Showing posts with label cost of doing business. Show all posts
Showing posts with label cost of doing business. Show all posts

Tuesday, May 21, 2013

How much should I charge?


It is quite common for a professional photographer to get a call asking to use a photo and the photographer doesn't know how to give a quote for the usage.

Understanding Copyright

First let me start with understanding of copyright. It is safe to say that unless you have permission from a photographer to use a photo you cannot use it without opening yourself up to copyright infringement.

If a photo qualifies in Public Domain then you can use it.  Accurate photographs of two-dimensional visual artworks lack expressive content and are automatically in the public domain once the painting's copyright has expired (which it has in the US if it was published before 1923).

There is also the category of Creative Commons License. Here the photographer has given permission for use of their images for non-commercial use. What is considered "non-commercial" is debated. To be sure you are OK clarifying before using would be a good idea.

If you are searching Flickr just look on the side navigation with all the tag and group information, it’s listed in that area with a link to what kind of license it is.

The other category is called Fair Use which can allow for use of images without compensation. My interpretation and I am not a lawyer, but if you are a student and working on a project for a class you can use images. However, if that student publishes those say on the internet could be a violation of copyright. When teachers start using the material it becomes a problem once they publish and distribute the material. Showing a news clip for a class to discuss would most likely fall under Fair Use.

When in doubt get the photographer's permission.

The Phone Call

I have gotten numerous phone calls from colleagues on quoting on some of the strangest uses. My first place to look for starting is the software FotoQuote. It sells for $149.99 and most everyone I know that buys it usually recovers their money in the first few times they use it.

FotoQuote has over 300 stock photo pricing categories and a wealth of coach information.


Often clients are asking for a variety of uses and FotoQuote lets you even create "Quote Packs." This is where you might include all advertising uses and exclude editorial. Just remember there are over 300 categories alone in this software package of categories.

Besides what category you are also giving permission for how big the image will be used. For example is it the main part of an ad or just a spec? Will they use your photo for the cover or just a thumbnail head shot with an article?

How often they use the image makes a difference as well. If they are publishing only 300 brochures for a meeting verses a print run of 5 million should be priced differently.

How long they get to use the image is also another variable. Will they use the photo one time, one month, one year, multiple years or unlimited should impact your price.

The first few times I was quoting on large projects I could feel the sweat on my forehead and my heart racing. I was having a panic attack.

Guidelines for quoting

Here are my tips for quoting on a usage. We need to first start with your base. If this is an assignment the basic price should be about the same for similar assignment, the differences in price are for the use. So, an executive portrait for a print on the wall in the companies headquarters verses it being use on billboards and running on the cover of Forbes Magazine will change the price, due to usage.
  1. Always ask what their budget is for the project up front. Sometimes they will give you a better deal than you would have asked.
  2. Be prepared to negotiate. Your first quote will often be countered. Therefore it is better to quote a little higher and have room to drop your price.
  3. Whenever you change your price you should change the usage terms.
  4. To speed the process along, I recommend going to a client with three prices. Your rock bottom price, middle range price and the high end price. This makes them see you as already trying to work with their budget. 
 Creative Fee and Usage Fee

When quoting on an assignment separating the creative fee and usage fee is a good idea. In addition to the creative fee you might have expenses as well listed.

I would suggest trying your best to encourage the client pay for as much usage up front. To help encourage them it would be great to list usage fees for future purchases.  I would probably state the time these prices will still be good as well.

For example you might allow them for an unlimited usage right now for $10,000. If they come back to you later that price should be much higher.  By putting this in writing and up front with the client you are showing them you are being transparent and trying to work with them.

Magazines

One category in the FotoQuote database I find helpful is the going rates that are known for different publications. Many of the magazines listed will even let you know the rights and there going rates.  Basically they set the price and you decide to except their terms or not. Sometimes you might be able to get a better rate if you have a specialty or the only one with access to the subject.



I think of using FotoQuote like a pilot does when they are flying in the clouds, they are using the instrument panel to help guide them.

