BOSTON CHILDREN'S PHOTOGRAPHER, BOSTON FAMILY PHOTOGRAPHER, BOSTON NEWBORN PHOTOGRAPHER

With best intentions, I wanted this to be blogged more than a week ago. I finished the gallery and slideshow quickly — and that is because I had an appointment with Corey so she could squeeze me in one day working, and so with that favor, who was I not to edit her images? So I excitedly tossed my laptop in my bag and head to the salon, only to later realize that the minute I closed my computer, the logic board died. When it was finally returned (covered under warranty, yay!), 7 keys didn’t work (loose cable, coupled with a LOT of food in the keyboard). So that added to the delay, and then, well, there’s life.

That said, Corey and Jim were so excited to welcome their little baby girl. And they are both adjusting to parenting, and their new roles, and are so cute, and loving and happy. Corey looks amazing, but we knew she would after we saw how insane she looked during her pregnancy. Baby Nicoletta is so sweet.  Her skin is perfect (even her peely feet, which might be my FAV thing about little babies!).  She is sweet and wide-eyed, and never once fussed (except when she was hungry, and c’mon, I know I still fuss when I am hungry!).  I loved having them at my studio.  And I am so excited for a lifetime of blond hair in my future, and photographs in theirs!

Jennifer found me through one of my clients for whom I shot one of my favorite sessions.  If you’ve been in the studio, you know that I have a vignette of BW framed prints from that session, as well as a sample BW album.  To say I really liked that family and session is an understatement.  So when Caroline referred Jennifer to me, needless to say, I was thrilled.  Jennifer and Alexander live in a wonderful home that is not only filled with beautiful books and photographs and art, but also with love.  They are a pair, that (pardon the Jerry Maguire pun), completes each other.  Much to my delight, when we finally decided on a session date, it was Saturday of Greek Easter, and of course, Jennifer is Greek!  What a treat, so wonderful to know that Alexander has a Yai-ya and Pappou… and that we’d both be celebrating with an overload of wonderful family and food the next day.

So here are my favorites, not all my favorites because that would be the entire session, but enough so that you understand that this too will be a session that will make me incredibly happy, and undoubtedly end up somewhere on my sample wall, along side Caroline!

And what is so positively awesome is that I photographed her as a newborn [one of the prettiest nurseries ever].  Then I photographed her when she turned one [cutest little cupcake smash ever].  And then I pretty much forced myself on her parents for her second birthday shoot.  No joke.  But you know I am sort of like a bad disease once I like you, there is often no getting rid of me.

I love sneaking out on Sunday mornings.  I love it when it’s in the high 70s in March.  I love Charlestown.  I love repeat clients.  I love clicking with parents so that it’s just really easy to shoot.  And I love super cute kiddos.

Lately I have been involved with a number of discussions with other photographers about pricing and the cost of doing business. And while there certainly are a varying range of opinions about how people should and do operate their business, a recurring theme of general misunderstanding of basic business costs has come up time and time again. And while I don’t LIKE to say “$300 for a shoot and burn session isn’t good business,” in most circumstances I believe that’s a correct statement. And as you know, my motto is “Cheap is not a business strategy.” Or at least it’s not one that will withstand the test of time, unless you are catering to the thousands, and your last name is Walton. And you are OK working for free.

That said, I know a lot of photographers who are just starting out, or who are in markets where there is a lower CoL (cost of living) and/or less wealth, will disagree with me, or just not understand what I mean.

In order to illustrate my point of view, I pulled out the numbers I used to calculate my business costs, and my pricing, the year I started out in business.  I was working full time at IBM and didn’t have the pressure of needing the extra income and I had the luxury of re-investing my revenue.  These are my COSTS, but not my PRICES (I started fully in business priced appropriately for profit and for my market and for my brand).

To clarify so that we are all using the same terms:

Cost of Goods (COGs) are things that are DIRECTLY related to your sales. So no order, no COGs. They are prints, albums, canvases, DVDs (products) + some people associate shipping with COGs too (inbound to you, outbound to your client).

Average COGS in portrait photography is about 20-25%. Selling digital brings it down, however there still is a COG associated for anything other than just uploading files (screened DVDs, cases, reference prints). Prints, albums, canvases, mounts, mini accordions, etc. have a higher COGs. Let’s not forget when you place an entire order and forget an item and you are now subject to a minimum order for something that costs $2.  Or something is drastically wrong with your color and you have to reprint an entire order. Let’s not even go there with Press Card disasters. All of this speaks to pricing your products and packages appropriately to cover your costs and the time associate with producing them.

Fixed Expenses are costs that you incur if you are operating a business (or even just starting one up) that you will incur indirect from a sale — you need these things regardless if you sell anything, you need them to be in business. The degree to which you need each varies on your business model and your volume and your overall setup. It makes sense to start each year with a budget for each category, then mid-year match up to where you are and figure out if you overspent or underspent and why (and sometimes there are very good reasons).

