Do you make money doing this? Please read this.

[boxofrocks]

I've read a lot an the board lately about folks charging what many feel to be ridiculously low prices for their work. Recently, Sonny started a thread looking for some advice shooting sports teams (read it here).

This is a perfect example of how this industry can be hurt by photographers who are poor businesspeople, or by what I'll call "weekenders". Those of you that aren't full time--please take no offense to this--instead learn from it, and increase your revenues.

There is no way that any legitimate photographer doing good work can sell team photo packages at $4.50 each and make a profit, if he or she has any reasonable overhead whatsoever. (Tom spells that out for you here.) IF a person exists that will do it for that much (and they might not), they are just doing it for fun to make a few bucks here and there, and don't have the type of quality control that someone like Sonny does.

Now before I say anything else, let me tell you a little about my background. I have a degree in Marketing, and before I got burned out in the corporate world, I spent 17 years in sales, marketing, and business development. I carried multi-million dollar quotas, and reached or exceeded them more often than most. I won lots of awards, took lots of free trips to places like Hawaii, and made a lot of money with both large companies and small; I tell you this not to brag, but to assure you I know what I'm talking about: Never, ever, ever did I sell on price. I always sold on VALUE, with an emphasis on the long-term relationship.

Some of those not doing this full time think that they can get "more" business by undercutting the price of the competition, because they have lower overhead. If you don't take anything else from this, understand one thing--that is only a short term solution, and will eventually drive you out of this market.

Due to the advances in digital, the barriers to entry into this marketplace have been significantly reduced, so prices will naturally drop to a degree. But when you are selling your stuff at barely above cost, you not only hurt your "competition", you hurt yourself. With such razor thin margins, you have to work longer and harder to make the same amount of money. Something has to give, and eventually it will be quality. Oh--and I promise you this--when you sell on price, I can guarantee you that eventually there will be someone else that will sell it cheaper, and you'll lose the business.

So if this isn't your primary source of income, great! Have fun, make money, and learn new things (like we all are). But don't literally sell yourself short by giving away your work just to get the job. Once you set the bar that low, it's awful hard to raise it.

Instead, create value by building a relationship with your client, team or league. Don't be the cheapest--it's actually better to be the most expensive--at least then there is a perception by the consumer that there is quality behind the price.

Just as one example, years ago, Gibson guitars were getting slaughtered by foreign manufacturers. Rather than decreasing the price to compete, they actually raised prices, further giving the appearance that they were the premium brand. From their CEO:

I said we are going to increase prices. Prices were ridiculously low. And people said, the price has been decreasing 20% a year, how can you reverse that? I said I'm just going to double the prices on a lot of models. I actually tested it and got an inverse price curve. Basically it showed that every time I raised prices a certain amount, volume would go up.

Sales and margins actually increased!

You are only hurting your "brand" when you try to be the cheapest in the marketplace. The perception of your quality drops. Your margins decrease. You have to work harder to make the same amount of money. But if all of that sounds appealing to you, and you want the type of customer that always gives the business to the lowest bidder (and all of the headaches that come along with working with that type of client on a regular basis), then go right ahead. You have no idea how much easier and more fulfilling your business would be if you didn't though.

/steps off soapbox

[Sonny]

Very well said Tom!

[zepp]

Originally Posted by boxofrocks

This is a perfect example of how this industry can be hurt by photographers who are poor businesspeople, or by what I'll call "weekenders". Those of you that aren't full time--please take no offense to this--instead learn from it, and increase your revenues.

I agree whole heartedly. In the end, not only do you hurt others, but also hurt yourself, as you further pursue income from this profession. Don't under value your talent OR your time.

If week enders are going to do this they should value their talent and their time. If you give your work away for next to nothing it's sure hard to convince people of it's true value further on down the road as you progress.

[ShaneKislack]

I've said the same thing, Tom. Infact, I almost quit the board b/c so many here don't want to hear it.

Here is a great article by Leslie Burns d'Aqua on the very subject. Please read it and send Leslie a thank you.

http://burnsautoparts.com/BAPsite/Ma...lowballers.pdf

The other thing I notice a lot here is that people charge prices randomly. It's like they figure what's the most I could charge and then justify a bunch of reasons to lower that price. Your rates should be based on something. And that something is most likely your cost of doing business (including salary) all the while keeping in mind fair market values.

[picasso]

I agree totally. Great post. Well said. Now can you please post it on about 10-15 of the other photography forums out there so others can read.

