Pricing photography

This very long and meandering post is intended mostly for new photographers. It outlines some general concepts behind setting a price on photography services.

“We give you your money’s worth and not a penny more.” – unknown

“Money is better than poverty, if only for financial reasons.” – Woody Allen

First rule: Never give a price over the phone or off the top of your head.

Second rule: You’re running a business. You’re supposed to make money by charging more than your costs.

Third rule: Like all businesses, you tell your customers what your services cost and not the other way around.

Fourth rule: Never base your prices on Cost + Profit Margin. Always base your prices on value to the customer.

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Just because a photographer loves what they do, that doesn’t mean a price can’t be put on their work. It’s not illegal or unreasonable for a business to make a profit. If a photographer respects their work and their business, then a fair price must be charged. It’s very important to remember that a fair price isn’t always the lowest price.

It’s been said that all clocks can tell the time but no two will agree. Similarly, every photographer will have a different price for the same job.

The right price is that which gets the photographer the job AND earns them a profit. The wrong price is that which gets the job but no profit.

If a photographer gets every job they quote then that’s a good sign they’re charging too low. If the client pays with cash from their wallet and says don’t bother about a receipt, then the photographer is really charging way too low. :-)

In determining photo or creative fees, a photographer must decide what amount of money will adequately compensate them for their time, talents and overhead, as well as for the value of the photographs produced. For better or worse, there is no exact formula to determining what these fees should be.

What a photographer charges for their work is something that they will have to determine based on their market, their overhead and their expectations of profit. Just because Photographer A charges $1500 for a particular job, that doesn’t mean Photographer B should, or even could, charge the same fee.

Unlike an employee, a self-employed photographer must make two profits: both the photographer AND their business have to make money. The business needs a profit to buy new cameras and computers, pay for seminars and conferences, buy new office furniture, etc. The photographer needs a profit (i.e. earn a salary) to buy food and clothes, take a vacation, pay household expenses, etc.

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All self-employed business people should know their cost of doing business. At least once, a self-employed photographer should use something like the NPPA’s  Cost of Doing Business Calculator, or just a pen and paper to figure out their overhead. A photographer must know where they stand. You can’t go anywhere if you don’t have a starting point. Note that the NPPA site has lots of other very useful information.

If the cost of doing business is, for example, $490/day, this does not mean that the photographer can’t accept a job for less than this amount, although, that is the concept. It means that for every day worked at $490 or less, the photographer either doesn’t make a cent or loses money. For each day worked below cost, the photographer must work another day at a much higher rate to compensate. Otherwise, it becomes one step forward and two steps back.

Before an estimate can be sent to a client, the photographer must have a specific and detailed description of the proposed assignment. There’s no such thing as too much information. Only with this information in hand can a photographer price out the job.

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Don’t work in a vacuum. Talk to other photographers. Know what other photographers are charging for their services but do not copy them. Each photographer’s business is different – different overhead, different expectations. One photographer’s prices may not suit another photographer.

Have a few other photographers on speed-dial (okay, maybe e-mail) so that you can bounce numbers off them. Fellow photographers won’t be as emotionally attached to a potential job and should be able to offer some clear-headed advice. Please note that it isn’t particularly legal for photographers to get together to “fix” prices.

When setting rates, you will make mistakes. You will undercharge and lose money. You will overcharge and lose business. Learn and move on.

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Pricing expenses, (e.g. equipment rentals, prints, consumables, assistants, etc.), should be reasonably straightforward. The photographer should inform the client that any expenses listed on the estimate are exactly that – estimates – and that the final invoice will show the final expenses.

All expenses should be marked up by the photographer as this is a standard business practice done by ALL businesses. It’s one small step towards making a profit.

Expenses should not be negotiable. Otherwise, the photographer ends up subsidizing the customer’s assignment. For example, a roll of 108″ seamless costs $70 and the photographer might mark up the roll of paper to $90. This should not be negotiable.

