6.15.2015

How do you make money in this business (photography)? You ask for it.

A tangled view of downtown Austin. 

First, let me set the stage. I grew up in a middle class family and we never talked about money. My parents always seemed to have enough and anything they denied me (a Pontiac GTO 6.5 liter....?) seemed to be more of a Calvinistic choice than a result of any financially motivated deprivation. Then I went to college with the help of both my parents, and few scholarships, and that seemed pretty straightforward as well. It's only when I finished school and started trying to figure out how to make a living that things got scary and complicated. Asking for money---and then asking for more money was something I had never practiced, never prepared for. As a consequence I didn't do it well.

A series of menial or boring jobs soon followed and I believed that there was set amount allocated for each of these jobs, that the allocation was unchangeable and that I could: take it or leave it. 

I think most of us start our "adult" job life thinking that everything is calculated in the number of hours worked x the rate of pay and we grudgingly leave it at that until we realize that we are being financially under-rewarded for our perceived efforts and we go looking for a better job. It's the hourly thing that's the first hurdle. 

The second thing that hamstrings employees and inexperienced freelancers is the idea that the buyer or employer holds all the cards, that there is an endless stream of equally talented people waiting to take our places and that we must, inevitably, invariably capitulate to the client's desires and accept the proffered deal.  Hmmmm. No wonder so many freelance photographers are poor. We seem to be bargaining from a no-win position all the time. 

Let's take the first idea, the pay by the hour concept. An image has a value that's elastic. If you are buying an image because you need something to grace your ad in a small church newsletter you probably base your budget on the draw or profit expected from the ad. The quality of the image has some value but the overall equation the image is part of is small and so the budget is constrained. You'll have a hard time convincing that local, small town realtor that her headshot for the church newsletter is worth your mortgage payment and I wouldn't try to convince either of you otherwise. But imagine the other extreme. Say you are working on a project for a multi-national corporation that sells very valuable high technology services and equipment in 145 countries around the world and earns tens of billions of dollars per year. Perhaps they need an image of a person as well. But imagine that this image is to be the basis of an ad campaign that will be used by the company internationally for the better part of a year. 

Imagine that they were looking around the web and found an image on your website that matched their vision of what their brand wanted to communicate to the world, perfectly. Imagine it was an image of a beautiful and brilliant looking young woman shot casually in an urban environment and it was relaxed and yet technically well done (congratulations on your technique!). They come to you to license the image. Now I ask you to think truthfully about whether this image and this use of the image has the exact same value as the image of the realtor from Smallville commissioned for
the local Church of the Essential Order of Druids newsletter (circulation 213). It obviously does not. The international corporation has tested the image and knows it is exactly what they need. Their media buy is in the high hundreds of millions. The whole campaign hinges on the power of the image. They expect the ads to return billions of dollars in sales.

Say you did the headshot of the realtor for $250. Is that what you would charge the multinational corporation? What if the headshot took you one hour to produce and the image desired by the big corporation took one hour as well? Do they both have the same value? Of course not. The value of images is contextual. The use and the anticipated return on investment are also part of the value. Think about this if you base your pricing on time spent. The real answer is that the company may have budgeted $250,000 for their ad agency to produce a similar image. If you are a good enough negotiator it is not out of the realm of possibility that you might be able to get a similar price for your existing photograph. And why not? Your image is already complete and viewable. If they assess it to be worthy of their campaign it already falls within the constraints of their budget. If you based all your decisions on an hourly rate you would royally screw yourself. And leave (potentially) $249,750 on the table. Be serious! You could buy a decent house in many cities in the U.S.A. with that kind of money. You could even make a small downpayment on a house in silicon valley with that sum!!!

But here's the other deal about basing pricing on an hourly charge; as you get better and better at your job you make less and less money!!!!!  Does that make any sense whatsoever? Hell no. But there are many photographers who've found that they used to take a day to shoot certain shots and now, with years of practice it may take them a couple of hours to get the same shot done. Should they work by the hour and accept smaller and smaller paychecks for the same work? After all, the clients still benefit in the same way. The images are still placed into advertising and leveraged to help make more sales.  The good answer is that each situation is contextual and you should have an idea of the value the image has to the final client. We price by the project. We estimate by how many images must be done and what the value of each image should be. 

