The Business of Photography

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The Business of Photography

Being Underpriced By Your Competitors

The capitalist economy can be a double-edged sword. While it allows people to pay high prices for goods and services, it allows people to pay very cheap prices as well. Naturally, when we are purchasing we want to pay as little as possible, but when our clients buy from us...

"I recently quoted a job for a government department. I thought the person who rang to ask for a price knew very little about what she was asking for, so I asked her how she got my name. "The Yellow Pages", she answered. I asked her how many quotes she was getting and she said about eight.

"I said I was happy to quote, but I would definitely not be the cheapest. I also said she would get figures from $500 to $2000 and she seemed surprised at the range given that we all ‘would be doing the same thing'. I think from memory I quoted about $1500. The job was at a conference in a resort that cost about $350 per night. She wanted 15 board members shot on a mottled background plus a group shot, a 10x8" print of each shot (i.e. 16 prints) plus an A5 TIFF file and a JPEG, retouched and delivered on CD. The prints would have cost about $200 and the resort was 40 minutes out of town, so the best part of a long half day job.

"I didn't even bother to pencil the job in my diary. She rang the day before to say she was using another photographer and thanks for the quote. I asked her what the range was and she said I was right - $380 to $2100. They took a price of $450 from a relative of someone in the office who had done a wedding for them."

I see quite a few emails like this one from photographers lamenting the loss of a job to another photographer who has charged half as much. Or perhaps a quarter as much. Or even just ten percent! How can photographers charge so little and still survive?

Market Assessment

Not all photographers survive. Photography studios come and go and many photographers, unaware of how much they should charge to stay in business, find themselves unable to pay the rent.

However, we're not always undercut by poorly managed studios. Young photographers, perhaps still living at home and clawing their way into the profession, might agree to do a job for a few hundred dollars just to get the experience. If they can add half a dozen jobs to their portfolio this way, it makes it a lot easier to sell themselves in the future.

And some clients are well aware that young photographers can sometimes produce good results. Maybe not great results, but good results will get the job done.

In other situations, economies of scale enter into the equation. A shopping centre portraiture business with a dozen camera operators working at different locations each week may each shoot 100 to 200 sittings a week, compared to a more ‘exclusive' portrait photographer who might shoot only five or ten sittings a week. There's no doubt the shopping centre photographer could charge considerably less and make life harder for the ‘exclusive' photographer.

The problem I see is too many ‘exclusive' photographers charging less than the shopping centre studios, which makes it harder for the ‘exclusive' photographers who wish to stay in business!

The point I'm trying to make is that the economy is not designed to be ‘fair' to you. People don't have to be rational in what they do. People don't even have to make money. Most people make decisions with limited information and as long as they are happy with their decisions, they will probably continue to make similar decisions in the future.

Are You Being Undercut?

The AIPP and AIPA include a cross-section of members from seasoned professionals who still smell of fixer fumes to students who might not have learned what fixer is. And often it is the seasoned professional who is being undercut by a newer entrant to the profession. What can they do about it?

There's nothing they can do to stop other photographers charging less than they do. However, they can acknowledge their cheaper competitors and spend a little time and effort marketing their superior skills and results to the clients. Sometimes the extra effort will work, sometimes it won't (as in the email example at the beginning of the article). We have no direct control over the actions of our clients or our competitors, all we can really do is shop ourselves around until we find a client who appreciates what we do.

Fortunately, there are enough of these clients around for most of us. Individually, the seasoned professionals might feel that their market is shrinking, but if they are honest with themselves, it's probably because they're not meeting the market. Okay, young art directors can feel threatened by older photographers, but there are older photographers still working at a hectic pace. They have either targeted older art directors or learned to speak a younger language. Personality and approach to life certainly make a difference and that's something not all of us can (or are willing) to change as we grow older.

Sometimes there's an expectation that as we get older, things should get easier because we know it all. In some ways this is definitely true, but in others it just gives us an advantage if we want to take it. Photography has changed dramatically in the last 10 years. Look at what's happened to stock photography: what used to be ‘second-best' transformed itself with the internet into something that is modern, funky and definitely not second-best. Now many clients only work with stock because they find it easier to deal with than precious photographers.