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A photographer should create their own price list for their standard set of non-photography services such as: burning a CD/DVD, contact sheets, web gallery for online proofs, post-processing, mileage, and any other repetitive or routine tasks. Consistency here is fairly important and these prices probably won’t vary from client to client.

Prices for these “fixed” services can be determined by considering what other photography businesses in the area charge for the same or similar services. But having a lower/higher cost of doing business might require a photographer to price their fixed services lower/higher than other photographers.

“Price is what you pay. Value is what you get.” – Warren Buffett

By adding value to any service, a photographer can justify having higher prices.

Example: Photographer A might charge $30 to burn images onto a disc for a client. But Photographer B, who includes a PDF contact sheet or HTML gallery on a gold archival or Lightscribe disc, might charge $55 per disc.

Clients will usually pay more if they believe they’re getting more value. But remember that value is subjective and is relative to the client.

Here’s a link to a previous post about adding value.

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Most photographers do not charge by the hour except perhaps for some event-type jobs and for overtime rates. Instead, they charge by the assignment and/or by the usage. However, clients will always ask, “What do you charge per hour?” or “What’s your day rate?”

Does anyone ever ask a car dealer, “What do you charge per pound of car?”

If they sold cars by the pound, a Porsche would be cheaper than a minivan. In fact, by the pound, a Porsche can be much cheaper than some cameras!

• If a photographer charges by the hour then an experienced photographer, who can do an assignment faster, would get paid less than an inexperienced photographer.

• If a photographer charges by the hour then it’s to their advantage to work as slow as possible. At the same time, it’s to the client’s benefit to yell, “faster faster.”

• If a photographer charges by the hour, that encourages the client to shop price.

• If a photographer charges by the hour, there’s no difference between a headshot that’s used only on a business card versus a headshot that’s used in an annual report AND in a brochure AND in a magazine advertisement AND on a web site.

Remember that if photo usage goes up then that photo has more value. More value to the client = more money for the photographer. But if a photographer charges by the hour, the photographer will never benefit from any increased value.

• If a photographer charges by the hour then that one hourly rate has to apply to everything they shoot. Otherwise, the photographer will have a tough time explaining to a confused client why a PR event is $150/hour, a studio product shoot is $250/hour, and an executive headshot is $350/hour.

If a photographer has changing hourly rates, it might be easier to charge by the assignment type and usage as it’s less confusing for everyone.

• If a photographer charges Client X $200/hour. If Client X should ever refer the photographer to Client Y, then this new client will also be expecting the same $200/hour, no matter what the assignment. And, if Client Y refers the photographer to Client Z, then this new business may also be expecting the same $200/hour.

The photographer may be stuck at whatever original rate the first client received. Otherwise, the photographer may have a difficult time explaining why their hourly fee changes for each client.

However, some photographers do quote by the hour but with a minimum, such as: “that will cost a minimum $200/hour” or “that will be $200/hour with a two hour minimum”. But be warned that in a case like this, the client will hear only “$200″.

If a photographer charges by the day, it’s to the client’s advantage to pack in as many photo requests or assignments as possible. This is how many newspapers operate. In a day-rate situation, the photographer will be working more but not getting paid more.

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Another pricing strategy is to base the photography fee on photo usage, while factoring in the photographer’s overhead, talent and effort. But a problem might arise when the intended photo usage is very small and the necessary photography service is large.

Another alternative, perhaps a hybrid of the other pricing strategies, is to quote per job and/or usage but with a set work time. For example, a photographer might say:

“That job and usage will cost $1800, based upon a maximum of four hours of photography. If the photography takes more than four hours, the extra hours will be billed at an additional $250 per each hour.”

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Determining the photo or creative fee can be complicated as there are no standard fees for anything. Pricing is not an exact science. Most photo assignments are different with different photography requirements and different photo usage.

Customers buy when the perceived value to them is higher than the perceived cost to them.

