The mysteries of bidding, billing and saving. Photography mysteries I'd love to see demystified.

I'm starting to assume that many people are unfamiliar with the whole underbelly of freelancing; the part where we figure out what to charge clients and also what we can charge clients. And how to get paid. And what to do with the money when you finally get some. 

Let's de-mystify: 

If you happen to be a very famous photographer with a very famous and unique personal style, and you have a super professional representative in NYC or on the West Coast then this blog post probably is largely irrelevant to you and your financial condition. But regular, commercial photography business is a bit different in that you are offering services that can be duplicated, pretty much, by a larger pool of practitioners in your chosen market. There might be only one Annie Leibovitz but there are at least 20 or 30 people in Austin, Texas who have nice websites and enough experience to photograph a CEO, and a "toaster oven" on white seamless, and a decent exterior shot of the Super Amalgamated Widget Corporation's headquarters. When you bid for various local and regional jobs these will be some number of the people you will bid against. You probably know them from time spent together at ASMP meetings and other industry events. You might even count some as friends.

While clients will tolerate a range of rates they have a general idea of what a project might cost and how much they are able to budget to produce the project. They might value experience and track record more than taking a chance with a less proven supplier and if that's their point-of-view then the scales tip towards someone like me. You get bonus points if your client has consulted with their peers at other companies and they've all given you a collective and enthusiastic "thumbs up." If that's the case the potential client will usually tolerate your bid or estimate being at the higher end of the budget range. 

But it may be that the company asking for the bid is a young, brash start-up with a collection of younger partners who are looking for freshness, risk taking and more trend-conscious imagery and in this case a 64 year old coming in with an extensive (and time-tinged) portfolio may be at a distinct disadvantage to a much younger but well accomplished competitor. All bets are off if a relative or spouse is on the other side of the bid process from the photographer. 

If you bid against the spouse of the marketing director you will nearly always lose. Talent does not always take top priority and emotional attachment filters perception. Be prepared to walk away gracefully.

When you make a bid (as opposed to the fast vanishing animal called, "estimate") you are making an agreement to do a certain amount of work within a certain amount of time for a specific amount of money. If you are a real estate photographer and you bid to photograph the front elevation of ten homes in bright sunlight for $5,000 then the only thing that matters to the client is that you deliver ten usable, sunlit home fronts along with an invoice for $5,000. And not a penny more. 

But what if you made your bid when the sun was shining and the weather was good but when you got started on the job all nature would allow for was days and days of driving rain and intermittent fog? You might have ventured out to see what you could accomplish on many different days but none of those days are billable to the client. All they care about is getting their ten, sun drenched architectural shots for $5,000. 

You might have thought you could shoot five house fronts on two different days until you found out that they are in neighborhoods far away from each other (do more homework before bidding?). You might arrive to shoot a house at 10 a.m. only to find that the house faced away from the sun and would only have direct light on the front after 1 p.m. And this might be a recurring theme in your bad luck. Perhaps, due to unforeseen and un-bid circumstances, it takes you ten long days to finally get the images you need. Will the client compensate you for all the extra time? Will they listen to your tale of meteorological woe and hand you a bigger check? Not likely. 

You'll get the $5,000 you originally bid. 

Now, if your brother and sister and mother and father are all attorneys you might get the advice that you should estimate that job instead of being locked into a fixed bid. This will be fun. I'll pull up a chair and watch....

So, you ( and your family of lawyers ) want to charge $5,000 to do this job but you want to cover yourself for any and all contingencies that might reduce the value of the job to you; right? So you tell the client, "I don't do bids but I can give you an estimate." In this estimate you calculate that you can do ten shots over the course of the next few days but you'll need to put in a few provisions to your agreement to cover things that you just can't predict. You add in a cost for "rain days" in case you wanted to shoot that day but couldn't because of inclement weather. You add in a potential fee for any time you have to spend driving to each location to see which direction the house faces in relation to the sun. You put in a few waivers in case you messed up and need to go back out and reshoot one or more locations. And you put in a clause that allows you to hire a driver and pass along the costs. 

So, potentially you could have decided that you'd like to shoot this Thursday, Friday and Saturday because you have to go to that big house party at the lake on Sunday. But, sadly, it rains all three days. You add $4,500 to your bill because you have included rain days in your estimate. You went to the house party and it was great but now you have a fever and chills and a bad cough so you have to hire a driver to hit the rest of the houses. You add $1,000 to your bill. The driver insisted on getting lunch while working for three days. Add $45 to the bill. You were in a rush and shot Jpegs with the wrong color balance at three of the houses so you had to go back and do them all over again. You added another couple thousand dollars to the bill. 

You were in a hurry to finish one day and while your were on your mobile phone and driving your car to the tenth location you accidentally hit an ornate, stone work mail box and destroyed it while also damaging your car. The family lawyers tell you it happened "on the job" so you include the damages to your car and the resurrection of the mailbox to your bill. Another four or five thousand dollars. 

Finally, you turn in the ten shots the client asked for along with a bill for somewhere between $15-$20K and you run as the client chases you out of their office screaming obscenities at you. Your family declines to offer you their services pro bono and gives you the card of an attorney who is just starting out and who might help you collect. Good luck with that because no client in their right mind would sign a unlimited buffet contract like that in the first place.

So, how do we bid? First we identify all the costs of a project. The time spent. The mileage. The meetings. The post production. The delivery costs. 

Then we add a profit, called usage fee that is based on the value of the photographs to the client. Anything that can be easily shot and has a basic commodity value will have a commensurate low usage fee. Some types of work, like basic headshots against a neutral background may be so utterly generic that they have no value beyond your time and expenses. Some shots, like location photographs of CEOs in a style that you do very well may have lots and lots of value to the company and, if the CEO loves his image, the photographs may also have a long life. In these situations the usage fee is higher than it might otherwise be. 

