Recently I made a video about determining rates for clients. The “How Much Should I Charge” video has spawned a few questions from viewers. So to clear up some confusion I’m posting this response. Specifically I’m referring to a conversation I had on twitter with @noahkrueger, @SmudgedPhoto, and @PicSeshu. Let’s dive in to the questions:

@SmudgedPhoto:
Why should your personal bills affect what a client pays? A large morgage doesn’t justify large fees?

@noahkrueger:
I find it hard to believe anyone would pay more for a photographer simply because s/he has a family.

These question stem directly from the discussion of determining your DCODB (Daily Cost Of Doing Business). In that portion of the video I was specifically talking about how much it costs a photographer to be in business. Part of the process is to add up all of your costs; insurance, mortgage, travel, photo gear, etc. I made the point of saying that the DCODB is not the same for every photographer. I think that’s where the confusion began.

If you are a single person who has to pay for your health insurance, dental insurance and other costs than you have to earn more than a person who has those costs paid for by a spouse. Therefore your DCODB is different and you’ll need to earn more (or less) money to earn a profit. These are strictly costs. Rates are a different beast.

Rates are determined with this simple formula: DCODB + shoot costs + markup = rate.

If a person has a high DCODB and this causes their rate to be sky high, and is therefore not competitive, that doesn’t mean they will be able to charge that rate successfully. It means that their costs are too high and they need to work on ways of lowering their DCODB.

Let’s say a highly successful Wall Street trader who enjoys an annual salary of $2,000,000 decides she wants to give up the rat race and become a wedding photographer. Let’s also pretend that this Wall Street guru has a monthly mortgage of $30,000 and a car payment of $800, etc. Unless that person makes some drastic lifestyle changes her DCODB is going to be incredibly high due to her salary requirements. It also means that the rate she’d have to charge to meet that requirement will be overpriced for the market. She won’t get any jobs and her business will fail.

Let’s try a different scenario. Perhaps there is a local photographer who is a recent college graduate. This guy is very talented, has no car payment, a low rent and his insurance bills are tiny. His DCODB is very low and he’ll be able to charge rates that are lower than his competitors because his salary requirement is much lower.

Why do bills affect what a client pays? Because your bills determine your salary requirement. They are connected. The moral of the story; stay out of debt, live within your means, save your pennies.

Will someone pay more for a person who has a family? No, the client doesn’t usually care. But being part of a family can increase what you need to earn or save you some money depending on specific scenarios. If your spouse is covering your health insurance and retirement needs then your DCODB is less. If you are the sole bread winner in your family you’re DCODB is probably higher.

Your financial lifestyle does effect your rates, for better or worse.

Follow me on twitter: @jmarkwallace