Two photographers can shoot the exact same photo, yet one photographer may be paid much more than the other. One reason is that the expensive photographer somehow provided the client with more value or at least gave the perception of more value. To phrase it another way: most clients associate a low price with a low value.

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Did anyone mention: Never give a price over the phone or off the top of your head?

There will be many impatient clients who will ask for “just a ballpark number”. The photographer will rarely know all the details of the assignment and yet, the client will ask, “what do you charge for … ?”

Not wanting to lose any business, the photographer may panic and quote either a low price range or give a very wide range. In all cases, no matter what the photographer says, the client will hear and remember only the bottom-end number. That’s human nature.

Photographer: “Well it really depends on the job and the usage rights. But maybe, and this is only a ballpark guess, but maybe anywhere from $500 to $2000.”

As far as the client is concerned, the photographer just said they could do the job for $500. Of course, the client didn’t hear anything about copyright, usage rights, payment terms, etc.

In case you missed it: Never give a price over the phone or off the top of your head.

If this photographer later discovers that the job will cost more, the client will wonder why the photographer is trying to jack-up the price from the “original” $500. The client might think the photographer is either trying a bait-and-switch tactic or that the photographer doesn’t really know what they’re doing.

A photographer who pulls a price out of thin air will always regret it.

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A photographer needs have to have a personal set of pricing guidelines to help determine the photo fees. These guidelines come from experience and from being aware of other photographers’ and agencies’ prices. But be very careful with copying price lists found online. Don’t follow other people’s prices blindly. Allow for your location, your market, your competence level, your overhead and your business expectations.

There is pricing software such as fotoQuote Pro which has prices for a wide variety of photo usages. This can be helpful as long as the photographer also factors in their market conditions and their business needs.

Note that the prices used in fotoQuote don’t appear to have changed over the years. But the sad reality is that market prices for photography haven’t changed much over the last several years. The prices used in the software are based on some type of survey of photographers, picture agencies and web sites. There’s no mention as to the survey size.

Approximate photo fees for certain types of photography should be written down and not left to memory. Be prepared ahead of time as much as possible.

A photographer should keep all estimates and invoices and use those numbers to build their own price guidelines.

Believe in the value of your photography and in your prices. Your belief in your worth is infectious. If you believe then so will they.

Learn to say, “That job will cost $2,300″ in a confident voice rather than, “I was thinking of maybe charging around $2,300, if that’s okay?”

Never apologize for your prices. Never say, “I hope you’re sitting down because the price is a whopper!” , “I hate to tell you this but the price is …” or “I’m afraid that’s going to cost a lot.”

Contrary to popular belief, price is not the main motivator for a purchasing decision. The service that the photographer is providing is the most important factor. Play up the service, not the price.

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One way to start formulating photo fee guidelines:

Know your cost of doing business. This is mandatory!

Determine what income you’d realistically like to earn before taxes. (Yes, we’d all like to make a million dollars while working only one day per year.)

Statistics Canada (2010) has reported that the average Canadian adult earns about $45,000 per year. It also said that the average self-employed photographer earns about half that amount.

Let’s say you want to earn $50,000/year (before taxes) and your cost of doing business is about $20,000/year. Right away, this means you must bill $70,000/year, not including expenses, to meet your expectations.

How many days per year will you work? Sure, you might be available to work 365 days per year but you might actually be photographing assignments only 100 days. But let’s be very, very optimistic and say you’ll be shooting 240 days. (365 days – 104 weekend days – 14 days vacation – 7 sick days = 240).

Do the math: $70,000/240 = $292/day is the minimum fee you should charge.

But wait. At that rate and with that number of days, you might earn your $50,000 but your business itself doesn’t earn a cent. Let’s give your business a basic 10% gross profit.

Your minimum is now $321/day for 240 days. If you fall short on your 240-day quota, (and you will), then you’ll need to charge more or else you won’t meet your income expectations.

But wait. What about time to work on your business itself? Bookkeeping, marketing, web site, running errands, phone calls and e-mails, invoicing, estimating, etc.

