“How much should I charge?”, it’s a question I hear all the time. I hear it from students who want to make the jump from hobby to professional, but I also hear it from many new professional photographers. Take a look at any photography forum and you’ll see it’s a hot topic. I’ve also found that the vast majority of photographers won’t even talk about the subject. Let me pull back the curtain and give you some insight.
Before I begin let me say that what I’m about to describe is not the only way to do this. I hope this post will spark some conversation and I invite your feedback and insights. This is the way I do it and I’m happy to share.
I’d also like to say that I’m opposed to the old-school thought of having a standard rate that all photographers use. The thinking is that if you charge $20 for the same thing that I charge $200 for I’ll go out of business because you (and all the other $20 photographers) will drive rates down across the board. I think that’s ridiculous, hopefully the practices I describe below will explain why.
First let’s figure out what we’re trying to do here. You want to know how much to charge. You need to figure out your rates. You want to have fair prices but you also want to make a profit. Where do you start?
For a moment let’s forget about the fact that you are a photographer. You are in business and you have goods and services to sell. The same principles apply to your business as the person selling widgets down the street. You both have costs. You both have supply and you both have demand (or the lack of demand) for your products.
What are the “widgets” that you are selling? There may be more to what you are offering than you realize. When you show up for a job and take a photo what does the client get out of the deal? Let’s list a few things:
- Your time
- Your experience
- A standard of quality
- Your style
- Media of some sort (prints, CD, etc.)
Of all of these things the only constant is time. One hour of my time is the same as one hour of your time. An hour is an hour. But what does the client get during that hour? Everything else is variable and will change as you grow as a photographer. You’ll gain experience, your style will evolve, the quality of your work will increase. Therefore an hour of my time is not the same as an hour of your time to the client. They won’t get the same thing from that hour.
Now let’s chat about a very important concept: the daily cost of doing business. What are your costs? You absolutely have to have an understanding of your costs or you won’t survive. Let’s take a look at some of the most common costs:
- Health benefits
- Depreciation on equipment
- Accounting fees
- Bank fees
- Credit card processing fees
- Expendables (gaff tape, seamless paper, etc)
- Office expenses
- Phone, internet, cell phone costs
- Travel costs (even if your working local)
- Clothes (you have to look nice at that wedding, right?)
- Web hosting costs
- Ink, paper, etc.
- Software licenses
This list can get to be pretty long and the one thing I didn’t include is time. Time is your most valuable asset and highest cost – never forget that.
It’s a good idea to actually write down every single cost you have. Use a spreadsheet. Really figure it out. The best way to understand your costs are to track them over time using accounting software. We use Quickbooks online and love it. The longer you’re in business the better you’ll understand your costs.
OK, now take all of your costs for an entire year and divide that by the number of days you plan to work, this is usually 250 days per year. This is your “daily cost of doing business” or DCODB. Now you have a realistic place to start when figuring out your rates. This is the rock bottom number that you have to bring in every single day of work. If you don’t know what your DCODB is then you should get cracking on the books. You must know this number!
DCODB is going to be different for different people. If you’re a stay-at-home mom who shoots kids portraits your retirement and benefits are probably covered by your husband. If you don’t own a studio your rent is lower and your insurance rates are different. You get the idea.
For the sake of argument (and easy math) let’s say your DCODB is $80. If you work an 8 hour day you need to pull in $10/hour just to cover the bases. For the record – I hate figuring hourly rates – but that’s another discussion in the future.
Now that you have your DCODB it’s a bit easier to give a fair price. If someone asks what you’d charge to come shoot for a day you can use a simple formula:
DCODB + shoot costs + markup = rate.
Let’s put it together. Our pretend client wants you to come to their location for a couple hours one morning and shoot their antique car collection. And while you’re there why not throw in a family photo in front of the old Tucker? How much would that be?