Paul

[boxofrocks]

Originally Posted by ShaneKislack

I've said the same thing, Tom. Infact, I almost quit the board b/c so many here don't want to hear it.

http://burnsautoparts.com/BAPsite/Ma...lowballers.pdf

Once people learn that they're screwing themselves, and not just "the other guy", maybe they'll be more apt to listen.

Doesn't matter if you are full or part time--we all have to start somewhere. Do yourself a favor, and don't start with the bottom feeders, though. Leave that to those that want to make this a transactional business, as opposed to a relationship-based business.

[STP Images]

.

[ShaneKislack]

Here's another article by Leslie.

http://burnsautoparts.com/BAPsite/Ma...files/CODB.pdf

I wish everyone would read it before posting another question about how much they should charge. No one here can tell you what you should charge for ANYTHING! without seeing your books. You can get estimations for usage...but not creative fees! I'm not perfect. I'm sure I've undercut before I knew what I was doing. But here it is, folks. It's not easy...certainly not as easy as asking someone else to give you the answer. But it's not hard either. And it's important.

[boxofrocks]

Originally Posted by Paraquat

Tom,

Outstanding advice. I have a very similar background and understanding of profit and sales models. The sad thing is, businesses and people who buy on price alone are NEVER (and this is one of the rare times that I use the word never) are good clients. They essentially are telling you that they place NO value on the compelling business reasons you have for charging a premium. They are also telling you that no matter how good you are, the only thing that has any value to them is your willingness to do the job for well below market average.

To add insult to injury, price buyers can be some of the most high maintenance clients ever. They essentially 'steal' your work by refusing to buy at a reasonable rate and then they complain because the quality or delivery isn't what they wanted.

In both my IT business and my photography business, if a client tells me that the price is the most important thing, I stop the conversation and tell them, "I can save us both some time. My (IT Services / Photography Services) are valued at the rates quoted for the following reasons (list your reasons here). If those are not of value to you and price is your only determining factor, I will not supply you with a quote and you can find someone willing to meet you on your pricing". I literally turn away business every week in both my photog and IT businesses. My sales people HATED it at first, but my margins increased 17% last year alone by firing (or not renewing) lowball clients. That's a 17% increase in PROFIT, not revenue!

I also use a simple diagram to help illustrate my point. I draw a large triangle on a sheet of paper or a marker board (depending upon what is available). On each point of the triangle, I place the words "Quality", "Time" and "Price". I tell the client or prospect that they get to pick TWO of these items for the job they want. The third item is dependent upon the choice they make on the other two.

For example, ask the client to choose the TWO most important factors for you and circle them on the page/board. If they choose "Price" (they want a low price) and "Time" (they want it NOW), then the "Quality" is going to be low and they MUST agree to this before proceeding with the deal. If they choose "Quality" (they want the best) and "Price" (they want a low price), then the "Time" factor is determined by me (they get put to the bottom of the list and I get to them when I can get to them. And finally, if the client chooses "Time" (they want it now) and "Quality" (the "wow" factor) then the "Price" has to reflect that choice - they pay a premium.

The problem that we run into in the business world is that clients want ALL THREE. They simply can't have it realistically, but photographers and IT service companies whore themselves out quite frequently.

The good news is (especially in the photography world) that there is enough business to go around so that you don't HAVE to be in a bad position when making a decision. Sometimes the worst decision is to TAKE a bad job rather than pass.

My two cents and now I'm stepping off the soapbox since Tom handed it to me. Who's next for the soapbox?

Amen, brutha.

I remember one time when I was working for BellSouth, I had to go with the VP of operations to visit a pissed-off client (big pharma company).

After he complained about price for about 10 minutes, I said "I understand what you mean, but if price is your primary concern, then I'm afraid all I can do is thank you for your business and hope you'll stay in touch. We're never going to be the cheapest".

I thought the VP of Ops was going to come unglued. He later told me he couldn't believe I said that out loud. However, we kept that client, and they went on to give me the highest margins of any client in my territory.

[CaptainTom]

Well said by all.

[Gordon]

The problem that these frequent appeals to the weekend warriors always seems to miss is, that not everyone is in it for the money. Some people don't care about the money at all.

They are hurting the professionals, but they aren't hurting/ screwing themselves at all - because they have a different set of motivations than those trying to make a living.

Thats the problem with trying to make a living in a market were many people do the same thing recreationally. The profit motive doesn't work for every shooter. Time doesn't always equal money. People sink vast amounts of time and money in to their hobbies, without any thought to getting a decent return or what it costs.