Budget at least one day per week for office work. Remember that you do not get paid for these days.

So now your minimum fee is $410/day for 188 shooting days.  (240 days – 52 office days = 188 days)

If you need more than $50,000/year (before taxes) because you live in an expensive city, have kids, want to put money into a retirement fund, get health insurances, go on exotic vacations, have a savings account, upgrade existing equipment, buy new equipment, and so on, then you’ll need to increase your minimum rate even more.

Obviously, it’s not possible to continually raise your rates whenever the need arises. Market conditions and competition will usually keep your fees down.

But here’s Deal #1:

For each low-paying job you do, you’ll have to compensate by doing a higher-paying job so that you can meet your income expectations. But for each higher-paying job you do, the less time you’ll have for a low-paying job.

Higher-paying jobs earn you more money (obviously) but the more higher-paying jobs you do, the less likely you will chase low-paying work.

Or to rephrase: higher-paying jobs tend to lead to other higher-paying jobs; lower-paying jobs lead to more lower-paying jobs.

Example: A $1,000 wedding photographer will be recommended by the bride to her bride-to-be girlfriends, all of whom will also expect $1,000 wedding photos. But a $7,000 photographer will be referred to other bride-to-be’s who will then be expecting $7,000 wedding photos.

Deal #2:

A good way to increase sales is to . . . . . . raise prices. There’s actually a name for this economic principle but it escapes me right now. A 1992 study (link to pdf) by Michael Marn and Robert Rosiello, of McKinsey & Company, showed that a 1% increase in price can boost profits by 11%.

If you raise the price, customers assume something has been improved or they’re getting more. But if you lower the price, customers assume something is wrong or something was reduced.

This will not work where “good enough” is the customer’s thinking, such as with a commodity service like passport picture photography.

Higher prices can increase the perceived value of your services.

It should be obvious that you can’t just hike your prices as high as possible and expect business to flood in. A higher price suggests a higher quality product and/or a more upscale service. So, you would need to meet a certain level of expectation.

There was a photographer here in Toronto who met his customers’ “upscale” expectations just by arriving at assignments in his Mercedes and always wearing a suit and tie. He looked successful => he must be good => he must be worth the price.

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The level at which a photographer begins a business relationship with a client is the level at which they will usually stay.

A cheap photographer will always be known as “the cheap photographer” and will get only the cheap jobs. The “good” photographer (i.e. the more expensive shooter) will get the premium jobs. Low-paying jobs do not “graduate” into higher-paying jobs.

A photographer I know was very excited to get called by an ad agency looking for a quote to shoot part of a bank’s national ad campaign. The photographer quickly quoted $800. The finished ad with her large photo was used across the country including full-page ads in a national newspaper.

The photographer later complained that she felt sick to her stomach over that job because she was taken advantage of, by herself ! Her own anxiety, excitement and fear caused her to bid low. She knew she cheated herself.

And there’s more.

Later, the same ad agency called the photographer into their office so that she could be introduced to other photo buyers. The photographer was led around the office and repeatedly introduced as, “This is (photographer’s name). If you need a photographer, she’s cheap!”

Not once did the agency person say, “She’s talented”, “She does good pictures” or “She’s great to work with.” It was always, “She’s cheap!”

The photographer said she was totally embarrassed and humiliated, and couldn’t wait to get out of the office.

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Quoting high:

Some photographers will purposely quote high and, if necessary, let the client talk them down to their “normal” fee. Other photographers will quote their normal price upfront and then stick with that number when negotiating with the client.

There are arguments for both strategies.

For a photographer who always quotes high and lets the client talk them down, repeat clients will always expect a discount and perhaps even a bigger discount than previous time. This photographer’s “suggested list price” won’t have much meaning.

This could be a good thing if the client expects (or is expected) to negotiate. But clients who don’t negotiate may be scared away by the initial high price.

For a photographer who quotes their normal price upfront, negotiations, if any, should revolve mainly around usage rights or photography requested and not around the photo fees.

