basic profitability plans. One of the main reasons why businesses fail is lack of cashflow. You can be profitable and not have sufficient cash to stay afloat. If you plan this area correctly, there is no reason why this should become a problem. The rest of the article will be done in a question and answer style. This is my answer to being creative in this mini-series. So I hope you enjoy it.
What does price affect really? Apart from profit and cashflow, it affects your future business growth and turnover. Furthermore, it affects people's perceptions of what you have to offer. A bad pricing strategy is bad for business and bad for you.
Isn't price the only way small business can compete with large business?Not necessarily. Because large and/or more established companies can absorb price cuts better and may be able to undercut small businesses to a scale they may not be able to manage. The best way is to have a further dimension to what you offer. What that is depends on your market and your goods/services.
So what do I need to know?The magic word is research. Find out what the industry standard prices are. Check for lower and upper limits and determine where you will place yourself on the price ladder. You may bit get it right first time (trust me, I got it very wrong on my first paying writing project. It is a mistake I made once). Make sure you know how much you need to spend and how much is pure profit. Be realistic but slightly flexible too.
What does photography offer?Creativity. Customisation that is lacking in bigger companies. Being involved in a wide range of projects and events. Yes it is hard work and yes it can be expensive especially at the start but getting the key elements right will see you right in this industry.
So there you have it. A brief overview of the importance that price can play in your photography business. It is easy to get carried away and leave this to chance. You do this at your peril. Take a little time and you will reap the rewards.
Take care and God bless readers and budding entrepreneurs...
© Ngozi Nwabineli - September 2009