I recently did an annual report for a tech company. I bid the project around the idea that we'd be doing ten different shots on ten different locations. When I thought about the job I decided it might take me ten days to do everything that needed to be done. I assigned a value to the combination of the days involved and my perceived value of the images to the client. I had done all the kinds of shots involved many times before. I had the right gear. The stars lined up. We got the job done in five days. We billed what we bid (Not estimated. Bid.). The client didn't feel cheated, the client was overjoyed to get exactly what they needed and to have saved five days long days out of the office. 

The value of the images, to the client, for their use, was identical. The value or quality did not change. There was no dissonance over the final bill (which was payed promptly). 

It's only fear that keeps us from asking for the value of the images we create and it is only fear that causes us to believe that the clients we work with have some dollar amount in mind based on the time spent versus the value delivered. Think about it. If you practiced for twenty years making great portraits and you had a "rate" of say $200 an hour how would you price a business portrait for a client's website? If the actual time spent taking the portrait was only 15 minutes (because of your experience and knowledge) would you consider just charging $50? Wouldn't it be smarter to figure out a price that reflected the value of that portrait to the client? Wouldn't $250 or $500 or (in big, affluent market) even $1,000 be more reasonable and rewarding? Wouldn't it better reflect the value that you are really bringing to the transaction because of your combinations of skills, taste and knowledge? If you are the very best in your market and your portraits are amazing and cause people to really stop and look might your portraits be worth even $5,000? That's what Richard Avedon priced his portrait commissions for back in the 1980's!!! Can you imagine how much Annie Leibovitz might charge to do your website portrait?  

Try pricing by value instead of by the hour. Make your pricing work for you at least as well as it works for your clients. A day rate or hourly rate is only a starting point for you in putting together a complete pricing model. Always remember to add in the value the image has to your particular client. And if clients can't meet your minimums they are probably not a good match for your business model. I wouldn't consider doing a headshot in my studio for less than a certain amount but I am always looking at what it cost me to do the job in addition to the value of the final product to the client. Consider this as well when pricing something like a simple headshot. 

You spend time and money doing marketing that brings customers into your sphere. You spend time selling them on the phone, or via e-mail. Unless you shoot only one style you'll spend time setting up a background, setting up lighting and testing your lighting. If you are like me you'll also need to straighten up an bit and take out the trash so the studio looks professional. You'll need to shoot the portrait and make small talk with the client. When they leave you'll need to ingest the files into your editing software, make some global corrections and convert the files into Jpegs that you can stick on a web gallery so the client can make their selections. Once the client makes their selection you'll probably need/want to do some retouching. 

Then you'll need to make sure you get paid. 

While you may have shot with your camera for only fifteen minutes your total commitment to that portrait may be two or even three total hours. If you want to make $200 an hour for your actual work you'd need to be charging something like $600 for the portrait, not $50. If you client has lots of uses for the portrait you'll want to price it to make a profit that is commensurate. (Profit is something you should aim for instead of just covering your costs---profit is what keeps you in business for the long run).  A complex portrait, like one of a newsworthy CEO who is constantly in the press, might need to be priced at $2500 or more to reflect its actual value. 

And that brings us to our second impediment, the idea that the client is in charge and that the client has some sort of unified (or standard) price list that they are constantly consulting when commissioning people to create intellectual property which they can license. I think many freelancers go into transactions thinking that the client has enormous experience commissioning freelance creative people and that they hew to a price list that's carved in stone. The freelancers seem to believe that bidding or estimating one penny over the expectations they are convinced the clients have will keep them from being awarded the project. 

