I’ve received a couple of comments in the suggestion box from people wanting to know about pricing their portrait photography. The following is an excerpt from my book The Portrait Photographer’s Ultimate Pricing Guide. I hope you find it helpful. For more info on the pricing guide, check out www.shuttermom.com/pricing.htm
One of the most common questions I receive is, “Cindy, how should I price my photography?” Most of you are afraid of pricing too high or too low, and if you are on the higher end, many of you are “ashamed” of your prices and don’t know how to justify them. In other words, you find it difficult to quote your prices with a “straight face.”
If you have been guessing at prices, you may be surprised to find that you have no profit to show at the end of the month.
Other common questions are “Should I show my prices on my website?” and “How do I create a price list?”
It can all be very confusing. Well, get ready to finally understand how to quickly and accurately price your portrait photography! You are going to be amazed at how easy it really is!
To survive in the portrait photography business, you MUST have an accurate pricing strategy in place. You can’t guess at this – it has to be right, or else your business is going to fail.
Remember, people do not buy because of price. People buy for quality and service. In most cases, you do not want to do business with people who are basing their decision on price. In the minds of most clients, price is equal to value. Therefore, something that is very inexpensive becomes “cheap” in the mind of a client, and something that is very expensive becomes “valuable.”
So…let’s get you started!
#1: You Must Know The Cost Of Doing Business
3 main things to consider:
1. Your Capital Expenses (High Ticket Items)
Equipment, real-estate, car, furniture, etc. (these items depreciate over time)
2. Your “Cost of Sales”
EVERYTHING that goes into making a sale – including your time (post processing time/labor, lab costs, flash cards or film, frames, packaging, etc.). Ideally, you wan to keep your “Cost of Sales” at 25% to 35%. What does this mean? It means that for every dollar you take in, you should not be spending more than 25 to 35 cents on your “cost of sales.”
3. Your “Fixed” Costs:
These are things such as rent, utilities, insurance, advertising, office supplies, postage, equipment maintenance, telephone, Internet access, employee’s salary and benefits, and YOUR SALARY AND BENEFITS (yes – you need to pay yourself). You want to keep your “fixed costs” at around 30% to 40%, meaning that for every dollar you take in, you spend no more than 30 to 40 cents on “fixed” costs.
So, think of it this way:
Total Sale – Cost of Sales = Gross Profit
Gross Profit – Fixed Costs = Net Profit
Let’s see how this works out in a hypothetical example:
Let’s say that you just sold a package for $100.
Total Sale: $100 (this is what the customer paid you)
Cost of Sale: $25 (this is how much it cost you to produce this sale – assuming 25%)
Gross Profit: $75 (this is your profit BEFORE taking out fixed costs)
Fixed Costs: $30 (assuming 30%)
Net Profit: $45 (this is what you actually made on the sale)
So, in this example, you are making $45 for every $100 in sales (assuming that you are keeping your cost of sales at 25% and your fixed costs at 30%).
Stay tuned…more on pricing to come!
