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5.1 Pricing Commercial Jobs

You’ve got the basics down now, but what about getting paid? In this lesson we’ll cover how to set your pricing, figure out budgeting, and make sure you have the cash needed to keep your business running.

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5.1 Pricing Commercial Jobs

In the last lesson we talked about the importance of post-production in your work. In this lesson we're going to talk about how to price yourself, so that you can run a profitable business and have good cash flow. Now the number one thing to remember, is you can not just take a price from your competitors. You need to do a little bit of hard work first, to be able to come up with a pricing model that works for you. If you take a price from your competitors, several things fail. First of all, you don't know if that competitor is actually profitable. They may be doing a lot of work and they may be out of business in a year. You have to make sure that you're running a profitable business for you. Secondly, they may have very high prices and you don't know if they're actually getting work. A lot of what they may be doing could be different from their website or their prices. And they may not actually be getting the amount of clients that you think they're getting at that high level price point. Stealing from a competitor's price list, always bites you, so just don't do it. A little bit of hard work and I'm gonna show you how, in this lesson, can get you a proper pricing model so that you can run a profitable business. So the first thing that you need to figure out, is you need to figure out what is your minimum subsistence level. So what is the minimum amount of money you have to make every month for you to continue living, and continue doing commercial photography? How I do that, is figure out what is the max amount of clients you can shoot. Let's say you're shooting bands. If you're shooting bands, what's the most amount of bands that you can shoot in a single month? If you figure figure out, for the amount of time it takes me, I can only shoot ten bands a month. So what your minimum level should be, is the amount of money you need, divided by the max amounts of shoots you can do. So if you need 4000 dollars every month and you can shoot 10 bands every month that means that your minimum level, that you absolutely have to charge, It's $400 per shoot, per band. Let me go over this one more time, in equation form for the visual types out there. The amount that you need, represented by the dollar sign, divided by the max amount of shoots you can possibly do, M equals the minimum amount of money that you have to charge, in order to subsist. So I figured out for my business, I can't do a shoot that is under $300. Now there are three exceptions to this rule, the first exception, is I have an in studio set, where people can come in and just get one headshot. It is a very quick, 15 minute session, there's no retouching involved, and they just get the one shot. That, I can charge below my minimum, because it's very low inconvenience for me. The second is when you're helping out a friend. If you have a friend, that you really want to help out and what they are going to pay you is slightly less than your minimum, that's up to you to decide whether you can help that friend out or not, but I do make exceptions for some of those close friends. And the third exception is personal work. I do not get paid for personal work, but remember, if we go back to the other lesson where I talked about this, there is a difference between free and personal work. The next important bit is you have to budget, I like using this piece of software, YNAB, or, You Need a Budget. You Need a Budget is different than other accounting software that you may already be using. I do use QuickBooks so I can send everything to my accountant at the end of the year. That is the best and easiest way to keep everything straight. But You Need a Budget is different, where you can plan out where the money is going to be spent before you spend it. Versus in QuickBooks, you're just keeping a record of what got spent in what category. So, the best thing that you need to do, is you need to budget just like you would budget your personal life. Your business is no different, it took me a couple of years to figure that out. And for a long time, there was just no profit, a very long drain, and it just sucked all the money in my account. And it sucked my energy out, and I just couldn't do it anymore. So, once I implemented a budget, I set aside a little bit from each job as profit, as payment to me. I set aside a little bit for the equipment upgrades and repairs that are eventually gonna be needed, as well as extra for taxes and extra for cost of goods. The rest just went into a fund that covered all the operating expenses for my business. Something as simple as this, or as complicated as using a piece of software, like You Need a Budget, which really isn't that complicated, but still more complicated than the method I just described. Whatever works for you, you do need to set some sort of budget, so that you know the money coming in isn't just leaking out. When you have control over that, then you can decide when you're profitable. It really is easy enough to decide to be profitable. Creating a budget, a budget is really just a plan for your money. When you create a plan for your money, then that money works according to what you want it to do, instead of seeping out the corners and disappearing and you don't know what to do with it. The next important piece of advice, is to save for rainy days. This is a graph showing my actual income from last year. You see there's that one month dip in the middle, I made a grand whopping total of $27 that month, yes, $27. It's not that I wasn't getting clients, it's that all the work that I shot during that month, was either a wedding, in which case they paid me many months before, or it was commercial work, where I did the work that month, and then I had to invoice for it, and I got it the next month. So that month I made $27, but the month directly after that, I made $11,000. This is very common, there are going to be seasons in commercial photography. There are gonna be times where you're not getting paid, there are gonna be times where you're working really hard and you have to wait a month or two to get paid. There are gonna be times where there are just no clients, and there are gonna be times where you're working seven days a week. You have to average out your budget. So if you're making $11,000 in one month, and zero in another month, then you need to average them out and create a budget that works for you. So that you're good months are saving up for your bad months. Here you can see, I prepared a sample invoice for you. When I'm creating the commercial invoice, what I like to do, is put a Creative fee and then line out all the items. I don't do this for weddings, weddings are It's our flat fee, and then you just package everything into that, they know what their getting. You don't have to line out this item cost this much. For commercial photography, you do have to itemize and create those line items. So what I like to do, is I like to put the Creative fee first, and the Creative fee is the only thing on the invoice, that is nonnegotiable. Whether you're doing an hourly rate, or a flat fee, that is nonnegotiable, that is the cost of having your talent and skill and vision. So, whether