We all love the art of photography and the technical challenges of capturing the essence of a scene or person. However, at some point each of us wants to make money from our talents and creative hard work because — quite frankly — this stuff is expensive! You need to get a grip on how to properly price your photography. It's essential whether you want to fund an equipment upgrade, attend a dream workshop, earn some extra money on the side, and especially if you want a soluble business.
Since every one of us is pursuing different kinds of photography (weddings, photojournalism, portraits, commercial), I won't get into many specifics about pricing for weddings vs. pricing for real estate. However, like all businesses or any part of your life where where income and expenses interact, they operate on the same principles. I will cover some basic economic and business principles and give you some tips on how to widen those profit margins so you can get back to what is important to you.
Determine What Is Important to You
This is an often overlooked yet crucial question photographers and entrepreneurs need to ask themselves. Being brutally honest with your answers as well as digging deep can prevent you from wasting literally years and a lot of money on pursuing something that isn't actually part of your goals. Ask yourself the almighty "Five W's": Who, What, When, Where, Why.
The most important of these questions is "Why."
Why are you doing this? Why are doing this particular form of photography? Are you doing it for money? Art? The challenge? Power? Fame?
From this question will flow the answers to the others. The goal is to decipher your objectives not only within photography, but also in your life. You can figure out not only your goal, but also what you have been doing to achieve them. By asking these questions, prevent [any more] wasted time and energy.
For example, if spending time with your family and friends is what you really enjoy, then becoming the official photographer for your country's president/prime-minister isn't the wisest choice. If you want to be a great nature photographer, shooting indoor portraits isn't really going to help.
As a business person, or just someone who doesn't want to go broke every time they buy new gear, you need to be very clear and honest with yourself about your ends and means. Know What you're doing and not doing, and what/who really matters.
The economy is driven by various economic forces and depending upon which school of thought you subscribe to, it will vary. However, the most common force is supply and demand. At the very basic level, this principle states that price of goods and services is related to its availability to and demand from the consumer.
Depending upon the product (a good or service) and its demand, the price can inflate or deflate. If something is in high demand, then the retailer can charge a higher price for their product. Otherwise, the price usually drops. If the product is in short supply — either in quantity or time — and is in high demand, the price can be extremely high, but acceptable to the consumer.
A graph showing the interaction of supply (S), demand (D), and price (P). (image: Paweł Zdziarski)
Like a seesaw, the price can drop if the too much supply or if consumer demand is insufficient. Retailers will sometimes create limited time sales to counteract any unexpected or cyclical negative fluctuations in their income.
These sales typically occur shortly before or after a new product is introduced to the market. What they're trying to do is create various incentives to buy their product or service by creating scarcity, exclusivity, or affordability and exploiting consumer "greed."
Simple questions to ask yourself are:
- Is what I offer in demand? If so, how highly?
- Is this demand in my physical area?
- Is it in my area of expertise/interest?
- What is the going price for your type of photography?
- Is what I have to offer actually in demand?
- What is the longevity of this dynamic?
- And is it volatile?
In closing, prices are driven by supply and demand.
Upgrades like this can cause a severe shift in your cost-income relationship. In order to compensate, you may need to increase your pricing. (photo: Daniel Sone)
Once you've gotten a handle on the market for your photography, it is time to start determining your cost-income relationship. It is this relationship that is the other half of your pricing structure and determines your profit and profit margin. If you don't know how much things cost, then you don't know how much to charge and how much money you're making. This part is as important as knowing the economic forces that drive and affect your market.
In business, pretty much everything costs something. And when determining your expenditures, overhead, and investments — that is cost — you'd be surprised at how many things you will need to factor into that equation. A lot of photographers, especially those just starting to make their hobby a money-maker/business only factor in the cost of equipment, travel, and materials. They tend to forget other things like time, shipping, and additional training. And although that roll of tape you use is inexpensive, it is an expense nonetheless.
Here is a list of items you need to consider when seeing how much photography is costing you:
- Photography Equipment (cameras, lenses, cards, batteries, lighting, light modifiers, stands, clamps, bags/cases, etc.)
- Post-Production Equipment (computers, software, printer and inks, paper, wacom tablet, cables, peripherals, etc.)
- Communication Equipment (phone, internet, fax, notepads and pens, paper, mics and headphones, speakers, etc.)
- Travel (transportation, hotel, food on-assignment, passports and permits/visas, etc.)
