The Business of Photography

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The Business of Photography

111 Understanding Licencing and Usage

A reader sent in a series of questions which we've asked Ian McKenzie M.Photog, Hon FAIPP, FAIPP (previous AIPP National President and member of the AIPP's Commercial Committee) to respond.

The reader is a commercial photographer who specialises in jewellery photography, but the following answers apply to commercial photographers widely, and to all photographers generally.

Q1: What are the industry standards for charging?

A1: There is no standard. However, there is a way to work out what you need to charge, but it's a long answer. Following are some ultra short ‘rules of thumb' for small (photographic) business management.

Most small businesses which fail do so in the first three years of their existence. The reasons for this are many, but the most frequent is undercapitalisation, hand in hand with extravagance, resulting in the gradual loss of liquidity in the business as clients use you as a bank, commissioning work for which they don't pay on time. In other words, hire you to shoot a job and then take a long time to pay you.

This is a very common experience for emerging photographers who are convinced by clients that they are doing you a favour by giving you the work. The old chestnut, "Do this one cheap and there will be lots more next month" is rife in this area of the market. Don't bother; you're only shooting yourself in the foot by doing these jobs cheaply.

Try to spread your client base so that no single client is more than 30 percent of your work. If one of your large clients goes away (and they often do, for all sorts of reasons), your business won't be crippled.

At all times you should try to maintain a three month buffer in the bank, so that if the work stops, you don't go down with it. With all your commitments, can you live for three months on your bank buffer (savings) and keep up the regular payments?

Don't borrow to buy your basic gear - the gear you need to do basic jobs. This way you should be able to keep operating even if the work slows down. If you hire purchase or lease your essential equipment, and you can't keep up the payments, the financier will take your equipment away and you're out of business.

So, now we look at pricing - how much you need to charge - and pricing begins with a budget. Set out below is a very simple budget for a photographer starting out. You should look at this and change the suggested figures to suit your circumstances if necessary, but be realistic. If your budget isn't realistic, the answers will be totally meaningless.

This budget assumes a photographer working from home with a small studio/garage space, an office with computers, phone, internet etc, a car, and doing your own bookwork, with no dependants (family or staff).

Rent (shared as part of house)       $8000
Phone                                                       $4000
Car (CHP, 4 year contract)                 $8000
Equipment lease ($25K/4 yrs)            $6000
Insurances                                             $3000
Electricity / Gas / Water                    $1500
Computer system and software     $3000
Internet broadband                            $1000
Fuel, car running costs                   $11000
Tax accounting, annually                  $2500
Wages (self - gross before tax)   $50000
Incidentals                                             $2000
TOTAL                                                    $100000

The best way to make a small fortune out of photography may be to start off with a large fortune. If you run a business just to cover your budgeted costs, you should still aim to make 10% net profit, making the aim point $ 110000.

Based on a working year of 45 weeks, assuming four weeks holiday and that extra three weeks in the year when the clientele is on holiday in their heads ( usually December/January), we have the following calculation :-

$110000 / 45 is $2445 per week required to earn a basic wage and cover overheads with your profit margin as insurance.

So if you were to work 1 full day per week, you would have to charge $2445/day or $305/hr for 8 hours;

If you were to work 2 full days per week, it's $1223/day or $153/hr for 16 hours;

If you were to work 3 full days per week, $815/day or $102/hr for 24 hours.

A lot of people will be able to work three days and charge that $815/day, but this also underlines the necessity to be able to claim back your expenses as well.

Do you have equipment hire costs, such as studio lights (possibly $200/day), medium format camera ($300/day), a studio ($300/day) and maybe an assistant ($250/day)? If all these are required your $815/day rate becomes $1865/day or $235/hr for 24 chargeable hours or three full days work.

Q2: How do you write out the invoice? Do you charge per shot or per hour for the photography? And is it purely your own hourly rate plus materials (as per the budget), or do you adjust it?

A2: The minimum you can charge ends up being your hourly rate plus outgoings (maybe the $235 per hour as outlined above), but it's up to you whether you present this to the client as a per shot rate or an hourly rate. Frankly, I strongly advise against the hourly rate. Using an hourly rate makes it harder, I think, to then charge usage.

If you want to look both competitive and professional, ask the client for a brief on which you then give a detailed estimate - that way you don't have the client guessing on how long you are going to take to do the job, and the client knows exactly what they are going to get, and for how much money. If you have hire costs which you need to do the job (props , unusual gear, a hire studio), you can show these separately on the invoice.