you decide to do flat fee or hourly, doesn't matter, first is the Creative fee. If you do decide to do hourly, then maybe the amount of hours is negotiable, but that hourly fee isn't. Or if they're giving you a lot of hours, than maybe there might be a volume discount. But however you decide to work it, that creative fee, that is your money. The rest of these are just covering expenses, yes, there may be a bit of a markup, but it's just covering expenses and most of this is negotiable to the client. If we're not lining up on numbers, we can strike something off and lower their budget for them. So, I have a copy of that same invoice here, and I'm going to be going down it and working you through all of the items that I put on my invoices. As I mentioned, first is the creative fee. Creative fee is your price for your talent, that's the non-negotiable part. Next is assistance. If you feel like you absolutely need assistance, they say we don't have the budget for that, you just know, no assistance, then that can be something that you bundle into your creative fee. Make your creative fee a little bit higher, don't put assistance as a line item, and hire assistants as you usually would. I have had videographers that, they had a small budget for photography, and they brought me in and actually paid me more than what the client actually had budgeted. They brought me in to do photography for their video projects. The next line item is Travel. This covers any airfare, taxis, car rentals, whatever it is, if it is a local shoot, in your city, I still suggest that you put a travel fee. Look up whatever the government recommended travel fee is, cost of maintaining your vehicle. In the US, that's generally in between 50 and 65 cents per mile. So, that is a very small fee, that when you're just going short distances, could be $10 or less depending on the project. Or you don't want to nickel and dime them, you can get rid of those $10 fees. But travel does add up, so remember to itemize it, if it is a significant expense. Next is Scouting. So scouting could be very important, or it could be an item that's not even on here. If it's something that I'm doing out of town and I need a scouting day, because it is a several day long shoot, then I will use that preproduction day, that scouting day, at a lower hourly rate. I'm not using any of my equipment. It's just my time, so there's no wear and tear on gear. Just the time of me and looking around trying to figure out what it is. If you have someone that you trust, they can do the scouting and pre-planning for you, and you can charge accordingly. Next is Disposable Materials. Disposable materials is anything, that after the shoot, you can't really use again. So if I have to buy batteries, then those batteries will be a disposable material. Now the $200 Anton Bower batteries, that I use for for my lights, those are not disposable material. I'm talking about, you know, double A's, triple A's, small watch batteries, anything like that. Those are disposable expenses, that they are buying that and paying for that item. The other thing that happens a lot, that is a disposable material, for me, Is seamless paper. So I have a blue, seamless paper behind me but whenever a client requests that they have a seamless paper, they are paying for the roll. So whether it is a small product shoot and it's a $20 roll, or whether it is a big seamless like the one behind me and it's an $80 roll. They are paying for the whole roll. Yes, I understand I may only use a third of it, I may use two thirds of it, but the client is paying for that roll. Next is Gear Rental. If you need to rent any specialized lenses, such as a tilt shift or super telephoto, this would be where you would itemize that. If you're doing video and need multiple cameras, you can put those in as well. Or even if you have a Steadicam, this is a very popular line item for video. So even if you own the Steadicam remember, these things are expensive. Steadicam operators rent out their Steadicam along with their time. So even if you own something, you can still put in a gear rental fee, If you own it, then your camera has a life. After you have so many exposures your camera will die and need to be replaced. Part of this equipment rental fee goes towards, just the wear and tear on your equipment and replacing broken equipment after it's been used up by all of your clients. The next item here is Per Diem or Catering. This is usually something that I leave off single day shoots. But if you are going to have a large crew, then this could be something that you absolutely have to itemize for, because you need to make sure, on an eight hour day, your crew's at least getting lunch. But on a multi day shoot, per diem or catering, so that everyone on set can eat, is very important. When I work on personal projects or projects where everyone's volunteering their time, let's even say that you're working with a non-profit. If you're working with a non-profit, then the gear rental stuff might be donated. Your time might be discounted. A lot of things on here might be struck off, but the one thing that you absolutely can't get usually can't get for cheaper or free is food. Food costs money. It will always cost money. It doesn't matter whether you're a non-profit personal project paid client, food's going to cost you money, so you need to charge accordingly for it. The next slide item here is Digital Storage. So personally, I charge $1 per gigabyte for digital storage. Whenever I buy a storage, I can usually get a terabyte for about 30 to $35. But this digital storage fee, the $1 per gigabyte, covers memory cards, multiple hard drives, my online back up plan, as well as all the time it takes to make sure all of these are working and up to date and backed up, so that you never lose an image. These things take time, and that helps cover the time. It also helps the cost of, like I said, those memory cards and multiple hard drives, as well as just the space that all these hard drives take up. If I'm doing a photo shoot, just photos, chances are that's usually in the $20 to $50 range, cuz even if I do shoot raw the entire time, and do really big PSD files, I'm usually not getting more than 50 GB per project. However, if you do a week of 4K footage for a TV show, then you're going to have terabytes upon terabytes, and then this digital storage, is really going to cost you if you don't itemize for it. And the last line item on here is Editing Time. If it is a shorter shoot, such as a headshot session, then usually the editing time for me is included within that Creative fee. However, if they're asking for one of my fantasy style artworks, or if I'm cutting together a video, it's really important that you include editing time in your invoice. Because if you don't include editing time in the invoice, you're spending a lot of time on the computer, where you're not getting paid, but you still have to do it. So, whether you're outsourcing it, or whether you're doing it yourself, remember to get compensated for the time it takes you to edit and hand over final image delivery. So, now we've gone over how to build a price list that works to meet your minimum, by itemizing everything and create a budget that covers for those rainy day months, when you're not getting much, by compensating for the big ones. in the next lesson, we're gonna take a look at client relations and how you can keep and maintain those happy clients.

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