- Office Management (employees, assistants, software, filing supplies, back-up media and services, desk, chair, etc.)
- Insurance, Accounting, Legal (liability, taxes, damage insurance, attorney, etc.)
- Marketing and Branding (website/blog, copyright and logo registration fees, market research, business cards, promotional materials, etc.)
- Shipping and Packaging (stamps, delivery fees/memberships, tape, boxes and envelopes, third-party fulfillment fees, etc.)
- Maintenance and Continuing Education (equipment maintenance, health, gear/software upgrades, workshops, educational books, etc.)
- Time (editing, consulting, traveling, educating, shooting, researching, personal work, etc.)
This is a daunting list with subcategories galore, but if you really want to find out how to set your pricing, you need to know your costs. One of the most important things a photographer can do to decrease costs, and therefore increase profit, is to be efficient every step of the way. The time you spend doing anything related to your photography or photography business should be a profitable and well-invested endeavor.
Time is Money (Benjamin Franklin)
So, once you have the dollar amount for your expenditures, simply subtract it from your income. The degree of difference, either positive or negative, is your profit margin. So, if your profit margins are very close, then you either need to increase your prices or decrease your expenses. If you want to increase your overall profits and margins, you'll need to do both.
Gross vs Net Income and Profit
This is a simple concept, but it needs to be understood. Gross income is the money you make before your expenses take effect. Net income is the money you make after your expenses have taken their chunk. A great example is the weight of a box of cereal. It has a gross weight and a net weight. The gross weight includes the packaging and cereal, while the net weight is just the cereal.
(photo: Daniel Sone)
The most relevant example is how much a client pays you for a session. Say the client pays you $2000 for a session (gross income). Sounds like a lot of money you're making there! Well, no.
After you factor in how much your equipment, time, travel, materials, shipping, and rentals, that $2000 check gets dwindled by that amount. What's left is your net income.
If your net income is greater than your expenses, then you've made a profit!
Outside the world of business, profits are called "disposable income." That's the money left over after you've paid your bills, taxes, and other living expenses.
Cost of Doing Business
All these things are called the "cost of doing business," what it costs you to do what you do.
Your prices need to cover those costs and give you something extra to grow. This is a great way to see if what you're making is sufficient to achieve your goals as well as make those adjustments to do so. Perhaps you don't need to go to the coffee shop so often. Maybe you're renting too much equipment. Is your post-production workflow very slow?
A few years ago I calculated what it cost me every time I pressed the shutter of my camera. It didn't matter if it was for work or play. My camera didn't know the difference, so I didn't consider it. I took the total cost of my gear (cameras, lenses, computers, software, etc.) combined it with the average cost of my travel (fuel, tolls, etc.) and then divided it by the shutter life of my camera.
Identifying this can help you say to yourself "I need to charge more" or "I'm spending way too much."
Types of Photography
Before we get into an example of how to price photography, we do need to understand that different kinds of photography have different requirements and therefore different costs and what you can charge. Each type of photography (wedding, fashion, portrait, news, event) has different requirements and you need to know them. A news photographer usually doesn't have the same deliverables, timeline, or costs as a fashion photographer. If you're shooting for your local daily paper, a charge for an 8-ft softbox rental most likely won't be there.
Here are some common charges different photographers would impose. I'm leaving out the common stuff like cameras, post-processing, and digital delivery (FTP, hard drive, or disk):
- Fashion: studio space, lighting and grip, assistants, make-up and styling, wardrobe, casting, retouching
- News/Photojournalism: travel, lens rental, licensing fees, guides and translators, room and board
- Landscape: travel, equipment rental, guides, prints, framing
- Wedding: travel, equipment rental, assistants, hotel, prints, albums, slideshow, retouching
- Portrait: studio space, travel, make-up and styling, wardrobe, retouching, prints
Photographers who combine different fields such as "commercial wedding photographer" would have longer lists for their expenses since their style's gear and personnel requirements take cues from whatever they're trying to incorporate.
For me, I do wedding photojournalism and therefore my gear is closer to what a news photographer would bring to a story. However, whenever I do any stock or commercial work, my invoices look closer to what a fashion photographer would present.
I remember when a 4x6 cost $0.05. Now, it's closer to $0.30. And that's just for the paper! (photo: Daniel Sone)
Since there are tons of ways to approach pricing, we'll look at something most of us provide to our clients: prints. I'm using prints rather than "creative fee" because it is a tangible product with clearly defined costs.
