formula for calculating your prices
Disclaimer: In case you were wondering, I learned almost everything I present here from public blogs and online articles about the photography business. That said, if you happen to be a photographer in business and want to complain about how much my transparency can hurt the proprietary aspects of the industry... then you can spend as many sleepless nights as I have Googling topics such as "photography business pricing" and "pro photo labs" and find just as much information as you would have were you to be my neighbor two doors down who only dabbles in family portraits. Anyone can get to the information I've accessed. I may not always remember where I got the information (unfortunately I haven't been keeping track -- I've spent 6 out of 7 nights researching this for the last 4 months), but it was all public nonetheless, and therefore, I don't deserve chastising for putting it all in one accessible place. Remember, I'm here to educate, not exclusivate (no, this is not a word, but it makes my point and provides effective rhetoric!).
Moving on...
I read somewhere on a public site that the formula for determining the pricing/value of your work as a photographer is fairly simple:
1. Calculate your minimum annual income required to survive PLUS annual costs of maintaining the business (rent, utilities, equipment maintenance, supplies). This is your minimum required annual income.
2. Decide the lowest number of jobs you would do, in a slow year.
3. Divide your minimum annual income by the number of jobs in a slow year to get the minimum amount of money you must bring in per job in order to keep the business running and pay yourself to survive.
THEN...
1. Calculate the annual costs of maintaining the business PLUS your ideal personal income (generally greater than your minimum). This is your ideal annual income. Don't be afraid to shoot high with this number if you feel your time, creativity, skill, and effort are worth it. Don't forget: When people pay you for taking their photograph, they're not paying for just an image; they're paying for your talent, your education, and your creation, all of which extend far beyond the ten seconds it takes to compose a single shot. You could be spending hours manipulating the image with expensive software on an expensive laptop in order to present the customer in their best light, or create for them an artistic representation of their memories that nobody else can duplicate. As I read in one forum, "If they want Wal-Mart portraits, they can go to Wal-Mart." There's a reason their portraits are so inexpensive.
2. Decide the maximum number of jobs you are willing to do in one year.
3. Divide your ideal annual income by the maximum number of jobs you are willing to do in one year. This is the amount of money you must bring in per job to reach your ideal annual income.
THEN...
One wedding photographer took the average between the two numbers calculated above and based her pricing on that figure. She divided this new number by the ideal number of weddings she would like to photograph in one year. This gave her an amount to start with when pricing her services, a number which met her business requirements, more than provided for her personal survival, AND put her on track to reach her ideal annual income sometime in the future.
When calculating your minimum annual income, don't forget to factor in things like health insurance, business insurance, payroll (if you have employees), and cost of upgrading equipment.
My Prices
In an ideal world, I would make as much as my husband (shooting for equality, here, people!) while stil being able to make my own schedule and raise my children at least most of the time. This amount I used as my ideal annual income. I asked my husband how much he'd like me to bring into the household, and used this as my minimum. I did all the calculations above and then took the average betwen my ideal and my minimum, and came up with a reasonable figure on which to base my pricing structure. I then messed around with the numbers even more by adjusting the amount of jobs I could do in a year. Of course, the more jobs you can do in a year, the less money you have to make from each job. If I want a year-long vacation, it would take a few people quite a lot of money to help me reach my goals; at the same time, if I overschedule myself, it allows me to offer lower prices, but calls into question the quality of each job. I'd rather be somewhere in the middle.
Showing the numbers I used to come to my pricing conclusions would reveal far more about my household than I'm willing to make public, so this is where I'll stop. Just know that this formula made it much easier for me to make my price list based on my own personal requirements as opposed to that of my competitors'. If my prices happen to fall below that of other local photographers, that's a sign of one or more of the following:
a) My competitors have higher standards of living, beause chances are they used a similar formula.
b) My competitors can command higher prices because of their duration of experience.
c) I have much more room to account for inflation in the future if my prices already fall below or within the budget of the current market.
Next blog: Market analysis.
Moving on...
I read somewhere on a public site that the formula for determining the pricing/value of your work as a photographer is fairly simple:
1. Calculate your minimum annual income required to survive PLUS annual costs of maintaining the business (rent, utilities, equipment maintenance, supplies). This is your minimum required annual income.
2. Decide the lowest number of jobs you would do, in a slow year.
3. Divide your minimum annual income by the number of jobs in a slow year to get the minimum amount of money you must bring in per job in order to keep the business running and pay yourself to survive.
THEN...
1. Calculate the annual costs of maintaining the business PLUS your ideal personal income (generally greater than your minimum). This is your ideal annual income. Don't be afraid to shoot high with this number if you feel your time, creativity, skill, and effort are worth it. Don't forget: When people pay you for taking their photograph, they're not paying for just an image; they're paying for your talent, your education, and your creation, all of which extend far beyond the ten seconds it takes to compose a single shot. You could be spending hours manipulating the image with expensive software on an expensive laptop in order to present the customer in their best light, or create for them an artistic representation of their memories that nobody else can duplicate. As I read in one forum, "If they want Wal-Mart portraits, they can go to Wal-Mart." There's a reason their portraits are so inexpensive.
2. Decide the maximum number of jobs you are willing to do in one year.
3. Divide your ideal annual income by the maximum number of jobs you are willing to do in one year. This is the amount of money you must bring in per job to reach your ideal annual income.
THEN...
One wedding photographer took the average between the two numbers calculated above and based her pricing on that figure. She divided this new number by the ideal number of weddings she would like to photograph in one year. This gave her an amount to start with when pricing her services, a number which met her business requirements, more than provided for her personal survival, AND put her on track to reach her ideal annual income sometime in the future.
When calculating your minimum annual income, don't forget to factor in things like health insurance, business insurance, payroll (if you have employees), and cost of upgrading equipment.
My Prices
In an ideal world, I would make as much as my husband (shooting for equality, here, people!) while stil being able to make my own schedule and raise my children at least most of the time. This amount I used as my ideal annual income. I asked my husband how much he'd like me to bring into the household, and used this as my minimum. I did all the calculations above and then took the average betwen my ideal and my minimum, and came up with a reasonable figure on which to base my pricing structure. I then messed around with the numbers even more by adjusting the amount of jobs I could do in a year. Of course, the more jobs you can do in a year, the less money you have to make from each job. If I want a year-long vacation, it would take a few people quite a lot of money to help me reach my goals; at the same time, if I overschedule myself, it allows me to offer lower prices, but calls into question the quality of each job. I'd rather be somewhere in the middle.
Showing the numbers I used to come to my pricing conclusions would reveal far more about my household than I'm willing to make public, so this is where I'll stop. Just know that this formula made it much easier for me to make my price list based on my own personal requirements as opposed to that of my competitors'. If my prices happen to fall below that of other local photographers, that's a sign of one or more of the following:
a) My competitors have higher standards of living, beause chances are they used a similar formula.
b) My competitors can command higher prices because of their duration of experience.
c) I have much more room to account for inflation in the future if my prices already fall below or within the budget of the current market.
Next blog: Market analysis.