How To Price Your Photography
After spending the last two years creating images to complete your portfolio, you finally get the phone call you’ve been waiting for. Somebody wants to pay you to take pictures. Awesome! You spend an hour talking with your first client about all the creative possibilities flowing through your mind and then they pop the question. How much are you going to charge to make the images?
There are two approaches to determine how much to charge, and the method you choose depends largely on how frequently you do paid photoshoots and how much money and time you invest in your photography business.
Cost Based Price Modeling
It has a daunting name but it is really quite simple once you understand it. In essence, it sets your prices based off how much it costs to run your photography business and perform a photoshoot. This method is geared towards people who have a significant amount invested in their photography business and shoot for paying clients on a regular basis. If you only shoot for pay once or twice a year you can try this method, but it might be best to set your prices based on an hourly wage, which we’ll talk about quick at the end of this article
There are five components to the cost based method of setting your price:
- Fixed Costs
- Desired Salary
- Estimated Number of Jobs for the Year
- Variable Costs
- Market Adjustments
These components are brought together to make the formula:Let’s look at each of these components in more detail.
Also called overhead, your fixed costs are the expenses you pay to run your business. They include rent, utilities, insurance, professional fees like accounting or lawyers, equipment, phones and internet, website fees, advertising, subscriptions or membership fees. Think of your fixed costs as anything you have to spend to run your photography business that doesn’t relate to a specific photoshoot. Some of these costs happen every month, others happen once or twice a year. The costs that occur every month should be converted into a yearly total by multiplying them by 12. Your goal is to estimate your total fixed costs for the entire year.
You have to be very honest with yourself when picking your desired salary. It should take into consideration how much money you need to cover your own cost of living and how much your unique services are worth. Typically the more experience you have, the more salary you can expect to take because you are viewed as more reliable. Similarly, if you have a very specific style or skill that others can’t replicate, you can take a higher salary because you have a unique skill that sets you apart from others. Don’t be greedy and expect to make $100,000 when you first start out. If you just graduated college, pick a salary that is reasonable for a recent college grad. Also, if your photography is just a part time job, your desired salary should be scaled back to reflect that you are not putting full time hours into your business.
Your desired salary can and should be adjusted frequently. If you are having trouble getting jobs, you may need to lower this number. If you are booked for months, it’s an indicator you can raise your prices.
Estimated Number of Jobs Each Year:
Much like your desired salary, you have to be very honest with yourself when estimating the number of jobs you’ll be hired for during the year. Don’t fool yourself into thinking you’ll be able to shoot a wedding every weekend for an entire summer. Your estimate should be based on the average number of jobs you would get during an average year. In fact, overestimating the number jobs you’ll get in a year will actually cause you to charge less for each assignment.
Cost of Doing Business:
Taking these first three factors, you can calculate your Cost of Doing Business (C.O.D.B.). Your C.O.D.B.is your base price that gets factored into every photoshoot. The formula is:Variable Costs:
Variable costs are the costs incurred for individual photoshoots and are pretty easy to identify. They include hiring models, renting equipment, assistants, location fees, travel, catering, wardrobe, set building, props, and any number of other expenses you might incur during a photoshoot. Most of the time you will need to estimate these costs before you actually know them in order to give your potential client a price.
Combining your variable costs with your C.O.D.B. you arrive at the price you should charge for a photoshoot:
C.O.D.B. + Variable Costs = Price
The final component in setting your price is to adjust it to the local market you’ll be performing the work in. If you live in a small or medium sized city, your C.O.D.B. will typically be lower than if you lived in a large city. So if you calculated your C.O.D.B. based on a small city and get a job in a big city, you might be able to raise your prices. On the other side, if you calculated your C.O.D.B. based a big city and take a job in a small city, you might have to lower your prices because clients just won’t pay that much for photography in their small town. Prior to giving an estimate of your charges to a potential client, you should do some research and see what other photographers are charging for the same service.
You may be wondering why bother going through the hassle of figuring your C.O.D.B. if you’re just going to adjust everything to the market? The answer is that if you establish where your prices should be, you can better analyze how profitable your business actually is. If you need continually adjust your prices down to get to the market price, it’s a sign that you need to reduce your overhead expenses or reduce your desired salary. You should also be weary of accepting a job for less than your C.O.D.B., because that means you’re not making enough to cover your expenses and salary.
It’s important to remember that this pricing method needs to be tailored to your specific business. For example, if you’re a wedding or retail portrait photographer you may have few variable costs and find it easier just to add $100 to every session instead of calculating your variable costs for each photoshoot, and presenting that as your pricing to the client.
If you’re doing commercial work there is one more component to add into your pricing model, licensing and usage fees, but that’s a topic for another day.
Option Two: Hourly Wage
The second and much simpler method of determining what to charge is to give yourself an hourly wage. If you only shoot for pay a couple times a year, this is your method. It assumes you aren’t regularly buying new equipment, you don’t rent a studio, and you don’t rely on photography to pay the bills. This method is more of a way to be compensated for your time then it is to manage a business. You were hired as photographer because you can do something others can’t do, and your hourly wage should reflect that. Once you determine what hourly rate to give yourself, all you have to do is estimate the time you’ll spend working on the project. This should include any meetings, planning and preproduction, the time spent shooting and then any retouching and time spent preparing the files for delivery.
Prices are a dynamic aspect of your business and shouldn’t be set in stone. Sometimes you might need some extra cash so you’ll accept a job well below what you calculated. That’s o.k. The purpose of using this pricing model is so you can analyze and see how effective your pricing is at covering your expenses and meeting your business goals.