Paying Attention to Pricing and Profitability

Paying Attention to Pricing and Profitability with Skip Cohen

I’m writing this month’s article after returning from ShutterFest last night. The energy at each conference is remarkable, and 24 hours a day you can find somebody working to capture the ultimate image. Equipment, models and an ideal location abound, but what happens when you’re out of the SF environment? What happens when your responsibilities are back to the reality of being a business owner and you need to cover your expenses, provide for your family, etc.?

You’ll never hear me say anything bad about working hard to develop your skill set. In fact, nothing I’ve written about over the years works unless you know what you’re doing with your camera. But, here’s what so many of you are missing—you’ve got to make money if this is going to be more than just a hobby.

So many of you have dreams of being a full-time photographer, but you can’t afford to go full-time until you can’t afford NOT to. That means your part-time income from photography has to exceed what you’re making in your day job, so you have to go full-time or lose substantial revenue.

Pricing Your Products/Services

You shouldn’t start anywhere but the very beginning. Sadly, most of you don’t think about a starting point. For example, you look at the price of a print from your lab at three to four dollars and get excited because you’re going to sell it at twenty! But through the whole process, while short-term that looks good on paper, you never consider your real costs, and in reality, you’re losing money.

So, let’s go back to the very beginning and look at everything it’s taken to get you to this point today. Start by looking at everything you’ve invested. Here are 25 things to put on your list, and I’m betting most of you don’t think about half of them!

*Working out of your home? There’s still a cost and a percentage of your mortgage or rent

Five years ago, Bryan Caporicci wrote a guest post for the Skip Cohen University blog about pricing and profitability. It’s still one of the most in-depth explanations about pricing I’ve ever shared. One area of importance is looking at what Bryan called “Influencing Factors.”

He shared the five factors below, which most of you never consider:

1. The quality of your photography and the finished products that you provide.

There is no room to compromise on the quality of any product or service you’re providing to a client. You’ve got to provide the best and always stay focused on exceeding client expectations and in turn making yourself habit-forming.

2. Your perceived value as a photographer in your marketplace.

No matter how good your work is, what’s the perceived value of what you’re providing? Does your work stand out from the crowd? What makes you different and better than your competitors?

3. How confident you are.

 The issue isn’t whether or not your lack of confidence is real, but whether or not it’s justified. If you really do lack the skill set, but you’re serious about building a business, then you may have entered the market too early. This isn’t a career path where you can fake it ’til you make it. One unhappy consumer who realizes they bet on the wrong horse can influence hundreds if not thousands of other people.

If your lack of confidence is deserved because you don’t have the skills yet, then you shouldn’t be in business. Your reputation is your most valuable asset—don’t screw it up. Take the time for more workshops. Read everything you can related to what you’re missing. Watch every video you can find, and take advantage of online education. Practice nonstop and learn every aspect of your gear. Be a second shooter and learn the skills you need for confidence.

Now, if you lack confidence simply out of fear, start getting involved with your local photographer’s group. Most communities have a group of professional photographers who meet monthly. Get involved in the various forums on Facebook, and share your work. Utilize your network together with your ShutterFest family.

Being a business owner isn’t for the faint of heart. Even if you’re working freelance, you still own a business focused on providing something to a target audience.

4. What your competitors are charging.

Your success competing in your market isn’t just about pricing—it’s about the perceived value, your reputation, and how you stack up against other artists.

Low-ball pricing might bring you some instant business in the short run, but eventually, it will destroy what you’re trying to build, not to mention undermine the strength of the market. If you want to build a strong reputation, build it on the quality of your products, your services, and the experience people have working with you. Look for added value to the pricing equation, NOT discounting. Talk with your lab, album company, and framer about new products.

5. Your cost-of-goods.

 The foundation for cost-of-goods is up top with that partial list of 25 cost items you’ve already invested in, but some are a foundation for all your business, while other costs are specific to that one print, canvas or album you’re selling.

As Sal Cincotta once said, “If you’re starting your business off and you want to start off on the wrong foot, get your pricing wrong!”

Profitability

No single article, video or even workshop/conference can take you through everything you need to think about when it comes to pricing and profitability. One thing I repeatedly discovered at ShutterFest was the number of photographers who are putting everything into the capture and creation of an image, but not the same effort into building a business.

Yes, that’s a foundation of what ShutterFest is all about, and it’s a remarkable event for hands-on shooting and developing your skill set, but there are also plenty of business and marketing classes each year, plus SF Extreme. You’ve got to think through how to price your products; what products/services you’re going to offer and how you are going to make money.

When it comes to profitability, it’s not how much you make but how much you keep. And, for those of you who are part-time photographers, you still have to think like a full-time artist and charge a reasonable amount to keep a roof over your head without the subsidy of your day job.

That means working closely with your lab on buying the right products for your audience. It’s about taking advantage of special promotions from retailers, maintaining consistent cash flow, and often renting vs. buying expensive equipment. Partnerships can also help, especially with direct mail and promotional efforts, along with all your marketing efforts.

And, when it comes to your fear of pricing, Simon King, a photographer from the UK, wrote an excellent post for me once: “Are You a Photographer Needing to Act More Like a Head Chef?”

“When I go out for a nice meal, I expect the head chef to know his art, and I’ve chosen the restaurant based upon the menu and the establishment’s reputation. I don’t, on entering the premises, start negotiation on my meal and ask to chop and change the menu…

 The second comparison is the one on price. There may be two very similar restaurants in the area, but one is twice as expensive as the other. So would many of us go to the high-end restaurant and state that the other one is similar and much cheaper and then ask for a price match? The response you would get to that is “NO, just book the other restaurant…”

 Remember, most head chefs cook because they love cooking, but they would never consider being dictated to by the customer. Most photographers love what they do first and foremost, but maybe we should all behave a little more like a head chef!”

 Starting a new business as a photographer is overwhelming, but what good is working to create the most beautiful images of your life if nobody knows who you are and you can’t sell your products and services?