How to Use the Cost of Doing Business to Price Your Work

How to Use the Cost of Doing Business to Price Your Work with Michael Anthony

How to Use the Cost of Doing Business to Price Your Work with Michael Anthony

The photography industry is unique. We start as artists and learn early on that in order to support our art, we need to go into business. The problem is that very few of us understand what goes into running a business when we start out. Learning to be a business owner is a trial-and-error process. The problem is that many people start their business before considering the costs.

I have been writing for this magazine for long enough that some of Shutter Magazine’s new readers may not know my background or how I got started. I am going to take you down memory lane to teach you exactly what not to do when starting your business. Thankfully I found Sal early on—and his model, combined with my sales background, helped our business to take off.

When I started my business in 2012, I was charging $1,750 for wedding photography and $300 for portraits. Fast-forward to 2018, and we have taken in as much as $24,000 for a single wedding, with an average of over $10,000 per wedding.

It may sound unattainable, and it did to me too at one time. Back in 2012 when Sal was teaching on CreativeLive, he mentioned that his studio did $1,000,000 in sales, and I said the exact same thing.

In 2018, our studio crossed the $1,000,000 mark as well. So let me be a case study: With hard work, it is definitely possible.Hard work is not enough. To get far in business, you have to understand what it costs you to be in business. Had I known how much it cost me to be in business, I would have known the path to get to where I am a bit sooner.

In today’s photography market, too many new photographers charge based on what they think they are worth, combined with what they see other photographers charging in a rudimentary competitive analysis. This is no way to run a business. I didn’t realize what it cost to be in business until I got my hands on the PPA Benchmark Survey, and when I realized that professional photographers keep only a third of their revenue as profit, it forced me to look at what it was costing to be in business.

Work Backward to Figure Out Your Pricing

Let’s create your business model. First, decide what you need to make in a year. As a business owner with no benefits or retirement, you have to decide what that number is. Let’s say that when you add up all of your household expenses, you want to make $100,000 a year.

Add what it costs to run your business every year. Let’s use PPA’s most recent benchmark survey. It states that non-brick-and-mortar studios keep approximately 50% of their revenue as gross income. That means you would need to generate $200,000 in revenue to hit your target goal.

Before you read on, put pen to paper and figure out your exact number. Without that number, you will have a hard time proceeding. If you are an established studio, run through your books for a baseline or average cost of items to help you budget for next year.

The average wedding photographer in the U.S. charges $2,630, according to The Knot. Let’s take a look at what it takes you to serve this client.

If you are shooting weddings at the average cost, you would have to shoot 76 weddings in a year—not really attainable as an individual, and even if you were able to, your cost of doing business (CODB) would likely be higher than 50% of revenue.

This is the part where, if you are an established photographer, you should probably take a look at your packages and figure out your hard costs down to the dollar. Things like albums may have fluctuating costs. It’s important to account for those things. In our studio, any upgrades that we get charged for by our lab, we offer to the clients as an upcharge so we never lose money on our base costs.

Let’s say you are able to get $4,000 per wedding and that you book 40 weddings per year, which is more than the average. You would have to make the remaining $40,000 with portrait shoots.

You can see very quickly that running a successful business requires you to charge much more than the average cost of wedding photography in the U.S. But if that is the case, then why is that average so low? The answer is twofold. Some photographers don’t understand their CODB when they are starting out, so to grab market share, they underprice themselves. This is not a sustainable way to run a business. Other photographers don’t need to make a full-time living doing this. They are content with part-time income and treat this as a hobby.

While many professionals will tell you that you are not competing with the latter photographer, the truth is that you are, I am, everyone who runs a full-time business is. But to win market share, you have to play in a field that the part-time photographer cannot afford to play in. You have to offer better albums, better service, a better overall experience. You have to market, hustle and analyze the data to give your business the advantage in finding the smaller number of clients that want this type of service.

Make no mistake about it: Our industry is providing a luxury product. Most people have never had a professional photoshoot, so that makes the client base limited. If you do take on a client who wants a luxury experience, then you will be spending a substantial amount of time with them. What does that look like?

The time involved with each individual client is substantial. But most of us don’t really know how much time we are spending with a client. So let’s break it down for a typical wedding.

  • 1 hour email exchange answering basic questions to set up a consultation
  • 1½ hours initial consultation
  • 8 hours shooting on the wedding day
  • 2 hours transportation
  • 2 hours culling the wedding
  • 10 hours post-production time
  • 2 hours communication to deliver photos, request reviews, coordinate timeline, etc.

If you are including an engagement session, which most photographers in my market do, then add the following:

  • 90 minutes engagement session
  • 1 hour transportation
  • 1 to 2 hours post-production

You can see that each individual job is 30 hours worth of work, meaning that a typical wedding takes up a week of work for an individual. If you don’t have a team of shooters or if you are booking more than one wedding per week as most of us do because of the seasonality of our business, you are looking at 70 to 80 hours per week of work after you factor in your admin hours bookkeeping, marketing, etc.

So how on earth does this knowledge help you make more money? It sounds like it’s really hard to be a photographer, right?

Knowledge is power. What things can you cut down on your list? The most obvious would be your editing time. I don’t get anything for telling you that Evolve Edit’s premier plan helped me weather tough times in the beginning. At $199 per month for single-photographer studios, you are saving between 10 and 40 hours of work per week.

This time allows you to market to your clients, and marketing is how you make more money. I spend 20 to 30 hours of my week marketing, whether it’s through social media, vendor relationships or working on past client referrals.

I never would have been able to build a business had I not outsourced my editing. By using this resource, I was able to charge a more competitive price. By taking advantage of Evolve’s creative editing services, I was able to build my business model around artwork instead of promising clients 800 perfect images.

That type of promise is unscalable and unsustainable. While you can fulfill it if you are doing 10 weddings a year, you will ultimately let them down with inconsistent work, unpredictable turnaround times and bad customer service. I know this because I get requests to redo wedding photos all the time.

Since we are just getting started with 2019 and wedding season is right around the corner, this is a good time to revamp your business model to make sure that you are able to hit your goals.

In order to succeed, you have to put in the work. Success in this industry is not about how many likes you get on Instagram or how many awards you win in image competition. As I get older and more seasoned in business, I am reminded more and more that as artists, we conflate an ego boost with success, and if you allow that to happen, it becomes a distraction.

Success boils down to how lofty your goals are and how close you come to accomplishing them. At the end of the day, nothing else matters.

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To read the full article, launch the digital version of the February 209 magazine.

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