How Much Should I Charge?

“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:

  • Salary
  • Retirement
  • Health benefits
  • Taxes
  • Rent
  • Utilities
  • Equipment
  • Depreciation on equipment
  • Insurance
  • 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)
  • Meals
  • Talent
  • Assistants
  • 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.

  • http://dolcepics.com/ laura-dolcepics

    This is the best article on this subject I've ever read. Thank you for your insight and detailed explanations! Had to retweet it. :)

  • TonyCastillo

    Great article I often wondered how people charge for photography. As a amateur photographer I enjoy learning everything about the business. I personally want to thank you for taking your time to help and teach those of us that are just learning about photography.Thanks..Keep up the good work.

  • http://grandviewphotographyaz.com Eric Taylor

    Thanks so much for this it is really helpfull!

  • http://www.philliplapeyre.com/ Phillip La Peyre

    I live in a small city in Australia where we have ALOT of photographers…. but that word is abused here. My primary income at the moment is ironically in a photography store, and we see so many people buying a camera, and then within 2 months they're calling themselves photographers, then as fast as they came, they have made a quick dollar, and they are then gone off the face of the earth. these people are bottom feeders and taking all potential clients. If you visit my website (i wont spam it) you will see that my quality of work is quite high (not exceptional, but high) and people think my rates are too high compared to other “photographers” (spit) in the area. Do i give in to these potential clients and lower my price, or do i sacrifice the little 'profit' im making to build the portfolio?

    My prices are not unrealistic, they are approximately 300$ more than what other people are doing, but i spend alot of time in photoshop fixing images to make them to the best of my ability. Do you mind if i ask your suggestions?

    P.S. Nuka is doing very well, final tests on Monday!!!

    Regards,

    Phillip La Peyre
    http://www.philliplapeyre.com

  • http://blog.snapfactory.com SnapFactory

    You may need to spend a small amount of time educating your clients. Do they know the difference between an out-of-camera image and one that's been color corrected, sharpened, sized, dust spots removed, etc? You may want to show them the difference in the quality of your work and the quality of your competition's work. Then let them decide if they want to pay for the post-production. That way you can give them a choice, a lower price with no post production or a “normal” price with the post production.

    You may also need to figure out ways to cut your costs so you can be more competitive. Are you using all of your camera's features to sharpen and enhance your photos in camera so you can skip post? Have you tweaked your workflow so you can produce the same amount of high quality photos in less time (Lightroom or Aperture will really help here)?

    In the end the customer will decide. The laws of supply and demand are real and you can't change that. Look for ways that give you a competitive edge and exploit it. What do you provide that nobody else does? And remember – it has to be valuable to the client. If your clients can't tell the difference between what you do and your competition then the perceived value of all your post production is zero. In other words, it has no value to the customer and they won't pay you more when the can get the “same thing” from someone else.

  • http://geowulf.wordpress.com Greg

    I'm back getting my masters and these 'hidden' costs are all too familiar to me in my Financial Accounting class.

    Just imagine if YOU were the accountant and had to do accruals with T accounts on all of this stuff…

  • GZ

    Billing is one thing. Collecting is another. How do you handle actual payment?

    Thanks,
    GZ

  • http://www.wholesalereadingglasses.net readers

    Thanks for sharing your insights on how much should a professional photographer charge to his/her clients. What I learned from this article is also applicable in other fields of profession. I do freelancing web design and I should start restructuring my professional fee as it is still disorganized and randomized.

  • http://blog.snapfactory.com SnapFactory

    For new clients we charge a deposit of 50% to be on the calendar (refund policy is negotiated in advance, usually no refund 7 days before shoot). They have to pay the session fee before the shoot begins. No photos are delivered until balance is paid in full.

    Would Target let you walk out the door without paying for your products? We don't either.

    For established clients or clients that are larger we have other payment options.

  • http://blog.snapfactory.com SnapFactory

    You bring up a very good point. You can learn a lot by looking at other businesses. I regularly read graphic design magazines because the business principles apply to design houses as well as studios. There is so much good information out there. My favorite is HOW magazine. It's fantastic.

    http://www.howdesign.com

  • http://FrankCizek.com Frank Cizek

    RE: “Billing is one thing. Collecting is another. How do you handle actual payment?”

    I've always liked the “Agreement” provision, “Grant of Rights. Upon receipt of full payment, Photographer grants to the Client the following rights in the Work…”

  • CJay

    whoa things are much clearer now… thanks!! I am just starting out doing Post Production, and this really helped out!!!

  • http://www.weddingcorner.info/ Wedding Planning

    As someone mentioned earlier…. my struggle is to be able to collect.
    I have had few projects in the past from referrals, but to collecting from my clients has been difficult as I have not provided them a breakdown of each charge in the past. Things seems to improve after I do that.