Oh, sorry, you're not a precious photographer? You're always well-mannered, finish the job on time and produce superlative results - and you've never made a mistake? You probably are, but other photographers out there can be prickly to deal with and give the rest of us a bad name. And besides, the internet is instant - a client can have a photo downloaded in a couple of minutes if they want to. Match that.

Are You Undercutting Someone Else?

So, whether we're talking about advertising, commercial, stock, weddings or portraiture, there have been changes in the market that make it difficult to increase or even maintain our prices.

Let's assume there are three levels of prices - expensive, fair and cheap. I'd agree that there seem to be too many photographers who are ‘cheap' and this is generally borne out by the Benchmarking Surveys we do. Few photography studios are generating more than $50,000 wages and profit ($100,000 for a mum and dad studio) which, to my mind, indicates their prices could be too cheap.

Are you cheap? Are you expensive? How do you know? The Benchmarking Survey (the forms are in and the results are being collated as this issue goes to press), will give you an idea of where you sit in the market, but ‘cheap' or ‘expensive' is something only you can determine for yourself. What do you want to earn each year from your efforts?

I've heard photographers criticise other professionals for charging too much money. At one seminar, a participant thought it was outrageous that wedding photographers should average $5000 for a wedding. I thought the photographer making the comment was outrageous in his ignorance.
Firstly, how dare he say it is too much! Too much for whom? A Rolls-Royce is too much for me, but if someone wants to buy one, good luck! It seems that some photographers, who are probably earning a very modest income, assume the rest of the world is the same. Wake up.

Second, a wedding is a very important event. Would you trust the photography of the most important day of your life to a young kid with a point-and-shoot camera, or someone with experience? In other words, is a photographer's experience worth something to you? It won't have value for everyone, others might appreciate the value, but can't afford it. And then there are those clients who value the experience and that's what makes the world go round.

Third, a wedding isn't just a few hours in the afternoon. When you add in the time spent interviewing the client, the production and the album preparation, it's easy to spend a week or more of your time. Take out the costs of materials and your overheads, and the fact you probably only shoot 40 weddings a year and you would be hard pressed running a good studio with much less.

Can you run a good studio and charge less than $5000 a wedding. Certainly. Work from home and don't produce an album. Or run a business that hires less-experienced photographers to work for you and take a cut. Plus you'll need to do something else for the other six or five days of the week that there aren't any weddings. In a capitalist economy like ours, anything is possible. That's why our clients can find a wedding photographer for $500 if they want to.

But Do You Want To?

Here's the really important question and it's aimed at you, dear reader! Let's say you're asked to photograph a brochure. The last brochure job you charged $500 to shoot. However, for this job you've discovered the other two photographers have quoted $5000 and $4000 respectively. How much are you going to quote now?

The biggest problem we face as a profession is ignorance. Anyone can call themselves a photographer and $500 can seem like a lot of money to someone who is currently working in an office job fulltime. It also seems like a lot of money for a ‘photograph' which you can print at Harvey Norman for 19 cents.

So a photographer who charged $500 the first time is likely to continue to quote $500 in the absence of any other information.

But, if you knew the other photographers were quoting $4000 and $5000, what would you quote?

The answer would appear to be $3999 on the assumption that the client will take the lowest quote. But this isn't always true.

If the client's budget for the job is $2000, they might turn to stock photography and all three photographers miss out.

The point of this article is to raise your awareness about how difficult it is to price a job.

What Should You Do?

Every photographer works differently, and every client has different expectations and understandings of how photographers work. What we need to do as professionals is spend a little time with prospective clients and ‘market' ourselves.

People and businesses with little money can't afford us, so don't knock yourself out trying to convince them. They are not your market.

Everyone else can afford us if they see value in what we offer. If someone rings you because of an advert they've seen in the Yellow Pages, a quick quote over the phone or by email is unlikely to show them your value. This is because they've probably phoned five other photographers listed in the same directory and to the untrained eye, we all look the same. We're all professional photographers, so what ‘other information' do they have other than price on which to make a decision?

