Your Dream Studio: Digital Product Pricing Strategies

Your Dream Studio: Digital Product Pricing Strategies with Jeff & Lori Poole

Your Dream Studio: Digital Product Pricing Strategies with Jeff & Lori Poole

Working Digital Products Into Your Price List

For the past two months in The Business Corner, we’ve been building your price list from the ground up by first determining a retail value for each product you sell. In October, we began establishing prices for products based on your time invested and the hard costs to produce each product—essentially using cost-based pricing as a foundation (October 2018, “Your Dream Studio: Understanding Cost of Sale and Markup”). Last month, we looked at alternatives to the cost-based pricing model, examining products and situations for which cost-based pricing doesn’t work (November 2018, “Your Dream Studio: Strategies Beyond Cost-Based Pricing”). One product we briefly discussed last month that breaks the cost-based mold is digital files. For this month’s theme of digital strategies, let’s further explore how to price and sell digital files.

The Digital Debate

Whether or not to sell/include digital files has been a hotly debated topic for the past decade, and will likely continue. In an age when everyone has a phone in their pocket, our clients are becoming increasingly digitally savvy. They are used to owning every photo they take in digital format. They demand shareability. They understand filters, presets and other basics of retouching. On the other hand, many clients do not understand the amount of post-production that can go into a photograph. It’s not as simple as snap, then filter. Clients want the files. Do we appease them?

On one side of the debate are those who want to service client demand. Many photographers feel that if they do not offer files, their clients will shop elsewhere. Many view files as simply another product to be sold. Some photographers point out that prints 8×10 and smaller are often not profitable—so why not let the client pay for the file and make their own prints?

On the other side of the debate are those who recognize the potential threat that digital files pose to print sales. If a client is able to make their own prints from professional files, this can kill the sale of printed products. Many photographers are also concerned about the poor print quality a client may receive from a consumer lab, reflecting poorly on the photographer’s work.

There is validity on both sides of the argument. There is also a ton of gray in this black-versus-white debate. Gauge your own stance by asking yourself these questions:

  • Do you want clients sharing their images on social media? Why or why not?
  • Do you care if clients retouch or add filters to their images?
  • What are your concerns with clients printing their images? Quality? Loss of sale? Both?
  • Is there a set of rules or compromises you can create that would make you comfortable with clients printing their images?

“Digital Files Don’t Cost Me Anything”—and Other Myths

While it may not seem immediately obvious, digital files have a cost associated with them. Remember that cost-based pricing includes your time to create that product. With digital files, you have to download the images, cull, color correct, crop…maybe even retouch. How much time do you spend retouching your images? Are you retouching every image before the client sees them? To remain efficient, it is important to keep your retouching time under control.

To put it in actual numbers: Let’s say you spend 30 minutes retouching an image and your time is worth $25 an hour. Half an hour, at $25 per hour, is $12.50 in time-cost. For a 25% cost of sale, you would need to charge a minimum of $50 per image for every image in the proof set. If you are proofing 50 images, that would come out to $2,500 for the set, simply to account for your time. And even if the client wants only 10 images, you still have to charge the $2,500 because you’ve already spent the time retouching all 50. You can see how this can get out of hand quickly.

If you are shooting a session and delivering all the retouched files for $200, that should tell you your files are worth more. We often hear photographers say, “I don’t have to charge for my time because I just retouch on the weekends/while my kids are sleeping/etc.” This is another myth. Incidentally, these are often the same photographers who spend all their time editing for very little profit. Time is money. To retouch 50 files at half an hour apiece is 25 hours worth of work—not including shooting the session. That’s nearly a full workweek. $200 is not sustainable for that amount of work.

Controlling Your Digital Costs

Of course, there are many variables in the situation above. The most important is the amount of time spent retouching. Many photographers opt not to retouch their digital files at all, instead offering them to their clients as “digital negatives” or “digital proofs” rather than finished artwork. Retouching can be used as leverage to encourage print purchases. For images that are printed, keep time costs under control by aiming for five minutes or less for most images. Check out the bonus video that accompanies this article for tips on keeping your retouching time down. Of course, exceptions to this five-minute rule apply. If your specialty is digital composites and fantasy artwork, it’s obviously going to take you more than five minutes. And that’s fine—as long as you’re charging accordingly.

To reclaim even more of your time, consider outsourcing. Jeff and I have been clients of Evolve Edits for quite some time. (Full disclosure: There is a relationship between Evolve Edits and Shutter Magazine.) Evolve does all of our color corrections, and sometimes culling and/or composite retouching. The amount of time we save is worth way more than the cost for their services. We simply work the costs into our cost-of-sale calculation. We then reinvest the time gained into marketing, shooting and other moneymaking activities.