Remember FotoQuote is a guide and not prices fixed by the industry. These give you some starting points to help you negotiate.

Just as important as FotoQuote are other photographers. This is why I joined American Society of Media Photographers [ASMP]. I can pick up the phone and ask other members their advice. Often some of them have more experience than I. I am not calling for prices as much as also how to communicate with clients. Often how you word something can make a huge difference.


Wednesday, September 21, 2011

Is there room for another photographer in the room?

1
Stanley teaching photography at University of Nations in Kona, Hawaii.  Youth With a Mission runs the school.  (photo by: Dennis Fahringer)

I believe there is room for another photographer in our industry.  To be successful a person must have the total package.

What are some of the things you need to be a successful photographer?

1.     Need a portfolio of professional quality images
a.     Well composed
b.     Good Exposure
c.      In Focus
d.     Great Light
e.     “Decisive Moment”
2.     Business Acumen
a.     Knows their home budget needs
b.     Knows the “Cost-of-doing-business”
c.      Knows their market place
d.     Has a consistent marketing plan
3.     Inner Drive
4.     Continuous Improvement
a.     Looking to improve their portfolio
b.     Looking to improve their efficiency
c.      Looking to improve their marketing

While I have been working as a photographer in some capacity for 30 years, it was in 2002 I became a full-time freelancer.  This is where I was responsible for the business side of photography if I were to be successful.

I reached out to a very successful Ken Touchton.  He called almost daily those first few weeks giving advice and calling to see if I was following through. 

When I teach I give similar advice given to me.  What I have discovered is very few ever follow through.  One day I shared how frustrated I was with students not following through with Ken.  He then let me know I was one of the very few that ever listened to him.
I had a few other friends who lost their staff jobs and also reached out to Ken and me.  After a few weeks Ken stopped following up with most all of them.  They were not following through and so he stopped wasting his time if they were not going to take his advice.

Most all of those photographers continue to struggle today.

This year Greg Thompson, director of corporate communications for Chick-fil-A, was talking with his team about their role.  “When a ship misses the harbor it isn’t the harbor’s fault.”

This metaphor helped me see how so many photographers businesses were going under.  They were spending their time working on websites and portfolios.  They were creating a harbor and not a ship.   It is a common mistake of businesses.  The “Field of Dreams” concept doesn’t work for the photographer.  You just don’t take a photo and people line up to buy it. 

Is there room for another photographer in this industry? If you want to be paid to shoot for yourself then there is no room for you.  If you want to shoot for others and help them achieve their goals with your photos—then you can make it.

Thursday, August 11, 2011

How much should I charge? Part 3

cdb1
You need to understand what you need for each of these categories over a year
This is step two of knowing how to quote a price to someone when they ask you, "How much do you charge?"

In step one you should have come up with an annual figure of what your annual living expenses are for you.  If you live in a gated community and drive a premium vehicle then you can already see that what you have to charge to pay your bills will impact your prices for your clients.

The other extreme which I often encounter when teaching folks how to figure their prices is they are in college or live at home.  If they use their actual expenses for their annual salary they will have to remain living with Mommy and Daddy for the rest of their lives.  If you are one of these folks, then take some time and research what it would cost you to be out on your own.  There are a few things that will greatly change for those under the age of 25 if they are on their own and not with their parents.
  1. Housing costs
  2. Car Insurance
  3. Health Insurance
These three items will be much more expensive if you are to do this on your own.  
cdb2
NPPA put this on their website to help you

I highly suggest going to the NPPA website and plugging in your figures.  However there is a better reason to go to the website than just using it as a calculator.  Beside each item there is an i-button.

These are coaching tips that give you some idea of how to figure this annual expense.  As you can see from this box I have copied the one for the "Office or Studio" item and you can see it gives you an explanation about this item.

Your "Desired Salary" will change

At some point you will need to sit down with an accountant to help you know what you can do that will make a big difference on what you pay in taxes. 

