Photographers often harangue one another over pricing. Ironically, very few are willing to publicly disclose how much they charge for jobs. In economic speak, this leads to an inefficient market that has wide ranging pricing for the same output.
More to the point, no one knows what to charge, photographers don’t have an easy way to benchmark their rates and approach, and thus pricing information is guarded like gold. The cycle of opacity continues.
In an age where everyone is a photographer and where even the most popular trade organizations have only a few thousand members, the notion that discussing pricing could somehow be construed as collusion is antiquated. Pricing is vexing. We need to talk about it openly.
There are a few good resources (see here, here, here), but a few resources aren’t enough to alter the status quo. In the meantime, publishing groups work together to devise new ways to appropriate more rights from photographers and issue signing ultimatums. Photographers have been waiting for a messiah, failing to realize that their messiah is themselves.
Why won’t photographers talk about price?
For editorial assignments, pay is often dictated by standard rates, but even those are somewhat flexible with added service fees (parking, mileage, rentals, digital transmit, etc). When it comes to commercial, corporate or institutional work, a dearth of information makes it difficult for both the photographer and the client to assess whether they are getting a fair deal.
Pricing can be nuanced. A photographer might agree to a lower shoot fee because she feels that the resale potential is high. There might be a guarantee of shoot days. Ancillary services like retouching or social media consulting might affect the price of the pure photography.
What photographers have to say
Jenna Close, Commercial Photographer & Chairperson, Board of Directors, ASMP:
I think it primarily comes down to a fear of being judged. Not only is pricing is all over the place, but the way in which we structure our fees varies widely. Some people license their work very specifically, others have embraced unlimited use, some people line item everything, others bundle fees into one lump sum. I think part of that is dictated by which area of the market you work in, but that doesn’t stop the topic from eliciting very passionate opinions from people. So there’s a very real fear of being looked down on, considered one of the low-ballers, or found to be less impressive a businessperson. No one wants a colleague to think ‘Man, that’s a lot lower creative fee than the other guy suggested’ or ‘Oh, you’re one of those people who is regularly leaving money on the table!’
Michael Clark, Outdoor/Adventure Sports Photographer:
I think part of it is culture. Here in America it is rude to ask how much people make for a living or even for a job, just like it is considered rude to ask who they voted for in the recent election. But in reality, I think it is mostly because photographers are not educated on this topic and do not know how to price their work. Many photographers get incredibly nervous when this topic comes up because they haven’t taken the time to learn this part of the business. It comes down to lack of education, which has plagued our industry forever…I also think that discussing pricing with photographers is very intimidating as there is always someone pricing their work at much lower rates than the rest of the folks in the discussion. I have seen this play out in ASMP meetings which talked about pricing. That person undercutting everyone else in the room was fairly quiet. Those that were talking were in “witch hunt” mode talking about how the “under cutters” were destroying an industry. Hence, this is a tough topic that requires serious trust so folks can open up and either become educated or at least not be alienated.
Chris Owyoung, Concert Photographer & PhotoShelter product manager:
While I’ll freely talk about how I arrive at my pricing for different jobs, I only share the specifics with a handful of close friends. Generally speaking, I’m reluctant to talk about pricing because: 1) I’m afraid of being undercut by the competition, 2) I’m insecure about my own rates, 3) I think that each photographer needs to price based on a cost of doing business calculation not necessary what others are charging.
Robert Seale, Commercial/Corporate Photographer:
Nobody wants to be the low guy. There’s no transparency because you’re afraid to be embarrassed to be the low guy.
Logan Mock-Bunting, Commercial/Editorial Photographer:
No one wants to feel like they are the one undercutting the market. But there are a lot of factors – geographic, future sales, long-term relationships – that can go into what makes a ‘final sales price’ and these factors can determine a price that is lower than what photographers may be bragging about/publicly revealing (most folks only tend to talk about shining victories, not drudgery. Their personal high outliers on the spectrum, not the low ones). Keep your rights, they can help offset a lower Creative Fee for long term profit.