It may also seem to photographers (or other freelancers) that there are thousands of competitors who are equally skilled and just waiting for the guy in front of them to fail the client test and bid too much. Then this horde will swoop in a lock up the project for themselves. It would seem like the clients hold all the cards. But wait. You are a client for many, many businesses. When you go out for dinner in an affluent and trendy town you have lots and lots of choices and if you are on a date there are some places that appeal and some you wouldn't step foot in. If you want a great meal with good atmosphere and want a place that has imaginative and creative food along with immaculate service you'll probably cross most of the cheap, fast foot or chain restaurants off your list. Then you'll start narrowing down choices based on your personal preferences. Do you prefer a quiet place? Are you a wine enthusiast and enjoy venues with creative and intriguing wine lists? Are you a fan of certain ethnic foods? Are you celebrating a very special event? With a series of calculations and preferences you'll have narrowed down the list of possible restaurants to a handful. Then you'll have to see if they can accommodate you with a reservation when you need it. And believe it or not the really special places can have extensive waiting lists. It may take weeks to get a reservation. 

There's a parallel with what we do as creative people. The vast number of people in the business get filtered out of the mix for one reason or another. Maybe the clients perceive that some people don't have the experience to pull off a complex job, or even a simple job where the stakes may be higher. Some suppliers might not be the right fit for the client company, or the level within the company in which the photography will be performed. Some suppliers may have a personality that would be okay for a product photographer to whom the client just needs to Fedex product and then get back images via FTP but their personality might not be optimal for the executive suite. Some suppliers might not have the right mix of images in their portfolio to match the prospective client's taste and expectations. And as strange as it may seem some companies who have in-house marketing services may not be called on by very many photographers (as compared to ad agencies, which can be deluged with inquiries) and may rely on recommendations from peers at different companies who will have already done their own relentless filtering. Is it any wonder that once you find a restaurant you really like you have the tendency to go back again and again? You have a high and reasonable expectation that they'll make sure you have a great meal and allow you to feel as though you've gotten your money's worth. Same with our clients. Once we get them to try our products. Funny how budgets can be elastic if you want something really good.

The client has a vested interest in finding a photographer who is a good match for their company. The client looks for a specific style and treatment that they like. They look for someone they will enjoy working with. They look for someone they can trust which means they are looking for an artist with a track record. If they need a portrait photographer they'll need to not only like the style of the work but will need to like the way the photographer works with people. Putting the wrong person on the project always reflects back on the person who hired them in the first place. Too many poor hires may mean disaster for the person whose job it is to source talented people for assignments. And in all those decision making trees we haven't even mentioned price. Why? Because it is usually much less of a concern than getting all the other parameters correct. 

How do I know this? I worked for eight years as an ad agency creative director and I hired photographers, illustrators and copywriters. I learned quickly that price was the least important consideration and many times, if I couldn't get the person I wanted into the schedule, I would convince the client to delay until we could. I learned that clients are much more forgiving of cost overruns than bad work. I learned after being in various peoples' studios for long days of shooting that some people are fun to work with and some people make you think about taking up a life of crime. I certainly already knew that not all copywriters were created with equal measures of creativity and talent. The good ones were expensive but the cheap ones were ruinous. Why? Because bad work doesn't sell product. Why would a client want to waste tens or hundreds of thousands of dollars on a media buy if the content sucked and ultimately sabotaged their brand and message? 

So, if you are good at what you do, and you have the personality that matches, you may find that the client needs you as much or more than you need them. Your unique way of handling CEOs or working out visual problems or coping with logistics may make you part of a small and busy sub-group within the larger group of photographers. Surprisingly, you may find that you are in a smaller subset than you once thought. Inside a small, slivery slice of a Venn diagram of very competent artists. If you get this then you can negotiate a fair deal for yourself instead of just a bargain deal for the client. 

Suppose you are a food photographer and you did a spread for a very trendy city magazine of a very, very photogenic and visually exciting chef's wonderful dishes. Suppose the magazine actually laid them out well and paired your images with some great writing. And suppose that the food and beverage director for a four star hotel saw and loved the spread and asked the ad agency to get THAT photographer. Could that photographer ask a premium price for their services? You bet. No problem for the ad agency, they pass along the budget to the F&B director for approval and, after all, he suggested/demanded the specific photographer in the first place. 