You know your DCODB is $80 but what about the other costs? Again, don’t do this in your head, do the math and get it right. This is why photographers who’ve been around a while won’t give you an answer on the spot, they need to calculate the cost and give you an estimate. Quickbooks is terrific for this – it’s built for it. Let’s break down the estimate.
The shoot is only going to take about 2 hours, so you should charge $20, right? Wrong. You’ll have to drive to the location, setup, shoot, and then drive back. There are hidden costs – transferring the photos, unloading the car, etc. At the very least you won’t be able to book anyone else for the morning. You need to begin with a half-day rate: DCODB/2=$40.
What about other costs? Let’s add those up (with bogus numbers):
- Assistant: $20
- Rental for gear you don’t own: $5
- Gas used to get to location: $1
- CD for comps: $1
Total *real* cost is: $67. But you are a terrific photographer, the client loves you, and you do amazing work. Five other people want you to shoot at the same time for the same thing – demand is high – supply is low. You can add a few dollars because your perceived value is high. But what if you’re just starting out?
Nobody else knows you exist, your work is OK at best, you’re just cutting your teeth. Maybe you should just shoot for free to get the experience, correct? No. At least charge your real costs. If you don’t you’ll be out of business soon. You can always lower your real costs by paying yourself less, skipping the assistant, etc.
You should always meet with your client before the shoot (even if it’s on the phone) to determine exactly what they expect as the outcome of the shoot. In the above example the family may want a full sized framed portrait for the family room. Did you include that in your estimate? Are you marking up what Whitehouse is charging you? Did you take in to account the time you’ll spend in post production getting the file ready for print? Are you considering paper and ink costs? Track your expenses!
What about licensing fees? If you shoot for a commercial client you’re rate structure will be a bit different:
DCODB + shoot costs + post production + licensing + markup = fee
We normally bill post production as half day increments depending on how much work we have to do or we contract graphic designers/retouchers to do the work and pass the bill+small markup to the client.
Licensing images can be sticky. We use a very simple formula for figuring this out. We ask our clients to show us the numbers of the total media buy and we use a sliding scale. Let me explain using hypothetical numbers.
Let’s say the client is buying advertising in 4 magazines, one billboard, and 20 mall banners. The total media buy is $40,000. We charge a percentage of that amount. For the sake of argument let’s say that percentage is 10% because it’s a mid-sized campaign. Our licensing fee is then $4,000.
But let’s say it’s a small client and they are just going to buy an ad in the local newspaper for $300. Our percentage would be 20% and cost the client $60.
If our client was huge and the media buy was $1,000,000 or more then we’d charge a smaller percentage, around 3%. The licensing to the client would be $30,000.
We like the sliding scale method for determining licensing. It’s easy for the client to understand and put in their budget. What the actual percentage is and how long the images are licensed are things we look at closely and are a part of our corporate strategy. I can’t share specifics but you have enough information to understand the principles and go forward.
I hope this gives you a start on determining your rates and pricing. To get solid advice for your specific business needs I suggest you do a few things:
- Hire an accountant to help you get started
- Use Quickbooks to track everything
- If you don’t have a grasp on basic economic principles then get some help or take some classes. Do you know what ROI is? Do you know how economies of scale effect your buying power and pricing? Do you know what depreciation is? Do you have an EIN? If you’re unsure about any of these things you should get some help from a professional number cruncher.
- Join Professional Photographers of America and enroll in Studio Management Services – it’s business school for photographers. Why are you hesitating? Click the link and enroll. It’s worth it.
- Read Picture Magazine – it has great business advice.
This article is by no means extensive. You’ll need to do the work to fully understand the business you’re in and set appropriate rates. You’ll be tweaking your rates until you retire.
If this article was helpful to you please let me know. This is just one part of the business of photography. You should also have some understanding of marketing. You should know how to calculate your ROI (return on investment) for everything you do. This will help you fine tune your business and stop doing things that make some money for those that make lots of money.
Happy shooting and number crunching.