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Quoting low:

“We lose money on every sale but we make up for it with volume!” – unknown

There is a difference between charging less and undercutting. A photographer with a low overhead can charge less. But a photographer who charges below their own costs is either undercutting or foolish, or both.

A photographer might decide to quote a very low price to help get their foot in the door. Their thought is that after they get in with the client, they can raise their prices back up to the “normal” level. This will never happen.

The low price a photographer charges for a job is what the client will expect again and again. Once any business cuts prices, it’s always difficult to raise them back up.

Working below cost or without profit means the photographer will literally work themselves out of business.

People always associate a low price with low quality:

Another photographer and I each bid on the same job for a trade magazine. We know each other and we talked about this job later.

He bid only $400 because his plan was to bid low to get the job and then, hopefully, the client would throw more work his way. I bid $2,200 and got the job. To be honest, the other photographer could have easily produced the same or better photos than I did.

The client actually told me that the other photographer bid much too low and they refused to hire him just for that. They thought that since his price was so low, something must be wrong.

Undercutting can hurt other photographers and clients:

I was once asked to quote on a public relations job for a book publisher because their regular photographer wasn’t available. I quoted $525 to shoot a short press conference, with one picture getting released as a media handout.

They said their usual photographer charges only $200 and that included all expenses, all copyrights and even proof prints of everything. So my $525 with limited rights got rejected.

The publisher was unable to find any photographer who would do the job for $200. The publisher’s own public relations person told me that she knew $200 sounded too low but the book publisher refused to go higher than the “normal” price of $200.

So, I lost that job and the book publisher lost coverage of their event because another photographer had conditioned the client to expect a ridiculously low fee.

Undercutting photographers can hurt themselves and their clients:

A few years ago, a Toronto photographer shot a commercial job for a national TV network. The job was a series of portraits of on-air news personalities that were used on billboards across the country, transit ads in several cities and full-page ads in a national news magazine. The pictures ran for six(?) months. The job took three full days to shoot, plus several more days for preparation and editing.

She charged $2,000, plus $700 for her assistant, plus film expenses.

A few months later, she called me and in the course of conversation, she complained that she couldn’t afford to get her old Nikon F4 repaired. She couldn’t afford to run her business properly because she wasn’t making enough money. (Yes, we all probably suffer from this but not to this extent.)

The client, whom I later met, asked if the original job could’ve been shot on digital which would have saved them time and money. The client said the original photographer didn’t have a digital camera so they shot film, waited for film processing and then sent it all out for scanning which meant more waiting and more expenses.

This photographer, who was charging too low, couldn’t afford to get into digital photography so her client suffered by paying more in time and money.

Very low pricing only shoots the photographer in their own wallet.

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Clients who pay more, expect more. But clients who pay less, don’t expect less.

Many clients assume a photo is a photo is a photo and that it’s the camera that does all the work. These people will expect the same quality of photography and same level of service no matter how low they pay.

Say your initial quote is $2,500 and the client counter-offers with $1,000. If you readily agree then it means you’re doing a $2,500 job for $1,000. You’ve lost $1,500 before the job has even started. And, the client is still expecting $2,500 worth of photography.

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Competing on price:

Competing (with other photographers) on price means you set your fees based on fear. If you don’t go low enough, you’ll lose the job. Fear isn’t the best way to run a business.

If your photo business competes only on price then it’s always a downhill race. It’s about how much money you’re willing to lose. First one to the bottom “wins”. We see this today with stock agencies competing with each other to sell pictures cheaper and cheaper. Remember, if you can’t lower your costs, you can’t lower your prices.

If you “win” the downhill race then you’ve secured your place at the bottom. But if you “lose” the race to the top, you’ve secured a place somewhere in the middle. Take your pick.

Customers will shop price if they have no other way of differentiating you from other photographers. If your potential customers are shopping price then it means you failed. You’ve failed to distinguish yourself, you’ve no choice but to compete on price and you’re telling customers to shop price.

