WHY IS PRICING SO PAINFUL? [PART 1]
/Ask a new photographer what is the hardest thing to figure out as they launch their business, invariably, 'what to charge' is at the top of the list. In addition to being one of the hardest things to figure out, it seems that many photographers have an anxiety and fear surrounding the subject of pricing. What is it about pricing that makes it such a painful thing for photographers?
I think that the number one thing that drives pricing decisions by photographers is fear. Whether it is a fear of never booking any clients, fear of what other people will think, or fear of being unable to make a living as a photographer - often times, photographers become paralyzed by fear when thinking about their pricing. It doesn't have to be that way. In fact, figuring out your pricing isn't even that hard - if you sit down and do the work.
Let's look at how you can turn your pricing from painful - into profit.
It's not as hard as you think
First, I think that many photographers spend far too much time stressing out about pricing. Most of the time, I think that even if photographers have an idea of what they "should" charge, they convince themselves that no one will ever book them. It's simply not true. (Though, as an aside, what if it was true that no one would book you at the price you need to charge to be profitable? Sounds like a good arguement that this isn't a particularly good career path for you - not an arguement for lowering your prices.)
In reality, figuring out how to design your pricing comes down to understanding a few principles, and doing some work.
It's about numbers
Photographers come up with all kinds of ways to pick prices. They look around and try to figure out what photographers in their are are charging. They try to determine what "the market will bear," or they even base pricing on what they themselves would pay. Unfortunately, none of these are based on any kind of rational thinking.
Consider for a minute, the wisdom of basing your pricing on what another photographer charges. Do you know anything about that photographer's business? Do you know what kind of expenses they have, or how much they make? Do you know how their business operates, what types of products they offer, how they manage their workflow, or what type of overhead they have? If not, why would you want to model your pricing after them?
What you charge should be based on your expenses + a profit. It's that simple. Your pricing is based on the products and services you provide, plus a profit margin. Add up everything that goes in to providing a product, or a service, and you have your expenses.
For example, for a product like an 8x10 print, add up everything involved in selling that print (your cost of sales).
Wholesale print cost: $2.20
Mounting: $1.50
Time involved to produce (including importing, editing, processing, retouching, preparing, sales session, and sending to the lab) 75 minutes @ $30/hr: $37.50
Total cost of sales: $41.20
Then, you have to also account for your fixed expenses (things like overhead, administrative costs, marketing, capital expenses and non-sales labor) as well as your profit. The PPA Benchmark survey recommends that your Cost of Sales should be no more than 35% of your income. If you want to make the math really easy, a good "rule" would be to take your Cost of Sales on a product, and multiple it by at least 3X, to get your retail price. So for your 8x10, that price would be $123.60. You can certainly mark your prices up higher, to create a higher margin - but this is a good place to start.
Need more help with the numbers? Check out the Photographer's Pricing Guide
Check back tomorrow - and we'll cover how to price your time!