The other information can come from you. You can spend the time (if you have it) to educate them, explain what is involved and justify your prices. This is also where the marketing of your studio - everything from your advertising, studio location, dress sense, manners and portfolios - is able to show clients the value in what you do.

In the case of the email at the beginning of the article, experience will tell us that some prospects aren't worth spending time with - you ‘know' they are just looking for a cheap price. Anecdotally, people who use the Yellow Pages often have no idea about quality photography and are generally shopping on price. Of course, sometimes we're surprised because these clients end up being our biggest spenders, but this is the exception rather than the rule.

For clients who warrant a little time, spend it asking questions and providing them with feedback about what you do. Ask them about their products, their services and what they want from the job. Obtain information and provide feedback - give them examples of similar jobs you've done, why they were successful. Explain what you're thinking of, what equipment you'll use, how you'll present it to them. Explain all the things that are obvious to you, but not to someone who might not have bought photography before, or not bought from you. Build their confidence in you.

And How Much Do You Need To Charge?

Despite all the wonderful theories written by people like me, there are times that the best marketing and service won't work. We don't have control over how our prospective clients think and act, we can only try to influence them.

So, when they come back to you with a price that is much lower than your quote, or your asked to match a lower quote provided by someone else, should you do the job?

Many photographers would argue that you should walk away. In the long term, there's no point working for less than you need to meet your goals, because all you're doing is educating your client that you will work for low fees. Instead of taking the job, you should spend the time marketing to a client base that appreciates your worth and is prepared to pay for it.

How much are you worth?

How much do you want to earn a year?

Let's say the answer is $50,000. Let's also agree that you will have just two weeks holidays, so you need to earn $1000 a week, every week.
Add to this the cost of doing the jobs - studio rent or hire, camera rent, lease or purchase, software, batteries, telephone, electricity, accounting, bank fees, stationery, postage, couriers, motor vehicle, travel, assistants... And if you're a wedding or portrait photographer, you have albums, prints and framing to add in. Let's say that all of these costs add up to $100,000, or $2000 a week, every week.
You now know you need to charge $3000 a week, every week.

If you do one job a week, you need to charge $3000.

If you do one job a day, that's five jobs a week and you need to charge $600 per job.

If you do ten jobs a week, you can charge $300 per job.

Do you want to earn $100,000 a year instead? Add in the $100,000 costs and you need to charge $4000 a week. Do you want to move to a new high-profile studio that costs an extra $50,000 a year in rent. Add it in. Do you want to save $30,000 a year in rent? Move home.

It doesn't take long to see that there are many different ways of running a photography business and, if photographers are working out their prices along these lines, why there can be a huge disparity in pricing.

The photographer in the email at the beginning of this article who charged $450 for a good half day could be earning $4500 a week if he or she did ten jobs like this each week, and with a full time assistant back at the studio could be earning a comfortable income. (Mind you, ten half day jobs like that a week would send me spare - I doubt I could keep up the pace for the whole year!)

On the other hand, if this photographer was only doing five of these jobs a week, that's $2250 a week and it's hard to see how he or she would be earning $50,000 a year.

Unfortunately, what I see in the industry is that photographers are doing only one or two jobs like this a week and convincing themselves they are making good money. They ignore the time they are not working behind the camera, the time they are marketing themselves or handing out quotes. At the end of the year, there's little left to reinvest into the business or superannuation, and only a modest income.

What's the solution?

1. Acknowledge it's tough out there and that you're competing with people who are not trained in business and are offering silly prices.

2. Use every job you shoot as a marketing exercise by producing superlative quality and giving excellent service. Yes, everyone says they do this, but you must really do it. Build your reputation and a client base.

3. Concentrate your marketing efforts on the client base that is prepared to pay you what you're worth. Develop ways that differentiate what you do from the cheaper photographers. Perception is everything.

4. And be prepared to change. If what you're doing isn't working, then you're not meeting the market. Change what you're doing, or change your market.

And smile. Life could be worse. You could be an accountant! 

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