Richard Kelly, Photographer and Educator:
I think that the vagueness/secrecy comes from fear. The fear comes from the lack of actual data/or/metrics for determining value and not knowing how one photographer sizes up to another. The other thing missing is knowing the terms/ rights and scope to a particular project that is then connected to a value.
Approaches to pricing
“Pricing is a process that works to eliminate as much doubt as possible for a key stakeholder to make a profit maximizing decision.” –Vivian Guo, Pricing Intelligently
As abstract and arbitrary as pricing can seem, arriving at a price is a process that equalizes a buyer’s needs and expectations (aka value) with a monetary amount. Luxury fashion is a great example whereby “value” is conveyed through brand prestige (usually accompanied with higher quality materials and design), which allows some designers to sell T-shirts for $400.
One of the challenges of the digital age is convincing consumers/customers of the value of what is essentially intellectual property. Back in the day, spending $15 for a CD made more intuitive sense because you received something tangible. Similarly, with photography the print provided a tangible output to the client.
When your photography is perceived as a thing (i.e. a photo), rather than a service, the customer will always consider it to be fungible. Why pay a photographer $1,000 to capture an event when another photographer is willing to do it for $200? If the customer believes the only thing that matters is price, the $1,000 photographer is screwed. But if you can convince the customer that having a back-up camera, liability insurance, quick turnaround, great service, and the experience of shooting five hundred other events is meaningful, then $1,000 is worth it because of the perceived value of the service.
Anyone who has ever dealt with a general contractor can probably tell you that selecting one on the basis of price can end up being an expensive decision. You want the contractor who will answer your phone calls, communicate problems that might arise, and ensure that quality work is completed by his/her subcontractors. Everyone wants a good deal, and that doesn’t necessarily mean the lowest price.
Pricing Methodology
There are three main methodologies of pricing: 1) cost-plus pricing, 2) competitor pricing, 3) value-based pricing.
Cost-plus pricing
Cost-plus pricing is a typical pricing methodology in retail where a desired profit margin is added to your Cost of Doing Business (CODB) or Cost of Goods Sold (COGS). The cost of raw materials and labor needed to produce a product). For any freelance photographer, understanding your CODB is key to ensuring that you don’t underprice yourself out of business. The NPPA provides a great CODB calculator.
Cost-plus pricing isn’t an ideal methodology for photographers because it tends to treat photography as a widget instead of a service. However, it still is important for photographers to understand their CODB as a basis for beginning a pricing analysis.
If you know your CODB for a day of work is $1,000 – and you might be surprised at how high your CODB really is – you’d better have a good justification for taking $250 editorial jobs (i.e. they provide marketing exposure for higher paying corporate jobs). But simply tacking on 20% to your CODB doesn’t teach you how to show value to your clients.
Richard Kelly provides counterpoint to using CODB as a starting point, “For me, it’s not a basis for pricing, it’s a way to ensure you don’t go out of business.” Still, knowing your CODB gives you a baseline from which to consider and/or evolve your pricing.
Competitor Pricing
Competitor-based pricing, as its name suggests, is a pricing methodology that only uses other people’s pricing as the basis for setting your own prices. The problem is that it assumes your CODB is the same as your competitors, and it can lead to a race to the bottom.
This isn’t to say that you should be blissfully unaware of what other people charging. It’s important to know where your pricing sits in the spectrum so that you don’t cause unnecessary price deflation, but it shouldn’t be the sole criteria for determining pricing.
Richard Kelly notes that his biggest competitor in his homebase of Pittsburgh is Getty Images. “For the past decade Getty has been my biggest competitor,” he says, “clients would compare both the work and the price to what they could get from Getty.”
Competing solely on the basis of price in photography is a death sentence for freelance photographers. In retail, businesses that rely on low prices (e.g. Walmart) depend on huge volume to be successful. They can play the volume game because they have scaleable businesses. High demand? Build more stores. Higher more employees. Negotiate better volume pricing.