Considerations Beyond Cost of Sale

As we discussed in last month’s article, digital files require other considerations when coming up with a retail price. The biggest is the lost opportunity to sell prints. If you assume that a client will not purchase a print once they have the file, you need to charge at least as much for the file as you would for the print.

Further, if you assume that a client who has all of the files will not buy any printed products, you need to price the full set of files around the price of your target sale. If your target sale is $2,000, the full set of files à la carte should be around $2,000.

Selling individual files à la carte is a surefire way to kill a sale. While we have not yet covered sales systems and strategies (stay tuned for February’s Sales & Marketing issue), you don’t want clients to purchase just their favorite handful of images at a price well below your target average. The full set of files should be the only digital option on your à la carte menu. Lower quantities of files may be offered within packages or package add-ons, but not à la carte.

Beyond these basic tenets, you can get creative. Perhaps the complete set of files is sold at a lower price once a minimum print purchase is reached. This will help satisfy those photographers who want their clients to have at least some professionally printed products.

Other Solutions to the Digital Dilemma

If you’re contemplating offering a digital option to your clients, you have more options available than just “to sell or not to sell.” There’s a sweet spot out there to fit your comfort level of offering files, while also fulfilling your client’s desires. Here are just a few ideas.

Client desire: social sharing

If your client’s primary motivation is to share their images online, simply offering low-resolution watermarked files can be a great compromise. Offer the files within a mobile app for extra wow factor. Downsize your files so they are no longer printable, and add a (somewhat) discreet watermark to the image. Now when clients post your images, you may even earn referrals. You may specify to your client whether they are permitted to crop, retouch or add filters to the image. Consider how your client can best gain access to these files. Do they purchase them? Is it a package add-on? Is a sharable file included with each print purchase? Make their desire for files work for you.

Client desire: inexpensive reprints

If your client wants to make their own prints, consider the pros, cons and compromises discussed earlier in this article. My favorite compromise is offering files that are printable only up to 8×10. Jeff and I sell our individual files at approximately triple the price of an 8×10 print. If the client is willing to pay that and I don’t have to sell them unprofitable gift prints, it’s win/win. But we specify in the client’s print license that they may be printed up to only 8×10, and we downsize the file so anything larger will be pixelated. We strongly encourage our clients to order their reprints from, which is the consumer division of our pro lab, Miller’s. This way, we ensure they are getting quality reprints.

Client desire: “just to have them”

Offer low-resolution social share files or medium files printable up to 8×10. Invest in a good backup system, and then guarantee your clients that you will always preserve the full resolution files of any product they order in case the products need to be replaced or they want future reorders. At this point, you’ve allowed them to “just have” the files in a format that will suit the majority of their needs, and you’ve also alleviated their archiving concerns. And you’ve done so in a way that only preserves the products they order now, which encourages purchases now.

Creative Solution: The Mobile App

By now, hopefully your wheels are turning about how to incorporate digital files into your product lineup. As an example of how you can put some of the ideas we’ve discussed into a product, let’s look at the mobile app. The mobile app is essentially a collection of digital files the client can access from their mobile device.

In our studio, Jeff and I offer mobile apps with low-resolution watermarked files that are not printable. We include the app as a bonus with either of our top two print collections. In our second-highest collection, the app contains 10 images that have already been purchased in a printed product. This ensures zero additional retouching time for the images in the app, and prevents the app from cannibalizing print sales. In our highest collection, the app includes all of their purchased images (not just 10).

Including the app in the top two collections helps push the client into at least the second-highest collection. The greater quantity of images encourages them to upgrade to the top collection. We are leveraging the client’s desire for shareable files to encourage their purchase of printed products.

Your Dream Studio Checkpoint: Product Lineup Complete

You should now have a complete list of all the products you sell, and you should have prices established for each item. Your product prices should have a foundation of cost-based pricing (see October’s Business Corner), with additional strategies for demand-based pricing (November). Finally, your digital products should now round out your product lineup (December).

Financially, you have been working on tracking and controlling your expenses (September), allowing yourself to keep more and more of every dollar you take. You’ve decided where you want to be along the volume/margin spectrum (July), and you’ve come up with an annual plan that fits your business model and your financial goals (August).

You are now ready to begin building your sales systems, marketing plan and seasonal calendar. Join us next month at The Business Corner as we begin putting together all your hard work into the bigger picture.

Get the full story

To read the full article, launch the digital version of the December 2018 magazine.

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