  • burdickrobert

    There is another link under the category of personal finance but it has nothing to do with finance. If you have difficulties in making payment, you can click the link named wachoviabank.com. You will have an expert helping you to fix your problems and you don’t have to go out of your home to get the service. What you need to do is to choose a button between the two “call us today” and “we’ll call you”. Don’t you think this service shows the attentiveness and consideration of the Wachovia? It’s really good in my opinion.

  • group health insurance

    great post

  • http://www.linkedin.com/pub/jonathan-youngsma/14/b36/115 Mathew

    Very well said. But billing & collection is entirely different thing. How one can manage both thing together?

  • garvg

    Collecting & billing is entirely different thing. How can we manage all this?

  • bhawana

    This is a good article. Very descriptive on this topic. The data compiled is just complete in itself.

  • manuj

    Good tips. I am going to start this business & the tips given here are so valuable for me.

    Thanks
    Regards.

  • http://unilinkinc.com/receipt_printer.php receipt printer

    Very interesting.. I think one thing may concern on this is the use of receipt.. Receipt is really important in having a business.. It is like a simple contract between you and your customer..

  • surya

    “DCODB + shoot costs + markup = rate”.

    v.helpful, This should be like a fixed formula for starters :)
    Thnx a lot for ur insights

  • http://www.sinohotel.com/english/tours/hangzhou/index.html Hangzhou Tour

    Great post!

  • http://www.stevennoreyko.com/ Steven Noreyko

    Important note:

    DCODB is an INTERNAL number. You do not disclose this to your client or mention it when discussing pricing. Same goes for markup. You should present pricing as simply as possible to the end client.

    My opinion on this is that you should not use DCODB as part of your cost calculation. You simply need to know what that number is and make sure your fee is higher than your CODB. It's a REFERENCE tool only.

    Your “shoot fee” should be based on your experience, the type of work you're doing and what the market will bear for that type of work.

    As Mark posted – your time may not be valued the same as my time. If I have tons of experience I could get a job done in 30 minutes while someone else would take hours to complete the work.

    Along those same lines – Know how long a particular job will take you to do, but don't bill the client hourly or talk about hourly pricing. Bill the client based on the job specifications – not how long it takes to execute the work.

    Make your fee one “shoot fee”
    SHOOT FEE + production charges + post production + licensing + markup = Total Fee

    (Production charges are I think what Mark called “shoot costs” – this is stuff billed too individual jobs like makeup artists, assistants, equipment rental, location fees, etc.)

  • http://www.cocoanet.us/~web8_dantepasquale DantePasquale

    Hi Mark,

    Excellent article. One thing I would add is to set aside some amount of monies for fines! At least here in OH, the corporate laws are made for only extremely large enterprises. In fact, the SBA here says that SBAs have less than 10,000 employees!!! There is so much paperwork for corporations that you are bound to get something wrong when you first start, even if you have an accountant because you can't afford to have one to refer to on a daily basis. Once you get things rolling, these incidents should lessen.

    As for collecting, in IT it's not too difficult, but sometimes clients change 3rd party payment companies so you need to able to float for 90+ days! Interestingly, when I worked for a large, international marketing company, they were paid in advance for their campaigns/fulfillment/analysis. If the costs were less than the original estimate, they refunded excess back to the customer! Quite different than any other business I've been involved with!

    Also, I don't know what insurance costs are for Photographers. I'm an IT consultant and sometimes work for scary-large customers, so I carry a ton of Errors & Omissions and Liability. Some clients even require bonding in excess of $10M US. Maybe you can right a short article on this as I hear that in some climates you can get “weather” insurance to cover shoots ruined by foul weather – which is the norm here 😉

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  • http://www.dustcollectorremote.net Dust Collector Remote

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  • http://twitter.com/carlbertossi Carl Bertossi

    Any advice for UK photographers who want to become  pro ?
    This post is from 2009 some refreshment ?
     

  • Pride andufc

    Best article I have ever read on this subject. This is the brutal reality of this side of the business. just because its in digital and you don’t pay for film doesn’t mean its cheap or free.
    computer,hard drives ,backup media, software, and TIME to learn it ALL. I think this business is just going into transitional stage. once the dust settles the money for QUALITY WORK AND PEOPLE will come back to film levels.
    Let all the shade tree photogs die off first. The cream always rises to the top.

  • TJ Foreman

    Thank you for the write-up, as it provides many base business principles in setting up a business.  The core ideas can be utilized for many different scenarios.  I wish more seasoned pros were as open with information, as it would educate more people in understanding that “free photos” are detrimental to the industry!  Keep up the good work.