Figuring Out Pricing
Part of our "Owning Your Business" series from Jed Taufer.
What should you charge?
Appropriate pricing is a key to success. One of the most common questions in business is, “How much should I charge for my work?” It's a great question to ask as pricing yourself appropriately is absolutely essential. And although pricing can be a challenge, it’s not too bad if you keep a few things in mind.
First of all, consider how much money you need to make each year in order to support your lifestyle. This number can be a huge factor in determining what you’ll need to charge. Do you like to eat out a lot? Do you drive an expensive car? Do you have a high mortgage? If you need a six figure salary to pay the bills, be prepared to raise those prices.
Next, it’s a good idea to be aware of what your competitors are charging. That doesn’t mean you should just emulate them dollar for dollar, but it might give you some insight into what your market will bear. Don't be afraid to look up their prices online as many people post their prices right on their website. Otherwise, feel free to call them up and ask them. And if you don't want to call them yourself, have a friend do it for you. This isn't unethical, it's due diligence.
How long have you been shooting? If you're brand new, it makes sense to be more moderately priced...especially in a relative sense. But if you've been shooting for a while, it shouldn't be a surprise to anyone if your prices are higher as a reflection of your experience as a photographer. Consider the cost of education alone. Over the course of many months or even years, the cost for continued learning adds up. If you've put the time in and paid for quality education, that's worthy experience that should be reflected in your pricing.
Level of Quality
How good is your work? There's no question that this piece is
subjective to some degree. But there are ways to support a level of
quality that justifies higher prices. Certifications and success in
competition are ways you can justify higher prices based on quality.
They aren't the only way, but if your peers and mentors judge your work
to be excellent, your clients will most likely recognize it as well.
Value is based on perception.
Next, consider how you want to be perceived. Are you a fast food chain or a high-end steakhouse or somewhere in between? Your prices should reflect who you want to serve. If you want to be available to the masses, your prices can't be too high. On the other hand, keep in mind that if you want to be a low volume, high-end brand, there are some people who will not consider you unless your price point is at a certain level. Value is based on perception, and if you are known as "cheap", there's a significant segment of the market that won't consider your services.
Cost Of Goods
An extremely important factor to consider when structuring your pricing, is your Cost of Goods
(COG). This is basically the sum of your labor and materials cost.
Estimate your time spent on the entire client experience. Include
everything from the initial inquiry to the delivery or pick-up. Examples
to include are the consultation, the actual session, culling, editing,
and the sale.
If you are doing all of it yourself, consider how much it would cost you to pay someone else. If it takes you 6 hours to do everything through a sale, and you've determined that you need to make $25/hr, then you'll need to make $150 just to cover your labor up to a sale. If something like this is the case, you may want to charge $150 for a session fee. That way, at the very least, your costs are covered before any product sales are taken into account.
Then, consider your hard costs, markup, and labor for each product you sell. Calculate everything that you pay for each time you sell a product. If it’s an 8x10, how much is the print? Are there shipping costs? Do you package your prints? What’s involved in that? How much time are you spending delivering the product? It’s important to account for everything in this part of the process. Don’t leave out tissue paper, or ribbon, or boxes. Include everything.
Once you have your hard cost for a product figured out, multiply that number by a markup multiplier. It's commonly held that your multiplier should range between 2.85 and 5 depending on whether or not you have a home based studio as opposed to a storefront.
For example, if your hard costs for an 8x10 are around $10 (for the print, shipping, and packaging), and your multiplier is 5, your 8x10 should cost around $50 plus labor associated with post processing, ordering, unpacking from the lab, repacking for the client and delivery (either shipping or client pickup). If those tasks take around 30 minutes, that's another $12.50 (based on needing $25/hr) added to the price of the 8x10 for a total of $62.50.
These numbers aren't hard and fast, but this process can give you a pretty good idea of where to start or what to shoot for. Again, keep in mind, that if your lifestyle dictates that you need to make $50/hr, the cost of your 8x10 in this instance just went up another $12.50 to $75.
Do the Work
Remember, you’re the boss. Your price list will need
to change and evolve over time. Take some time to figure this out.
Don’t be afraid to make adjustments when necessary. If you don’t do it,