But photographers are usually sole proprietors, and are inherently non-scaleable. If you’re a kid right out of photo school, $99 headshots might seem like a good idea. But try paying rent in a city like New York, and you’ll quickly realize the error of this pricing strategy. You simply cannot generate enough regular volume to make this a long-term business model.
Value-based Pricing
Simply stated, value-based pricing sets price based on the perceived value to the customer. It doesn’t factor in cost or competitive pricing. It requires lots of research to understand the customer, their pain points, and their willingness to open their wallet, but it generally results in the highest profit margins.
Let’s use wedding photography as an example. Wedding photography can easily be found in New York from $1,000 to $25,000 and more. New York Magazine polled 100 brides in 2013 and found that 21% wished they had spent more on photography (perhaps equating money spent with results), suggesting a openness to value-based pricing.
Most sophisticated wedding photographers would argue that selling wedding photography isn’t about photography, but about selling a relationship. On one of the most intimate days of a bride and groom’s life, the photographer is continually present for hours. How do you create perceived value while simultaneously honing in on your target demographic?
For well-known wedding photographers Justin and Mary, the culling begins with their inquiry page which is targeted towards the bride. The last question of the form asks, “On a scale from 1-10, how excited are you to be a Justin & Mary bride?”
Justin and Mary previously told me they don’t respond to inquiries of less than an 8. The reason? A bride who isn’t excited to work with them is probably 1) comparison shopping for the lowest price, 2) isn’t familiar with their work and brand, and therefore is a poor customer.
There is scant information about fees on their website other than to say “Full collections begin at $6800.” For most people, that’s a fair chunk of change. But as long as the marketing and price work to eliminate doubt from the customer’s mind, the price is “accurate.”
- Do their galleries lead you to believe they are competent photographers?
- Does their website design match your aesthetic?
- Does their marketing “voice” speak to you?
- Are you excited to work with them?
It’s tempting to believe that a different genre of photography is somehow exempt from this approach. A commercial photographer bidding on a custom stock library for a corporation might seem worlds apart, but is it?
- Does your photography and aesthetic match or exceed the customer’s expectations?
- Does your list of clients reinforce your ability to service the customer?
- Can you communicate in a way that is equivalent to their other vendors (some of whom might be significantly larger than your company)? Is your proposal professionally designed?
- Does your personality resonate with the customer?
- Are you responsive in your communications? Are you perceived as being fair? Are you perceived as a “good guy”?
- Does your breakdown of your estimate scare or comfort the customer into thinking you know what you’re doing?
How should we talk about price?
How can photographers talk about price without letting emotions get in the way? A good template already exists via Wonderful Machine’s Pricing & Negotiating column on aPhotoEditor. An actual estimate (with identifying information redacted) is provided, and Jess Dudley does a great job of breaking down various provisions, and how specific items were negotiated with a client.
But of course, the column is focused on “wins” rather than “losses” and the estimates are typically for corporate/advertising usage in the $10k+ range on shoots that require crews. You’re unlikely to see a price estimate for an event photographer at French Embassy dinner (i.e. the scope is relatively narrow compared to the gamut of photography jobs that freelancers deal with).
You also don’t get a sense of regional variations in pricing and approach. In New York City, replacing a water heater might cost you upwards of $3,000. In Iowa, Sears might be available to install the same water heater for $750. Variations in cost of living, insurance, accessibility (e.g. a water heater in a garage is vastly easier to install than a water heater tucked into a corner of an apartment on a fifth floor walk-up) can create legitimate regional variation in price.
Hopefully by discussing these things, we can begin to initiate a real dialog around pricing. Feel free to participate through thoughtful questions and comments below.
About the author: Allen Murabayashi is the Chairman and co-founder of PhotoShelter, which regularly publishes resources for photographers. Allen is a graduate of Yale University, and flosses daily. This article was also published here.
from PetaPixel http://petapixel.com/2016/01/21/why-wont-photographers-talk-about-price/
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