PRICING I by Joshua Hudson

The Golden Questions--- What is my work worth?

It is a question that comes up on this and other boards over and over again. And there answer is simple: you are worth what you are think you are worth.

The question you should be asking is-- How much do I need to charge to keep my business going?

This question is critical because as soon as a photographer comes back from a great wedding shoot, he immediately ruins his success by his lack of business savvy. Especially those part timer wedding photographers, who wish you could quit your job and do this full time.

I hear a lot of people talk about checking out the local market and seeing what they charge. And it is always good to see your competition, but remember, that most of them have no idea why they charge what they charge either. There is a mystical business savvy photographer who set the prices and everyone fell behind. What is worse is that there are always a few photogs that did really bad wedding models in their marketing plan and offer $500 weddings with all the trimmings.

So you need to start from scratch.

First, find out what your start up costs are. Make a list of everything you will need to be a wedding photographer--

1. Gear
2. Back up gear
3. Insurance
4. Utilities (phone, gas, elect, etc-- don't think if you work out of home that you shouldn't amortize this. This is a business not a hobby)
5. Expenses (gas, tune ups, letterhead, business cards, etc)
6. If you are full time: health care insurance, taxes, etc.

That number is your starting number of how much you are in the whole so put that number in a big red magic marker someplace. Congratulations! You owe your company.

Now you need to work out the money making numbers--
1. What you charge for skill: photography, editing, admin, travel. Your skill levels in each are worth different amounts so you shouldn't charge the same. If you are a great photographer and feel you are worth $50/hr that doesn't' mean you should charge that for filling out paperwork at the office (which might be $8/hr).
2. Figure out what your goal number of weddings per year should be and your expected number of weddings will be. You budget for your expect weddings, but market for goal number weddings.
3. You need to know your break even cost.
Time Expenses + Material+ Business Expense= Break Even Cost (BE$)
(Don't forget to add in time waiting for prints, shooting, editing and admin. Most people don't even figure in paying their number one employee: themselves.)

This is how I figure things out for me.
Shooting-- $50/hr.
Editing -- $30/ht
Admin -- $ 8/hr

I shoot a wedding for 8 hours- $400. I spend 30 hours editing (on average) that is $900. I spend about two hours of admin- $16. So in this model I have a Time expense of $1316, which I then add a fudge factor of 10-15% of $1500. That is an estimated start place that may need to be adjusted as I find my photography improves or I cut down on editing, etc.

Materials are simple...what do I sue per wedding? Paper, printing, pencils, gas, AA batteries.

Business Expenses are those numbers you figured out at the top. Your business insurance divided by the expected number of jobs. Your healthcare divided the same way (if you need to buy it yourself). Your marketing budget averaged over the number of GOAL jobs. And don't forget to rent your equipment back to yourself to tuck a little money away for upgrading and repairs. You don't want to send you camera to the shop and pay for it out of your pocket, right? The Business needs to pay for it.

Add this all up and you get your BE$. That means that in order for it to be worth your time you need to make this magic number to break even.

Some photographers would then look at the going local rates and just work off of that and if there is a huge difference they consider that profit. I personally want to keep people buying..so I do what most retailers do and just add 35% above break even cost. You will probably find that your pricing will be totally different from where you thought you would be.

Those that find themselves not charging enough compared to other photographers, look at what they are doing and see if they have more expenses or just marketing to a client that expects to spend more. These numbers you crunched are what you need to know to know how to stay afloat. Chez Beouf may charge three times as much for a sirloin but they don't pay any more than the Outback. What the fancy restaurant DOES do is create an ambiance of increased worth to their product. If you think your pricing is not attracting the clients you want then adjust by all means-- but then make sure your materials and ambiance are also adjusted to cater to those clients (which will cost more).

WOW JOSH LOOK AT ALL THE MONEY!

Err! Wrong! Most of that money isn't yours. When you finish your job, you need to pay people. First you need to pay the photographer and editor. Are they you? Great...then write yourself a check. That is your money. that is the money you pay income tax on.

You then pay all of your expenses. The electric company wants its share for making your computer screen glow.

Pay for your materials. Clients want their pics.

Look at the pennies you have left in the piggy bank? That is your businesses money. That is the money you have for work. That isn't YOUR money. Don't go crazy and take the kids ot Chucky E Cheese or get your wife that new mop she always wanted. That money goes back into the business to get new gear, gather interest, keep for emergencies, etc. It is also the only money you really need to pay for business tax as your profit. (especially if you are a LLC or INC)

Always pay yourself as an employee and get that money away from your business money. I don't even keep the cash in the same banks. My wife doesn't have access to my Dragonfly cash. Check written to the business are put in my company name, not mine.

This is a business model on how most small business work out their fees, pays and such--- I do not think that most photographers work this way. I think most of them go by finding out where they think they sit in the market on skill and then adjusting prices in between those they think they are behind and those they think they are ahead of in the skill department.

I ignore the market for the most part. And use the simple business sense that other businesses use all over the world. Then make adjustments to what the local market is as I can afford to.