Determining Pricing

One process that plagues many photographers is setting pricing. Whether you’re just starting out or re-evaluating your business, having a deliberate process for determining your pricing is key. One of the common complaints among photo buyers, whether they’re professional art buyers or consumers, is that pricing seems to simply be arbitrary. To a certain extent they’re correct, but being able to justify how you’ve arrived at your pricing goes a long way towards blunting some of that criticism.

Understand your market. Most photographers work locally, some work regionally and a very few work nationally and internationally. Understanding where you fit within this spectrum is very important. It’s also important to realize that there’s not necessarily a skill or worth judgement associated with where you fit into this. I know many incredibly talented photographers who work primarily locally, as well as a few that have national clients that I’m not particularly impressed with. Shoots with local clients usually are not going to fetch the same rates as those for regional or national clients. We’ll get into why later.

Understand you genre. How difficult is it to do what you do? As technology progresses and cameras get easier and better you’re going to have to continually up your game. 10 years ago one could make a reasonable living shooting pretty good pictures. No longer. Now with a $600 dslr just about anyone can take a pretty good photo. The technical constraints and concerns that made 80% of photos difficult have pretty much disappeared with technology. I’m not insinuating that a trained and experienced photographer won’t do better than an amateur given the same equipment. But the fact is that difference may not be immediately apparent to many clients. You need to be drastically better than Uncle Bob and his Digital Rebel. If you specialize in a genre that is very technically difficult (food, aerial, architecture and political to name a few) you can charge higher rates because you have skills and talent that are rare.

Understand the usage. Understanding how photos will be used is of course critical to shooting a great image. It’s also critical to pricing it well. Most of us are used to buying scarce resources (i.e., commodities). The gas station doesn’t care whether I put a gallon of gas in my car or if Bill Gates puts it into his limo, they charge us the same. Gas is a commodity, it’s pretty much the same everywhere you go and once it’s sold it’s gone. Photography is intellectual property, not a commodity. It’s not scarce. I can sell the same image over and over. ┬áPricing for commodities (gas, oil, pork bellies, whatever) is based primarily on supply and demand. Intellectual property can’t use the supply and demand model since there’s an unlimited supply. Another model is needed. A good marker to use for determining pricing for IP is impact. A cheeseburger photo used in a menu for a small carryout will be seen by FAR fewer people than that same shot used on the menu for a national restaurant chain. As such the usage fees should be higher for that national chain. Bigger impact, bigger fee.

Time involved. This is the classic day rate model of pricing. I know lot’s of photographers who use this model still but I feel it’s outdated as the sole model for pricing. How long a project takes certainly needs to be considered when determining pricing; it just shouldn’t be the only factor.

Production costs. These are the actual, physical, tangible things you need to purchase, hire, rent, steal, etc. to get the job done. I try to avoid using the term expenses because that insinuates actual costs involved. I mark up my production charges and I feel I have a right to. If a client asks for receipts I’m happy to provide them but with the understanding that production charges are not the same as actual expenses. After all, you should be able to mark up that makeup artist that you helped train for years, or that print that you spent three days working with the lab on to get just right.

PITA Fee. This is an internal consideration I use when figuring out how much of a Pain In The Ass a client will be. It’s not particularly nice – but if you’re a pain to work with, I’m going to charge you more to make it worth my while. I’m a photographer because I love it. If a client is going to make me hate photography, it had better be worth it. Of course don’t itemize the PITA fee on the bill.

Finally, you need to understand your Cost Of Doing Business (CODB.) How much does it cost you to keep the lights on, the doors open, the gear in working order, pay your salary, etc. Leslie Burns Dell’Acqua has a great article on her site here about this. Read it and understand it.

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This Post Has 4 Comments

  1. Steve,
    Excellent article – I especially like the PITA fee.
    Fred

  2. When I was in the ad-agency business, my boss used to say she DID itemize the PITA fee on bills!

    She just called it “PIA,” though. If asked, she would explain that it stood for “Purchased Inventory Allowance,” and that it covered the costs of supplies that couldn’t be itemized easily: rub-down type, spray mount, mat boards, diskettes, and other things that have to be kept in stock and used as needed. Nobody ever complained about it!

  3. I don’t know that I agree with everything in the section called “Understand the Usage.”

    Not so much about the usage fee level in relation to the exposure the image gets. But I think the distinction you’re trying to make between commodities and IP is off a bit. It seems to me that commoditization is one of the processes that is making the photography business increasingly difficult. What I mean by that is essentially the same as what you are talking about when you discuss quality, technique and the blurring of perceived differences between ‘amateur’ and ‘professional’ results (and players.) Images in general have become a commodity. There are just so many of them it’s almost impossible to take them in in a meaningful way. In addition, you tend to commoditize your own images the more copies you sell and the more widely they are distributed. And you commoditize them to the extent that they reflect the preoccupations of the market you are targeting rather than your own preoccupations. The fact that you might make some more money as a result, through IP doesn’t make the work any less of a commodity. The petroleum companies make money with each tank they fill, gallon that is pumped. What’s the difference?

    I think the true distinction between commodity images and non-commodity images has more to do with the degree to which an image can be identified as yours — call it personal style or vision or what have you. IP is simply an administrative and/or legal recognition of that uniqueness.

    The problem, I think, is that because of the commoditization of images, there is less of an appetite or demand for personal style unless it is so… what’s the world? …vivid or surreal that it, in a sense, screams out to be noticed above all the other images. Successfully. The marketplace for this type of image is shrinking because the print venue is shrinking. So there is a positive feedback loop happening where personal style becomes more and more, in a sense, distorted in order to get the attention of less and less market. On the other hand, the Internet is a kind of undifferentiated wasteland where the ability to really perceive personal vision, i.e., non-commodity images, is almost impossible because of the blizzard of other stuff that surrounds it. It may be that the ability to *make* non-commodity images is similarly affected. And we spend hours and hours trying to game the web with search engine optimization and all the social networking techniques. In a way it just seems to get noisier and noisier. And our sense of sight seems to get duller and duller as a result.

    Not a happy scenario but perhaps an indication that ‘small planet’ or ‘local’ thinking may be a healthier (if not necessarily more profitable) recipe for doing what you love and with a smaller PITA markup.

    …edN

  4. Ed,

    I don’t disagree with your point that the commoditization of images makes the business more difficult. Mediocre photography is fast becoming a commodity. The only way to ensure you don’t fall into the commodity race to the bottom is to continually produce better and better work. I like to think though that the increased use of mediocre images makes the demand for outstanding images even stronger.

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