Once you've created a body of work, are a proven commodity, have shown you can get along well with a range of people you have created an image for your business that makes clients want to hire your for their projects. This means you are in the driver's seat when it comes to pricing. Not the client. 

In all the years I worked in advertising I never had a single client question a photography or writing bid from one of my freelance collaborators. They only complained if something didn't work. We might have to reshoot but we never had to lower our budgets to hit some artificial spot on a spreadsheet. 

Are things different now? Am I living in the past? I don't think so. I think the amalgam of attributes of a freelancer are what count, not some commodity perception. I've recently been raising prices for everyone who is requesting my services. I've raised prices with existing clients and when I get the slightest push back I remind them that we're getting better at what we do all the time and that there is real inflation in the economy. We don't get much friction. With new clients I have a little bit of anxiety when I bid 20 or even 30% more than I have in the past but so far we've lost very few of the bids and most lost projects have been because of stylistic differences in the photography rather than on price. How do I know? I ask. 

Our biggest problems, when it comes to pricing work, are the two I mentioned above: The idea of working for an hourly charge and the perception that clients hold all the cards. But a third problem that comes up for freelancers who've been in the business for a while is our own perception about rates. We may raise them once in a while but then we get comfortable with our pricing and we go through long periods where there is no push back from our clients. 

The reason is that we lose touch with competitive pricing.  We trade off some additional profit for comfort. For not having to defend our prices as much. And just from practice we become comfortable with the idea of our pricing models. We are like the frogs in the experiment where one drops a frog in hot water and the frog hops right out but if you put them in a pan of cold water and slowly heat it up the frog doesn't notice the gradual change, becomes complacent and dies.  Another easy way to think about the need to stay on top of pricing increases is to think about your own parents. They are always amazed when things cost more, right? OMG, these movie tickets used to be $1 or $5 or $7 or whatever it was at the point when they started buying their own tickets. But the ticket prices get higher all the time as do the prices of soft drinks and candy at the theaters. Their costs go up and they must raise prices to ensure profits. But the parent are constantly comparing current prices to the baseline prices they remember. 

We do the same when it comes to pricing for clients. Some of my peers even look back to see what they billed a client last time and use that number. At some point you diminish your profits and start hacking away at your break even point and the sad thing is you probably don't realize you are doing it to yourself. You might consider aiming at a ten percent increase across the range of your services every year to eighteen months. You'll thank yourself when it comes to paying the current prices for one of those fancy meals we talked about above....

To recap: Pricing by the hour is dumb. Doctors price by the procedure and M&A bankers charge a percentage of the deal. You can price your products in a way that returns the profits you want. Pricing by the hour is a great way to make less money as you get better and better (more efficient) at delivering your product. 

Clients need you as much or more than you need them. Try a little experiment. Next time a client calls to book you for something and asks if you can be there on Tues. at 8am tell them you are booked that day but could do it on an adjacent day. See how quickly you hear back from them with an enthusiastic confirmation. That means you have clout. If you never hear back from them they probably see you as an interchangeable commodity instead and you might be better off finding clients who value what is unique about your offering. 

Finally, the cost of living keeps going up. It's relentless. If you don't want to make less real money every year for your amazing work then you have to raise your prices to reflect the changes. Some people will tell you the market has changed and no one can make money in the photography business anymore. Agree with them and walk away. You know better. Ads are still getting done. Budgets are still around. It's just that the rewards are going to the people who know their work is valuable and ask for the money instead of accepting someone else's terms. 



13 comments:

atmtx said...

I love your business oriented posts. Thank you for these wise words.

Victor Bloomfield said...

This is a really cogent, well-reasoned and well-written essay. Thanks for writing it.

Patrick Dodds said...

Thanks. I needed that.

