Artists of all sorts, photographers especially, struggle finding that sweet spot with their pricing. We all struggle with wanting to be affordable enough to get a lot of work, yet we also want to be sure we aren’t leaving any money on the table after each sale.
It is a delicate balance.
Many of us begin with a comparison to the job we currently have and greatly under estimate how much money actually goes into the business.
This is the WRONG way to go.
Pricing for your photography business based off of your current job is not even close to comparing apples to oranges. It’s like comparing apples to an orangutang.
This isn't your day job
Let’s say you are a nurse and you are pricing your photography business with a similar hourly rate.
Here are a few questions to consider:
- As a nurse, do you have to bring in each and every patient?
- Are you researching the best deals on defibrillators and needles and bedsheets and printer ink?
- Are you the one ordering, stocking and tracking inventory?
- What about billing? Do you handle all of the accounting, billing, check cashing, debt collecting?
- What about patient gifts? Do you sit down and write thoughtful Thank You notes and send a bottle of wine and chocolates to each patient that chooses to be under your care?
Do you get my point??
–>> Starting your own business is a very complicated financial affair.
When you have a job (or spouse) covering living expenses, retirement and healthcare costs, it is natural for you to look at any money you are making on the side as fun extra income.
That’s why new photographers feel they are raking in the dough on each gig.
Most of the time, these people are not yet legitimate businesses. They aren’t collecting and reporting sales tax, income taxes on the business and paying for insurances.
Sample Product Pricing Formula:
With a physical product based business, the math gets a bit complicated in that you have to account for what accountants call “cost of goods sold.”
This is a term that refers to how much it costs to gather and assemble the parts to make your product.
There is also your time, shipping and handling costs, as well as mistakes/returns.
For the simple purposes of understanding the basics, here is an example:
- 60% cost of goods sold
- 40% profit per item sold
- Average order of $75
- $500 per month in other business expenses
$4,666 business revenue needed per month
÷ 40% profit margin
= $11,665 in product sales per month needed
÷ $75 per order
= 155 orders per month needed
If this is a photography session, that’s a TON of work and not very realistic year round.
Recommended Pricing Formula:
I’ve been a member of the Professional Photographers of America for 10 years. One of the many reasons that I love being part of such a solid organization is that they have a plethora of resources and educational elements available to professional photographers.
Every few years they send out a Benchmark Survey to find out how profitable photography studios are running and set industry benchmarks.
They also have this ah-mazing tool for planning average sales and session totals!
My own pricing journey
Running your numbers the first time is rough, however, this is the basis for your entire business. It is important for you to sit down and do the math so you know what you are spending, what you are earning and accurately projecting your sales each year.
The good news is that this is a repeatable process!
When I began as a photographer, my mentor just told me what to charge. I didn’t know why she picked that number and I had no idea if it was an appropriate fee. With just my very first wedding, I realized that I lost money.
At the time, $1000 was a ton of extra money! The problem was that I went and bought my first real lens for $650 and then had a photo lab bill of $450 to process the film. Oh, and I also paid $80 for a wedding photojournalism class.
To add salt to the wound, the Bride’s parents hired another photographer and it was super awkward trying to figure out who was in charge.
I left thinking, why did they hire two different photographers? Why didn’t they give one of us all of the money??
This first wedding taught me a lot about what to have in my contract, how to work with friends, the reality of running a photo business and shock of all shocks: that I LOVED photographing the chaos at weddings.
The next step was figuring out what on earth to charge so I actually made money.
Pricing for Wedding Photography
Let’s talk COGS.
The costs of goods sold (COGS) go into each wedding and are:
- hourly rates for meeting with clients before & after their wedding
- client gifts for booking
- printing costs for the proofs
- hourly rate to edit the images
- travel fees
- second photographer fees
- other expenses depending upon your business model.
What are CODB? Costs of Doing Business are:
- printing price lists
- liability insurance premiums
- continuing education/professional memberships
- sample albums
- accounting/billing and so much more.
What about profit?
The profit is allocated to paying you to actually photograph the event, gear upgrades, income taxes, retirement, healthcare expenses and vacations.
When you think about ALL of the things that need to be covered by one wedding, the rates can add up quickly.
–>> Anyone charging less than $1000 for a wedding is losing buckets of money and just running a charity.