Photographic Pricing in a real world for 2012

FIRST OF ALL ....please use this link and read the article on pricing as the author makes some very good points.  There are some points that I feel need rearranging, but it is a good read.

http://www.mcpactions.com/blog/2009/10/12/how-should-i-price-my-photography-words-of-advice-from-jodie-otte/

Now that you have read those views, I would like to offer mine.

I teach photography business from a slightly different perspective.  It is my belief the the first thing one needs to know prior to going into business is "what am I worth per hour"?  So how do you figure out what you are worth per hour.  If you become a greeter at Wal Mart you can expect $12.00 and hour part time with no benefits.
If you go into business, there you are gambling with your investment in equipment, advertising, support equipment such as backgrounds, reflectors, and props.  These items are purchased out of "future profits".  Said another way, you are starting out in the hole.

But, back to what your worth per hour and how it applies to your pricing.

I have a spreadsheet that I have developed over the years that lists ALL monthly expenses by type and what they are.  The total of all these "FIXED EXPENSES" are divided down to the Week, Day, and Hour.
There is also a feature that can be set up for the days and hours that you are open, but is not required to figure hour hourly fixed overhead.

So let say that your total monthly expenses are 2000.00.  This is low but easy to figure.
There are normally four weeks in a month, so 2000/4= 500 per week fixed cost.
Let's say you are open to do photography 5 days a week.  Yes..that is correct, it cost you 100.00 per day
Most jobs call for 8 hrs work, except photography, but we will use 8.  100. / 8 =around 12.50 per hour.
Use your own figures and you will see that it is much more that 12.50 an hour.

Now, if we want to work at poverty level, which is 36,000 a year for a family of four, that is 3,000 a month
750 a week, and 150 a day, or 21.00 per hour.  Adding the two together we are up to 33.50 per hour.
I would consider this to break even point.  Now add 5 and hour for new equipment. We are at 38.50 per hour
every hour, for 6 days a week.

The purpose of this exercise is to get new photographers to understand that your major costs today are not your camera, and your printing, but everyday living.  We have all seen the raise in milk prices, gas prices, bread prices, clothing prices, even utilities are up.

So how can you price your products if you don't know what you have to have per hour, per day, per week, and per month ? You are simply flying blind into a mountain.  A mountain of debt, burnout, and family disappointment.

However, once you know your FIXED HOURLY OVERHEAD, all you do is keep track of the hours you spend with or FOR a client / customer times your hourly fixed overhead, add the cost of the prints, an packaging, then add your profit to the total.  Remember that profit is not a dirty word..as that is what you will use to reinvest in better, or back up equipment, add to a savings account, and use to live daily.

Using the figures we played with here of 38.50 an hour, let's play act a job.  I will list the functions and the time.
Phone call.........15 min to book session
Prep time.......... 15 min getting ready for session
Session............. 1 hour..(60 min)..(cheap client)
Download time...15 min
Depending on your proofing presentation...downsizing, and spot retouch 20 images = another hour  60 min.
Taking the order.  .....one hour
Preparing and ordering from lab............30 min.
Order returns/prep for delivery.............30 min
Book keeping and banking...................30 min

So all of this adds up to 5 hrs and 15 minutes if I counted right.  So 5 x 38.50 - Your cost without buying prints is $192.50 as a break even starting point.  So your lab bill for this order is 30.00, you are now at $222..00 COST.  What are you going to charge?  Remember, there is no profit in the $222.

Another version:

So it takes 5000 a month.  That is 2000 fixed expenses, and 3000 poverty level income.
Let's just say you do 4 sessions a week. time 52 weeks in a year...is ...208 sessions.
5 k a month times 12 = is 60,000.000.
60,000 divided by 208 = 288.46 sale from each and every customer.
Using your figures, it is easy to figure what "Average Sale" is needed to meet your goal.

Your figures are going to be different and most likely much higher but these are just a couple of ways to look at the business side of photography.

But using your figures, it should not be that difficult to set up a price list for your average sale to equal the amount of your calculations.  So we have a 40 dollar session fee for one hour photography.  That leaves about 280.
Most times the average order will be 5 units.  1-810, 2-57, 16 wallets...5 units...and that is $56.00 per unit.
No matter how you slice the pie..this practice studio needs 56.00 per 810 unit if purchasing 5 units.
If only one unit is purchased it has to be $280 dollars for you to stay in business.  Of course you are not going to say your 8x10's are $280. each!   But you have to market your product and arrange your prices in such a way to realize that  level of income from every customer.

Yes, it takes time and effort to figure these things out using your own numbers, but here are two of the ways to make the decision of what your product is going to cost.  These are your numbers, it makes no difference what the guy down the street charges..  Do not use someone else's prices!  That will not work.  It don't matter..only your numbers matter

I am the B in B&J Consultants and I am available for business consultations just about anytime.  Contact me if you want to go further into this type of managing your business.  For a small investment into your future you can avoid the pitfalls of winging it on your own.

This was just thinking about a portrait session.  Work out the hours reqired to deliver a quality wedding album and you be greatly surprised.  I can promise that if you are spending 8 hrs on the wedding, you have 32 hours of back room work.  So using this practice studio  32 hours at 38.50....your break even point with no product purchased is $1232.00 as a cost.  I can all but promise that if your charging less than $2000. you are paying the bride to take her pictures.  Not actually, but there is no way anyone can spend 8 hours on a wedding, do the computer work, and all the details for less than that amount.

So put some think time in about your cost factors.  I know it will help you to be a happier photographer.
That is what January is for.  Set aside 3 hrs every day the second and third weeks on January and you will have the numbers to place your business on a profitable track for 2012.

BD Roberts, M. Photog. CPP, EICPP
B&J Consulting