Dave Jenkins said...

Time for a new book on the business and practice of commercial photography.

ODL Designs said...

Im with patrick, i feel i really needed this read right now.

Dave Jenkins said...

I'm really amazed there aren't more comments here. Back to equipment reviews, Kirk! We're not up to this big boy stuff.

Michael Reed said...

I'll add a comment

I just a hobbyist that takes snapshots of family, etc.

I could get much better technically if I spend more time on it, but it's the other intangibles that I will never get good enough to become a professional in demand paid photographer able to make a darn good living at it

artist (good eye), people skills, and so on. All of which Kirk touched on in his article

Some people have learned the technical and business side very well and just have the Knack for the other skills

Michael Matthews said...

A key paragraph in this excellent essay is just nine words long:

"Then you'll need to make sure you get paid."

In order to achieve that, employ this added rule -- know who you're working for.

In the early 2000s I was asked to do the voiceover narrative for an HP multimedia production. The script was three or four pages. It was a presentation for one event, not for broadcast or other distribution. It looked like an hour's work, plus maybe a half-hour's preparation.

So, okay, $500. Agreed.

The reality turned out to be a weekend's worth of recording and re-recording including a callback late Sunday night to record new paragraphs of copy, changes faxed to the small ad agency / production company in Santa Rosa, CA which was handling the job.

It also emerged that the one-use AV presentation was the launch of a global marketing strategy in San Francisco, for which HP was flying in corporate, government and other IT professionals from all over the world. A theater full of them, wined, dined and put up in posh accommodations in one of the world's destination cities.

Anybody in his right mind would have hired James Earl Jones at his full fee, producing the track at Skywalker Ranch.

For some reason, known only to God and Carly Fiorina, the job went to a group of feverish twits in Santa Rosa who hired a local public radio guy and recorded using hardware that appeared to have been scavenged from several PA systems.

James Earl Jones would have been paid. I'm still waiting.

Scott Kirkpatrick said...

I wish you wouldn't use the boiling a frog analogy. It has been tested and the frogs are smarter than that. They jump out when the water gets too warm.

Kirk Tuck said...

Dear Scott, Please find me another good analogy that explains the concept I was trying to get to. I was trying to word one about how people get fatter and fatter over time but it may not translate outside of North America as well. Let me know what you come up and we'll use that in the future. With best regards, Kirk

Max Rottersman said...

Everything you say is my experience too. I have often under-charged and it just leads to problems. I was very lucky when I was negotiating with a client (who later became a friend) and he said, "Max, don't argue both sides of the deal. You just worry about your end and I'll worry about my end." I was a little hurt. I thought I was trying to help him. Why wouldn't he want to know my "technical" knowledge so he could better formulate the project? The answer is, in the end, clients hire me to solve their problems (of which I am only a small piece of a larger puzzle). They don't care if I work 5 minutes or 50 days. They don't care how smart I am. They don't care what's under the hood. They just want to work with someone who gets things done, who doesn't stand around waiting for someone to tell them what to do. They don't want to worry about how I pay for my insurance. They don't want to worry if I'm charging enough to own the right equipment. Anyway, I no longer worry about what my client can/will pay. I focus on what I need for the job and pretty much stick to it. I've found that when clients don't want to pay it they generally don't pay anyone--that what I was charging wasn't too much for the project, the project was just too much for them.



Spiney said...

I really needed to read this. Perfect timing. My wife and I had a well respected and successful portrait studio for 15 years. We had to close it because I had a total of 3 back surgeries and 1 failed neck surgery in a short time.

My wife was laid off from a well paying job about 1.5 years ago. We started doing some portrait work again to make ends meet. I was afraid to charge anywhere near what we used to because I no longer have a studio. But I do have the equipment, the skill, and the knowledge to get the job done. On top of that we are both likeable and easy to get along with. I need to base our rate on the quality we are delivering and the true scope of the job, not my lack of a studio.

Anonymous said...
This comment has been removed by a blog administrator.