Working against that sort of competition is tough. I feel sorry for those trying to compete in the same spaces where people want to do it for fun. But appealing to them to take on the less interesting business aspects and requirements for accounting and accountability for quality/ service is I think a lost cause. They aren't in it for the money, they are in it for the fun of shooting, or the thrill of seeing an image in print, or the joy of having someone buy their picture. Sure they might like to cover their costs, but they aren't looking to make money. There will always be people willing to throw money in to their hobby to do things they want to do and never expect to make a real profit at. Many of them may well be good enough shooters to make a professional living at it, but that isn't what they do or want to do - they want to do it for fun, whatever the cost.

[zepp]

One other thing that is somewhat related to this topic.

Value your copyright.... Buyouts are negotiable.

Sure, there are different circumstances for every assignment but negotiate in your best interest. At one time I took buyouts fairly regularly but understanding what an image can be worth I've changed my practice.

One time I was approached of a buyout assignment. I refused. The editor came back and offered me double the original offer (now offering me the full assignment from the cost to their client). It sure didn't seem fair their first offer give me half AND they keep half the assignment PLUS grab the rights. I still refused and negotiated the assignment fee and retained my rights which I've since collected royalties on.

I'm not saying every situation is the same but ever situation is worth putting the thought of looking out for your best interest and worth the time involved in a little negotiation.

[boxofrocks]

Originally Posted by Gordon

The problem that these frequent appeals to the weekend warriors always seems to miss is, that not everyone is in it for the money. Some people don't care about the money at all.

They are hurting the professionals, but they aren't hurting/ screwing themselves at all - because they have a different set of motivations than those trying to make a living.

Thats the problem with trying to make a living in a market were many people do the same thing recreationally. The profit motive doesn't work for every shooter.

True--that's because not every human being out there is reasonable.

If you explain to someone that they could do the exact same thing, with no increase in effort and cost, and make more money just by asking for more, most reasonable people would say "sure!".

Some folks don't understand that they might lose a deal here and there by not selling on price, but in the long run, they can do 10 jobs for $1000 or 5 jobs for $1000. They could work half as hard for the same amount of money if they didn't sell on price. This also means you're available twice as much, so you can make double the money for the same effort.

To each his own, I guess. I'm sure some of this will fall on deaf ears. and some will even be offended (I hope not--that's not my intent). However, I don't understand why anyone would want to leave money on the table.

[TXhummer2]

My 7th grade science teacher said it when he was showing his stainless steel juicer, "You do get what you pay for, Quality products always last longest and work best!" I have found that applies to everything in life. Thanks for the posts, ya'll!!!

[ShaneKislack]

Never give away your copyrights. Many people will ask for full buyouts because they haven't done their homework and are being lazy about negotiating usage. For example, do you think the local deli is going to need rights to reproduce the image on taxi hubcaps (I've seen it) in Singapore? No. They just don't want to have to do the work to figure out what they need. Imagine if you said "Mr. Deli, in my quote I've price for Singaporian taxi cab hubcap reproduction rights". He'd come unglued.

Originally Posted by Gordon

The problem that these frequent appeals to the weekend warriors always seems to miss is, that not everyone is in it for the money. Some people don't care about the money at all.

They are hurting the professionals, but they aren't hurting/ screwing themselves at all - because they have a different set of motivations than those trying to make a living.

Thats the problem with trying to make a living in a market were many people do the same thing recreationally. The profit motive doesn't work for every shooter. Time doesn't always equal money. People sink vast amounts of time and money in to their hobbies, without any thought to getting a decent return or what it costs.

Working against that sort of competition is tough. I feel sorry for those trying to compete in the same spaces where people want to do it for fun. But appealing to them to take on the less interesting business aspects and requirements for accounting and accountability for quality/ service is I think a lost cause. They aren't in it for the money, they are in it for the fun of shooting, or the thrill of seeing an image in print, or the joy of having someone buy their picture. Sure they might like to cover their costs, but they aren't looking to make money. There will always be people willing to throw money in to their hobby to do things they want to do and never expect to make a real profit at. Many of them may well be good enough shooters to make a professional living at it, but that isn't what they do or want to do - they want to do it for fun, whatever the cost.

Two things to say to that. 1. If they are being honest, then I'm not worried about competition from them. They shouldn't be charging anything if they aren't interested in. And someone doing it for fun on the weekend is never going to be as good as someone who is dedicating a livelyhood to it.

2. 9 times out of 10 it's a copout for someone who secretly harbours desires to be a photographer. They are scared of failing so they set it up so that if they don't make money they can say they never intended to. I feel bad for those people becaue they don't have faith.