What is the most important calculation that you can make when creating a photography business? It’s your COGS, or Costs of Goods Sold. If you aren’t pricing for profitability you will NOT be profitable, it’s as simple as that. It is imperative that you understand your numbers and why your 11×14 costs what it does. Never base your pricing on what your competitors are doing. For starters, you have no idea if they are actually earning any income and you have no idea what their expenses are. You also will not have the confidence to stand behind your pricing when you are in a sales session with clients if you don’t know why your 8×10 is X number of dollars.
Photography is difficult to price because there are so many aspects involved in delivering your final product. We are selling both goods and services! I see many photographers make the mistake of pricing an 8×10 at $20. It stands to reason that since it costs $3 and then it is marked it up almost 7x then it should certainly be making money! However, I have yet to see a business model that can be profitable selling $20 8×10’s, other then the very high volume chain studios. Now there is nothing wrong with being a high volume studio if that is what you are developing your business model to be, however being an on-location studio you cannot charge high volume studio prices and expect to remain in business for long.
The X factor when calculating your pricing is failing to account for your TIME. An 8×10 is much more then the paper it is printed on, it is all of your time that went into making that final print. We make money in our business model on the products that we sell to clients. Those products need to not only pay for our hard costs in creating the product, but also your time preparing that item. This is especially important in calculating your prices for albums and prints, as those items tend to have the most time associated in producing them. In addition, you must remember that you should be making enough during each session to pay yourself for all of your time spent working on your business, such as marketing and website development. Remember, the only time you are bringing money into your business is through your sessions. They must be priced appropriately to allow you to stay in business. Now, how on earth do you determine what profitable pricing is? Enter the COGS, or Costs of Goods Sold.
To develop your COGS you MUST factor in your time in creating that product:
|8×10 Print + mounting||$9|
|Process Time 15 min||$15|
|4 x COGS||$108|
While you need to do your own calculations in order to come up with your pricing, generally 8×10’s should be priced at LEAST $50, often much more, in order to have a chance of being profitable. Many people aren’t sure what to price their time at either. If I were to outsource my editing I would pay $60/hour so that is what I used in this calculation. Your business costs may be more, as if you have a retail space then you will need to have a higher per hour rate of pay for those extra costs.
There are a few incredible resources out there to help you develop your pricing strategy, one of them being the Professional Photographers of America. Through your membership you may access all of the wonderful resources on their website. Their Studio Management Services also hold classes throughout the year and the business basics class goes in-depth into this very topic.
Pricing and numbers is one of my happy places, I know I’m a total nerd! I do offer one-to-one pricing and sales virtual consulting for portrait photographers, or we can meet in person if you are near Pittsburgh! Please let me know if I can be of assistance helping you create a profitable pricing plan.