You can never win by competing on price alone. But you can win by competing on customer service and, of course, by producing good photography. Notice I didn’t say “great” photography, although that would be a definite bonus.

Relationships with customers are more important than photographic ability, (unless your photography really stinks).

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Just FYI:

• The Editorial Photography Estimator has information on a large number of US publications. It seems to use 2001 data but it still should provide some insight.

Stock Price Calculator may be of some use although there’s no indication when or how this data was collected.

• The Canadian Association of Professional Image Creators has published a list of suggested minimum licensing fees.

• The Canadian Artists Representation Copyright Collective has a suggested fee schedule. It’s very important to note that these *minimum* fees are for copyright licensing only. While this is not intended for commercial photographers, it might be used as a starting point.

• A five-part video series by photographer Rick Rickman on the business of photography. Note that parts 3 to 5 refer to US copyright law only.

• The National Union of Journalists in the UK has a Freelance Fees Guide. Very important to remember that this site is intended for photographers in the UK market.

FreelanceSwitch has an online calculator to help figure out what your minimum hourly rates should be, based on your cost of doing business. Note that it’s not recommended for photographers to charge by the hour. Use this calculator for informational purposes only. Hourly rates and day rates for commercial and corporate photographers went out-of-style in the 1980s.

The Association of Photographers (AOP) in the UK has an online usage calculator to help photographers determine a suitable fee. It’s important to understand how this UK calculator works: it’s based on a BUR system (Base Usage Rate). The AOP site also has some other useful information.

• D-65 is web site by well-known US photographer Seth Resnick. The site has general numbers for his stock photography pricing.

Ten Tips to Better Pricing by Rafi Mohammed, in the European Financial Review, wasn’t written with photographers in mind but it still applies.

A video explaining the basic concepts of how to price photography.

 

 

4 thoughts on “Pricing photography

  1. I really like your blog. It’s really useful and incredibly helpful to precisely what My hubby and i was looking for. I am going to continue to comeback to always check your blog more often. Best Wishes!.

  2. I’m going to bookmark this page, as well as add it as a resource reference on my site.
    Great work.
    Thanks!

  3. Hi Warren,

    Great article on the proper competitive way to price our works of photography. I’m a photographer in Toronto as well, and I’m always struggling with reducing my costs. Now I’ve decided to make the jump and cut studio costs to focus on the on-location market with competitive prices. I’ve also been focusing on headshots so now I’m excited to see where it goes.

    Overall, as a Toronto photographer, I’m happy that you posted this, and I will be posting my own article which is similar in nature to yours, so feel free to check it out at http://www.danielcamer.com once it’s up!

    Thanks again for an insightful article, I’ll be sharing this with my fellow peers just to make sure we can hammer in the fact that just because one enjoys their work, they should not charge “whatever they can get” for it.

    Cheers,
    Daniel Camer
    Toronto Photographer

    • Warren on April 9, 2013 at 5:54 pm said:

      Thanks for your comments, Daniel. Remember that this post just tries to show a few general concepts. One concept is that a photographer should not just pull numbers out of the air nor copy what other photographers do. Prices should have a reason why they exist other than greed (high price) or stupidity (low price).

      Today, the number of “professional” photographers is infinite and the barrier for entry is almost non-existent. So, in theory, photographers should be charging $0. And in fact, many photographers do charge $0 either by giving away work for free or by pricing at or below cost.

      Over time, everything goes down in cost except, perhaps, real estate and taxes. So, selling at cost-plus-markup is a fool’s game. A photographer isn’t Walmart; a photographer can’t do volume.

      Marketing only on price is also a great way to fail. A photographer should market around value not price. (Yes, that’s a tired, old cliché). The more a photographer talks about price, the more a customer will think about price, and the more important price will become.

      Instead of buying a new lens, which often won’t earn a photographer any additional money, a better purchase might be a small business course at a local college.

      Photographers absolutely hate this but: business first, photography second.

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