Some dinners are McDonald's Happy Meals™ and some dinners are Aged Ribeyes at the Four Seasons. Each has a different value to the buyer. It's the seller's job to get top dollar while it's the buyer's job to get the best value. 

You're a rare bird and a great salesperson if you can get the same high rate you'd charge for an on location portrait of a top, Fortune 500 CEO when shooting this month's top sales person at car dealership. Most of us base our jobs on an internal estimate of: how much time is involved? + how fun is the job? + what is this client's payment history? + is this a job I can use in my portfolio? + how complex is the job? + does this job fit in with the brand I'm trying to project? = the basic budget. Then add in your usage fee. Calculated on the perceived value of the images to the end user.

At every step of the way you'll need to factor in things I can't know for you. Stuff like the cost of studio space in your area, the demographic composition of your region, your own brand's position in the market, your level of experience, the prevailing competition for jobs like this in your city, and even your level of experience. 

I would not be anyone's top choice as a sports photographer in the Austin area. No one has every asked me to photograph soccer, or a football game, or even kid's Little League baseball. I have photographed national swim competitions but that's only because of my deep knowledge about the sport and how to photograph that specific sport. 

But the one thing that doesn't change is that when you've proffered a bid you are obligated to hit that price regardless of whether or not you took all the variables into consideration. If the client changes any parameters you have every right to go back and add to the price or renegotiate the project. If you screw up then...you screwed up. 

I live in a very prosperous market but by its very nature it attracts a lot of very good competition from all over the country. The money flowing through the market helps keep prices competitive nationally. The fierce competition keeps the prices from getting overheated. Almost like clockwork we'll have a big name come in from NYC or some other first tier market and they'll assume they can continue to charge the same prices that are attached to national advertising campaigns while shooting jobs that can be readily handled by local competitors. The newcomers find themselves readjusting. So many of our jobs here are direct to the corporations as opposed to jobs done through advertising agencies for worldwide ad placement. There are different pricing structures and ranges for each type. 

On the other hand we are occasionally asked/invited to bid on bigger, national advertising projects and we have to overcome our built in, mental pricing barriers to deliver bids that are high enough to be in the acceptable range of pricing for those kinds of projects. All too often our own restraint (self limitations) based on local pricing causes us to leave lots of money on the table. 

I write all of this because of a comment on the blog (which I assume was in jest; but I never know...) that suggested ( or "hoped") that I doubled my bill to my client after the international travel went to hell after a job. I wish I could  have gone back, added to my fees and extracted money for the time I spent on the set of The Blade Runner Hotel, and in a stuffy airplane, and begging for a reservation miracle to get me home.

But I had bid the job. The client's offer to book flights was a "favor" I should not have accepted. But nothing that happened was the client's fault and none of it was billable to them under our agreement/contract/bid. 

I did learn a valuable lesson and that is to book your own travel if you hate mistakes. 

I did have a client several years ago which needed me to do a lot of domestic travel. Occasionally, after a particularly long day, I upgraded myself to a first class or business class ticket for a long haul home from one coast or another. I would not consider sending along the bill for the upgrade unless invited to do so as a favor from the client. Most upgrades at flight time were running around $250. If it's a client you like and you feel like you must fly first class I suggest that be part of your negotiation when bidding the job. If they balk your other option is to raise your rates and see if they'll go for that. Billing is like water and goes to the path of least resistance. Either way, first class and economy passengers seem to arrive home at about the exact same time...

Another note: A reader commented today on my story about the excruciatingly long flight which I wrote about yesterday. He said, in his lead-in, that my story was "not credible" because the flight crew should have invoked some rule about length of time they can fly. I deleted his remark because it was insulting. The passengers and myself have no way of knowing, during a three or four hour layover, if the flight crew of a 747 has been changed out while we sit on our butts at the other end of the plane. When I say, "The captain said...." I meant a generic captain. Whoever is in the pilot's seat at the time. If I have to keep tabs on the flight crew's duty schedules I surrender and will never write about an actual situation ever again. It's too much work pushing back against "not credible" accusations. 

The story is exactingly accurate. My understanding of crew dispositions is non-existent. None of the crew invited me into the airport bar for a drink. Nor did they offer to let me stay at their homes while we waited for the airport to open the next day. How the fuck would I know who had command of the controls at any given time...?

One analogy about bidding a job. Think of a job as a restaurant meal. There's a menu (analogy = a proffered bid). You order an entreƩ and a salad and a bottle of wine. You are shown the prices for each item. You are aware of the local sales tax percentages. How would you respond if, after the meal was served and happily consumed, you were given a bill for 25% more or 50% more than the stated menu prices? Would you pay that bill? Would you ever go back to that restaurant again?

And, what to do with all the money after you get paid....

First, put aside all the money you need to use to pay for the expenses incurred on the shoot. Assistants, food, travel, lodgings, etc. Pay those bills so nothing stacks up on a credit card.

Put aside a percentage of the fees for time, and fees for usage, to defray fixed costs such as studio rent, insurances, assistants, permits, travel, rentals, etc. 

Put aside a percentage of the payment for the job for income tax and self-employment tax (percentage based on last year's tax obligations) and any local taxes that are recurring. 

Pay yourself. We compute a "household"  budget amount which is due each month and paid by me into a household account on the first of the month. It covers groceries, utilities, rent or mortgage, and miscellaneous things like entertainment.

Put 10% of the fee in a savings account. When you hit a certain balance over your needed emergency fund (one year's worth of expenses) sweep the excess $$$ into your brokerage account. Invest wisely. 

Put 10% in your SEP or other tax advantaged retirement account. Again, invest wisely.

Finally, have fun with the $5 or so dollars you might have left.... rinse and repeat.