What happens when you run your own business is that some of your expenses for your home can be moved to your business and especially if you work out of your home.

While not all of these expenses will move over to your business at 100% these are some items that could be transferred that are usually part of your home budget.
  1. Telephone
  2. Utilities
  3. Internet Connection
  4. Auto expenses
  5. Computer
Adjust your home budget

You will need to revisit your "Annual Salary" and most likely realize you can now take home less for your home budget, because some of this shifted to your "Business Expenses."  This will slightly affect your rates that you must charge.

A little guessing

You will need to figure out what an average type of job or assignment you will be doing with your business.  This is the most difficult thing to approximate for a number of reasons.  Here are some types of photo shoots I might do in a year.
  • Headshots
  • College recruiting
  • Corporate events
  • NGO editorial coverage
  • Magazine features
  • News coverage for wire service
The prices for each of these is different for various reasons.  First of all they don't all take the same amount of time.  More importantly some of these I am an expert in and my competition cannot compete head to head with me with all my clients.

The basic idea is once you have figured out how many of each of these types of assignments you will do a year you will guess as to what is an average assignment look like.  Take the same list and give it some numbers as to how many you will do in a year. Put beside that how long on average it takes you to complete the work.
  • Headshots (100) x [2 hours] = 200
  • College recruiting (15) x [20 hours] = 300
  • Corporate events (12) x [20 hours] = 240
  • NGO editorial coverage (10) x [30 hours] = 300
  • Magazine features (15) x [8 hours] = 120
  • News coverage for wire service (20) x [3 hours] = 60
Total "billable" hours a year 1220 divided by 8 hours a day gives you 152.5 days of "billable" time.

Now this is figure when you are starting out my just be 30 days that you can find work in a year.  RED ALERT!!!

You will need to assume that you either 1) have saved enough money up to offset your lack of jobs until you get enough jobs, or 2) have another job.

On average a very successful photographer will most likely have around 100 "billable days" of work in a year.

Using the 152.5 days of work a year will give you $589.18 day rate if you use the default numbers in the NPPA calculator--DON'T DO THIS--use your numbers.  For illustration this would give you then a $73.65 per "AVERAGE" hour rate that you "MUST" charge at the minimum or your business model will be upside down.

The reason I say average is on some jobs you will be able to charge more since you might have no competition or very little competition or the going rates in the market allow for the higher rate.

Don't Quote Hourly Rates

This exercise is to help you know your costs, not to give you the rate to quote. 

Combine it all

Now that you know your "Cost-of-doing-business" you will combine this with actual expenses associated with a job.  Here are some of those expenses you will add to your base:
  1. Travel Expenses
  2. Prints/CDs/Online Fees
  3. Shipping Costs
  4. Photo assistants
  5. Makeup artists
  6. Food costs (snacks for day long shoots for example)
This is not an exhaustive list, but this will go on top of your $589.18 if it is a day long shoot.

Usage Fees

I talked about how to calculate these earlier and this will go on top of the $589.18 + Expenses that will give you some idea of what to quote.

Trade-outs

While you have everything now to quote a job and are ready there are some things that are now negotiable.   For example, if a client gives you 50 copies of the coffee table book you did for their organization you could trade this out for a lower price, because you now can offset some of the costs of advertising.  You can then give these books out to potential customers helping you land a new client.

I know some photographers who trade out retail value of their services say with a restaurant.  They give them $2,000 worth of photography for $2,000 worth of food.  It is a win win for both.  The actual cost of doing the business maybe $1,000 for the photographer and only $1,000 for the restaurant.  The photographer takes potential clients out for dinner at the fine dining restaurant and it helps them seal the deal.  The photographer just saved $1,000 in expenses for overhead. 

Summary

If you know these figures you will feel confident when you are quoting prices that you can pay your bills doing the job.  You also will feel that you did the right thing when they offer you less than your rates for a job and you turn them down.  Realize once you have the numbers you can still be creative to come up with solutions that make you the right fit for a job.