Q3: What if I spend four hours shooting, but then eight hours on digital post-production? Do you charge digital work as extra or give the client an overall shot rate?

A3: It depends on the client. Some clients like to see the breakdown, others just want a final price. You ask the client.
Now a question for you. Are you spending eight hours on digital work because the client supplied you with a less than ideal subject, or are you compensating for your professional failures? If you have shot the original capture professionally, you should not need to retouch it, except for the factors outside your control.

Many photographers look at their work and then fiddle with it in the computer without charging the client for it. This is a good way to go broke. Your creative time is worth what it's worth - my feeling is that computer manipulation should be charged at the same rate as photography.
Discuss the possibilities with the client and let them decide what ‘improvements' they wish to make to your images. At that stage they'll be more amenable to paying for your time.

Q4: In your quote/invoice, do you specify license usage terms e.g. one year usage within Australia in two media, magazine advertising and on the internet?

A4: Yes. The whole ‘secret' to client relationships is honesty and clarity.

Explain to the client ahead of the shoot (in the quote) that you charge on the basis of the end value to the client of the image/s. That way, they are not paying for something for which they receive no commercial benefit.

Q5: If your client is a magazine publisher, do you specify which magazine and what issue they can use the photos in, or can they use the images for any or lots of different magazines in that one year?

A5: You give them a single-use only - generally speaking. This means they can only use the photo once. However, there can be times when you will be lenient, depending on your existing relationship with the client, but if you are going to be lenient, be specific about the boundaries to that leniency.

Q6: On your quote/invoice, do you also state additional charges for extra time, media and territory usage, so they know in advance? How do you state this?

A6: Yes, you should state all these, certainly for an extension of time for the original usage. However, for a different usage (e.g. world-wide instead of Australia), usually you'd just state that this is subject to negotiation.

Q7: Do you split your pricing in two, one fee for the photography and a second fee for the usage rights? Do clients generally accept this? How do you explain to the client this difference? They usually believe that once they have paid, the images are now theirs to use in whatever way they can. How do you explain that this is not the case and how do you justify this extra fee they might need to pay later on?

A7: Some clients are receptive, certainly in advertising. Others are not, especially small businesses. However, as a business you need to work to a system, so you might offer different usage terms depending on who the client is.

For instance, for a small client the usage might be wide ranging and for a long time. In other words, you charge them up front (if you can) because you figure they won't pay you a second time.

I personally don't charge clients in two hits but I justify my pricing by giving them a very clear estimate of the job up front, stating exactly what they are getting for their money. As I said before, clarity and honesty are everything here, and if possible you should talk the "terms and conditions" through in the most basic language in a face to face meeting with the client when you are getting the brief. That way they won't feel they are getting nasty surprises when they get the written estimate which will contain as much detail as you feel necessary.

Generally speaking, you will get a feeling about your relationship with the client which will decide for you as to how specific (tough) you feel you need to be before you go out on the shoot. If there is mutual trust and a good working relationship, you can expect that the client will respond to your justifiable need to stay in business.

Also, bear in mind that a lot of commercial images have a ‘life' which is quite short - somewhere between a month to a year. In these cases you may well decide to give the client unlimited usage because the shot will be worthless at the end of that time, and then hopefully they'll come back to you for more.

Q8: I have specified that I have to be credited with the photography in any instance the image is used in advertising. I have just spoken to a client who has told me he has used my images in a bridal magazine. I asked if he put my name on the photos and he said no as the magazine did not allow any writing on the ad apart from his own logo. What can I do when this happens? It seems to me that if I do not chase up the clients constantly, asking how and in what magazines they are using my images, they just ‘forget' to put my name on them.

A8: This is the area of moral rights and technically they must credit you if you ask them. However, they may have terms that state they don't credit photographers and maybe you accepted these terms when you did the shoot, although in theory they can't contract out of moral rights.

There's no point taking legal action, it's a matter of education and some people simply won't do it.

However, it is unusual for a photographer's credit to be on a display advert, as you have (presumably?) been paid for the usage of the photograph in that media, but for an advertorial in a bridal magazine, where the magazine lays out the pages, then it's easy for them to credit you. See Vogue, Harpers etc - all the fashion spreads are credited. You should contact both your client and the magazine directly, in a friendly way, and gently insist. If the client is using your images without having the usage rights for that media, then either you haven't been specific about usage, or if you have, send them a bill.

Either way, don't expect a credit as a matter of course in a display ad - if you get it, it's a bonus.

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