Costing your Photography Business

I think you may be getting an idea of where I am going with the questions. At the end of the day, the person that want to hire you for your services doesn’t really care about how you get to the result, as long as the result is what you advertised and confirmed it would be. In the same vein, somebody that wants an image for a publication hardly ever ask how the image was shot (except out of interest)

What I am trying to bring across is that it is not your equipment or years as a photographer that decides what your price must be. Yes, it would definitely influence the price, but more than anything else, your prices would be based on the quality of your work, your ability to repeat the quality consistently under various scenarios, and your ability to deliver on time every time. Coupled with your real world costs – that is how you work out your fees and pricing structure. Unfortunately, this takes a bit of thinking and calculating, so most new photographers use the old and trusted Inca Method… they ask the guy standing next to them. Getting quotes from 10 photographers in the industry and then cutting a few hundred bucks off the average ‘to get a foot in the door’ is not a good idea!

Before we start working out the costs of doing business, let me explain why undercutting the market is such a bad idea (especially if you do not know what your actual costs are) The first problem is that you tend to mis-estimate what a shoot will actually cost and you end up paying in. The second part is that your prices are set and published and current clients will not understand if you double your prices between two shoots. The third part is psychological: If you get bookings at a low price, and then raise your price to where it’s suppose to be, and then not get bookings for a few weeks, you start to doubt yourself, and the clients you are marketing to, and you will drop your price again… Getting to a good pricing structure will take years after that, and for years you will work yourself to death just to keep up with your bills. Always quote for the price that you should be asking, and then give a discount… That way your clients know the real price it’s supposed to be, and when they refer you they will give the people they refer you too a heads up on what to expect for the price (excluding the discount)

Down to business.
Have you done a real world costing of your business expenses? If you are reading this, I am guessing either “no” or you are not sure that you have added everything in. So lets start with the basics.

Remember!
Even if you do this only part time, your costing should be done as if it’s a full time job, and you cannot ignore certain costs because it’s covered by something else. Maybe you are still driving a car you got when you started studying, and it’s paid off… but at some point it would need to be replaced, so cost for it now. Also remember!! The values below are just numbers, not even best guess estimates, and the value of the exercise would be in getting your numbers as complete and as accurate as possible!

Grab a piece of paper (or a spreadsheet if you are so inclined, although most people I know will start this on a napkin) and write down your equipment costs:

Cameras
Lenses
Flash units
Tripods
Camera bags
Studio lights
Light shapers
Light modifiers
Reflectors
CF Cards
Mobile storage
Light meters
etc, etc, etc…

Everything in your camera bag, then move over to your computers…

Main processing/retouching computer(s)
Software
Hard drive array
Long term storage disks
Graphics tablet
Desk
Ergonomic chair (trust me… this one is a lifesaver!)

etc, etc, and so on, and so forth… everything you touch while negotiating for a shoot, advertising a shoot, planning a shoot and doing a shoot…

Take that number and divide it by 3. Why three? Well, apart from the fact that I have always liked the number 3, we have found over the years that 3 years is approximately the average time in which you will wear out your equipment and it needs to be replaced. Obviously, some items will go faster than others, and some items will last longer (I am using my 5th DSLR body although I am still using my original 17-40mm f/4 L lens I bought with my first body) All in all it evens out. In a few years, you can adjust the number as technology changes and equipment usage change. Note… this will not be the same period as your tax write-offs…

Right now we have a yearly number we can start working with … if you have a pretty average kit (5DmkII, 7D, lenses from wide to 200mm and some flash units, etc) then you should have come out around the R70 to R75,000 mark… this figure might be a lot higher or a lot lower… it will depend on your kit. If this number flustered you, it really shouldn’t. A new 5dmkII, a 70-200 f/2.8 L, replaced photoshop, and a new Macbook Pro will set you back about R73,000 – That is if you upgraded… not a new version of Photoshop.

Now… next step:

How much do you need per month to survive? (And this is totally different for every person)

Household
Rent
Food
Medical insurance
Savings
Two ply toilet paper
etc, etc, etc

Lets say for the sake of easy math that you comes to R20,000 pm, that is about R240,000 per year you need excluding tax monies, so lets be generous and average the amount out to R300,000 per year.

Now there are some more business expenses coming into play here… and again, you should most probably have all of these, but I know from experience that many small businesses do not.

Equipment Insurance
Public liability insurance
Internet access
mobile phones/office phones
Office/studio rent
Marketing
Websites and email
Staff Salaries
etc, etc, etc

Again… this will drastically differ from person to person or business to business… some will spend R500 on flyers as their total marketing, some will spend R60,000 on a stand at some expo, but again for the sake of simplicity, lets say your month to month expenses are about R20,000 (again about R240,000 per year)

With the basic costs now more or less covered we are looking at about R615,000 per year that you as a photographer would need to bring in to pay the bills and have enough petrol in your car to go to the next shoot.

That is about R51,000 pm or a rate of R320 per hour (based on a 160 hour working month)

If you are going to function on an hourly rate, may I suggest that you at least double that, because chances are very small that you will actually have the clients to cover every hour… For this reason we also think the suggested SAFREA rates are too low with pre and post work rated at R275, and their highest (10 hour) day rate at R5250 per day.

So now that we have established this, what does it mean for the pricing of your services? Lets say you want to do weddings. How many do you want to do in a month? if you want to do 2 weddings a month, that means you need to charge at least R25,000 per wedding without any prints or products to cover your fees, R12,500 if you can do 4 a month (or 48 weddings a year)

If our numbers were accurate (and I think as a ballpark for many, they would be) anything you charge your wedding client under the R12,500 we calculated above means you are physically paying money to attend the wedding! and you might actually be better off not doing the job!

Obviously there are other jobs and more factors to take into account than what we have mentioned above, more midweek jobs to bring in more money, but the principles remain sound.

If you do a wedding (for instance, and this applies to almost all other shoots as well), you do not just spend 8 or 10 ours on the day of the wedding… you also spent 2 hours with the couple in the week before to get the final arrangements sorted, you spent more hours even earlier showing your portfolio the first time and answering questions, preparing quotes and info packs and not to mention the couples you saw that did not book you for the day in question… all hours you cannot directly bill for.

After the wedding/shoot you spent an hour downloading and doing backups, then a few hours getting the first proofs ready, and once the images and enlargements were chosen, you spent time editing and preparing for print… more time is spent driving to and from printers, and correcting orders… all time in which you cannot generate more work through shoots unless you hire somebody to do the admin side for you… and off course, pay them a salary. Also, your costs will differ drastically if you need to supply high resolution images vs medium resolution images to a print client, for instance…

The last point to take into account is to build in a percentage buffer for bad payers. The clients that never pay for the work you’ve done and disappear from the face of the earth.

Some of these numbers might be high for you, but for most I think these numbers would be too low. As I said in the beginning… I have not listed all the options and costs. You will need to do those by yourself according to the costs you have (and off course the costs you SHOULD have). In the examples above, we have not yet even touched Vehicles or transportation costs…

It doesn’t help to leave out numbers, all you are doing is to fool yourself into thinking you are ok, and three years down the line you can’t figure out where your money has gone to!

If you are like most artists I know, then the money and business part is not your strong point. Spend the money and get a good accountant that can work this out for you, it might cost a bit now, but it will save your life in the long run!

The post Costing your Photography Business appeared first on ODP Magazine.