Pricing on prints vary widely between photographers and there are several reasons, but by this point you may understand why and why you may be able to — or need to — charge more. In either case, let's take a look at an appropriate way to price a print.
First, let's remove the consideration who your client is and what the print is for. You won't charge grandma the same price you'd charge a Fortune 500 company. You'd also charge one price for a wedding and a different one for an ad campaign.
Secondly, let's also remove any usage and rights you'd license to your clients. This can also vary dramatically from case to case.
After you've factored in your overhead for a project you need to determine how much you will charge for your prints. There are a few ways you can go about this: self-fulfillment and self-printing, self-fulfillment and lab-printing, or third-party fulfillment and printing.
Depending on your budget and the amount of time you can devote to this portion of your business one of the three options will fit you best. Personally, I have a combination of a third party handling the whole thing and an option to self-fulfill with lab printing. With either option, it costs money to print and I need to charge my clients appropriately to make sure either choice is profitable.
So, let's take a simple 8x10" sized-print on professional paper without any special finishing, lab color correction, or any extras. A simple, direct print. The average price between the various vendors I use for both personal and professional work, is about $0.50/print. If I simply charge my client $1.00, I have doubled my income, right?
No, not at all. In fact, I'm way deeper in the hole than that.
Typically, there is a "minimum order charge" and this usually exists because it is not profitable to the lab to process any order less than the established minimum amount (usually $5.00). So, if I simply buy a single print, it cost me $4.50, not including shipping. And if my client buys a print for $1.00, I'm still underwater at least $4.00. This is not good at all.
Other costs may be a "processing fee" that your lab or online gallery may charge to process your order. This can range from 2% to 22%, depending on the vendor and what you have them do.
Once you see the big picture, it becomes clear that the simple 8x10" print isn't really $0.50 and therefore you cannot charge anywhere near that in order to break even or make a profit. At the end of this arithmetic, that print could be as much as $6.71 (plus S&H). And that isn't factoring all the production costs you incurred to take the photo and the post-production to finalize it for printing. But this is a good start, we now know this popular print size has a baseline cost of $6.71.
How did I arrive at this number?
I took the vendor's print cost ($0.50), added the minimum order charge ($5.00), and a 22% payment/order processing charge.
It is a good idea to charge for the higher end of your costs because it will give you the flexibility to address fluctuations between vendors, shipping costs, and projects. Whatever the case, your pricing should enable you turn a profit with a wide enough margin to be stable. If your margins are too close, then all it will take is a few oversights to put your ledger into the negatives. A good rule of thumb is to keep a margin of approximately 30%.
In short, every sale and client project you should pocket 30%. If all goes well, that 30% is all yours and if it doesn't you could use that buffer to cover some mistakes.
So, what does that mean in the case of an 8x10" print?
Well, we have a baseline cost of $6.71 for the piece of paper itself. So, if we add 30% to that, we get $8.72. So, a profitable single 8x10" begins at $8.72. But is a nearly $9 print worth it to those of us that wish to have a sustainable, profitable business, purchase new gear, or invest in education in a timely fashion?
No. It is not.
If a client only buys one print, we've only made $2.00. It could take a while before we could buy anything more than a ballpoint pen. So, we have to actually charge more than $9.00 for an 8x10" print. As I have stated before, we have to consider how much we spent to produce the images, market forces, and our skill level in order to pin down a price for a product. Adding that in is the tricky part. Each of us is different.
Missouri-based wedding and senior photographer Sal Cincotta once said that if you're charging less than $35 for an 8x10" print, pack it up and get out of the game because it isn't sustainable. At first I disagreed with him, but then I started looking very closely at my office, vendors, and life expenses. I realized that the materials and time were costing more than I thought and that my margins for weddings, portraits, and related work were too close for sustainability.
In order to keep my business growing and be able to properly service the next client, I had to adjust my pricing. I don't charge the $35 Cincotta recommends, but what I do charge for prints and photography is significantly more than before because I realized a print costs more than the paper it's on.
Hopefully, this article helps you learn the truth of the cost of your photography and gives you a pathway for pricing properly. The biggest money-making act you can do is find out your costs and reduce them, especially in the time department.
Time is money and the hours spent using an inefficient strategy could be costing you thousands and making your hourly wage less than someone working fast food. This isn't the most enjoyable part of photography, but aside from a lucrative 9-to-5, a rich relative, or winning a sweepstake you won't be getting to the next phase easily.