This is another view-from-my-office photo.
All products, except luxury items, have a maximum price set by market conditions. A loaf of bread costs up to about $8. A bakery can’t increase the price to $20 or $30 no matter how good that bread is. The price of bread has a ceiling. To make more money, a bakery can expand into products that have a higher price ceiling such as cakes and pastry (which might be considered luxury items).
Almost every occupation has a salary ceiling. Whether you’re a fast food burger-flipper, a store clerk, a police constable, a school teacher, or almost any other job, your salary has a ceiling, (not including overtime and bonuses). Once you hit that ceiling, if you want to earn more, you must change to a job with a higher ceiling. You might become a supervisor, a manager, a sergeant, a vice principal, etc.
Photographers are no different because every photography niche has a price ceiling. Once you hit that ceiling, if you want to earn more, you have to expand into another photography niche that has a higher ceiling.
For example, if you start out doing passport photos, your price ceiling – the maximum you can charge before you lose customers – might be $20. If you’re not happy with this, you can’t charge $50 for a passport photo but you can charge $150 for a basic business headshot. So you could expand into the business headshot niche. But this, too, has a price ceiling of perhaps $500 for routine headshots. If you want to earn even more, then perhaps you might move into family photography where you could charge up to $5,000 for a family portrait package.
Floor to Ceiling
Price ceiling and price floor are well-known economic concepts that usually refer to government imposed regulations. Examples of price ceilings are rent control, cost of prescription drugs, and utility fees. Examples of price floors are minimum wage laws, Canadian dairy prices, and Canadian poultry prices (Canada’s supply management controls production which guarantees a suitable return to producers). In times of emergency, governments have imposed temporary price ceilings on essentials like fuel, water, and food.
But price ceiling and price floor can also be applied to many other industries including photography. Think of a price ceiling as the maximum amount your market will bear. A price floor is the lowest price at which you can sell while still covering your costs and maybe even making a minimal profit.
Every type of photography has a maximum price that’s set by your market. This is not an absolute number but rather an approximate number that can change over time. Your goal should be to have your photography prices at, or at least near, the ceiling and not on the floor below.
If your prices are above the ceiling for your particular type of photography, supply will exceed demand (i.e. you won’t have enough customers). If you price under the floor, demand may exceed supply (i.e. too many customers, not enough time) but you won’t make much profit. Also, when your price is too low, customers will think something is wrong with your photography.
You can price above the ceiling if your photography is perceived to be a luxury, you add enough other features to justify the price, or you’re a well-known photographer.
Between the price floor and price ceiling, you can have price equilibrium where supply equals demand (i.e. enough customers to keep you busy). But do you want to be busy doing $100 headshots or busy doing $500 headshots? Busy with $1,000/day events or busy with $3,000/day events?
Raise Yourself
A new photographer will almost always have low prices. There’s nothing wrong with this. But as you become more established and more experienced, you should raise your prices. There’s no reason why you should still be doing, say, $75 headshots after six months. Within five years or so, you should be approaching the ceiling. The exception is if you’ve chosen to be cheap. But why would you? Photographers cannot scale their business, they can’t do volume.
Obviously you can’t raise your prices without also raising your photography. If you price near the ceiling, your photography skills must be competitive at that level.
You might decide to set your prices somewhere in the middle. Not too high, not too low. But the middle isn’t the best place to be. Price low and be seen as the cheap alternative. Price high and be perceived as the expert. But price in the middle and you’ll be seen as average. Few customers want an average photographer.
Some photographers will price low because they’re either new to the business or they don’t know what they’re doing. Some will price in the middle because they can’t differentiate themselves. But those who price near the ceiling have the most to gain: good customers who pay well.
Your photography has more value to the customer than to yourself. So price for your target customer, not for yourself. Like every other business, you want customers who will spend more not less.
It might feel safer standing on the floor but the floor can be crowded. Don’t be afraid to dance on the ceiling.