Tax & Legal Assistance, Memberships (Clickin Moms, PPA, etc.), Gear (lenses, bodies, flashes, CF cards, etc.), Hardware (harddrive storage, laptops, etc.), Software (Photoshop, actions, templates, etc.), Hosting, Web Site & Blog upgrades, Mentoring & Workshops, Logo/Branding, Advertising (booths, prints, ads), Print Materials (inserts, brochures, price lists, thank you notes), Packaging (boxes, clearbags, ribbon, bags), Studio Sample, Props, Studio Rent, Studio Operating Expenses, Cell Phone, Internet

Salary for your time, however there are various ways to calculate that depending on how your business is structured, so I am only going to address “paying yourself” on a broad scale — but it’s important to consider as you will see.

Gross Profit is the amount of revenue you collect, before taxes and expenses

Net Revenue Before Taxes = Gross Profit – COGs – Fixed Expenses – Paid Salary –> This is the number that is the basis for figuring out income taxes. However, that also varies based on how you structure your business, pay yourself, and your general tax rate.

Now let’s put this in real terms. You are going to shoot a full session (est. 1-1.5 hours, family and/or children or newborn) give the clients a DVD in basic packaging with 30 reference prints.

Price: $300  = COGs: $25  Shipping: $5  Total Costs: $30    Net profit: $270

BUDGET

The first thing you should do, as you plan your year, is to estimate a budget with the Fixed Expenses and determine which is a monthly, quarterly or annual expense, and determine which is a MUST have and which is a NICE TO HAVE. Based on my business four years ago (home based, nominal expenses), my FIXED EXPENSES were $15,782, or $1,135/month BEFORE I EVEN SHOT A SESSION. Even with a more conservative budget, removing some “nice to have items,” the fixed budget is still about $10K or about $761/month. In this figure, I do not include an allocation for gas, cell phone, etc. and other things that I was writing off for my IBM job (or as a final tax prep step). Obviously the more you grow, the more fixed expenses you incur, but generally you increase them in line with your growth.

Based on the $300 price point, in order to meet FIXED EXPENSE needs, you need to shoot between 3-5 sessions a month, and you have NOT PAID YOURSELF OR MADE A DIME OF PROFIT.

YOUR TIME

Now let’s consider your time. When I started out, I averaged about TEN hours per client (that’s a lie, once it took me 22 hours to proof down to a 30 image gallery). I still average that, but how it’s allocated is different (more design and consultation, less editing). Luckily, when you shoot better, you edit less.  Hours per client are determined by: pre-booking/book consult time (emails, phone calls, getting payment/forms), travel to/from shoot, shoot, download/backup/organization of files, editing, blogging/FB, gallery presentation, post-session communication, order management, order preparation/edit/placement/receipt, shipping/pickup, payment, close out of client.

Let’s assume that for these $300 sessions, your time is FIVE hours per client (but I doubt it when you are starting out), maybe TEN hours on the high end.

Additionally, every business has “admin” time — time that is allocated to the business that is not directly associated with a client (posting for CC, creating FB posts, blogs, promo cards, pricing, portfolio slideshows, washing newborn blankets, driving to the post office). Let’s allocate 5-10 hours a week for that.

You are now working between 35-90 hours a month, or 9-23 hours a week, and you have NOT PAID YOURSELF OR MADE A DIME OF PROFIT.

PAYING YOURSELF

Now let’s consider that you’ve been doing this for a while and you think YOUR WORK IS GOOD. AND IT HAS VALUE. AND YOU PROVIDE SOMETHING TO OTHERS THAT IS WORTH SOMETHING. (That’s why they are hiring you, right?). And you decide, “Gosh darnit, I want to make a profit and be PAID for my time.” Or “It really would help in these tough economic times to have some extra cash on hand to pay the bills… I could consider this a job and PAY MYSELF.” You decide that you want to pay yourself $15/hour for each hour you work.  I recommend paying yourself much, much more, but again sometimes this is dictated by how your corporation or taxes are set up, your CoL, etc. so let’s use this as a hypothetical figure.

Now you have two choices. You can WORK MORE so that you earn over and above your expenses (what you earn is more $/hour and profit, but typically also increased expenses), or you can INCREASE YOUR PRICES SO THAT YOU MAKE A PROFIT.

You can choose to keep your time per client short, and your admin time brief, and tack on $135-$175 (the more you shoot, the less you mathematically have to increase it) or you can spend more time on both and tack on $270 – $350. But either way, you are now PAYING YOURSELF FOR YOUR WORK. How much you increase your price is dependent on how much work you want to do (this is the “volume” versus the “boutique” model comparison), how much you pay yourself, and where and how you want to market your services and to which segment of the population.

Check out the comparisons. You can see how changing the variables of PRICE, TIME, AND VOLUME changes not only your net profit, but also your hourly rate. It ranges from $.70/hour (yikes) to $16.40/hour.

So now that all this fun and games is complete, keep in mind a few other MINOR (wink) details:

• The Numbers Do Not Lie.  If spend money, you need to understand that what you earn as revenue, counts against that.  It’s basic P&L (profit and loss).  What you choose to do with your P&L is your own business, but if you ignore it, you are doing yourself a big disservice.

• I am NOT saying that you have to be “expensive” to be in business.  I have just described a “break even” analysis to tell you how you determine the costs you need to cover to not LOSE money.  This is so helpful because you can apply it to a number of different pricing scenarios.  For instance, I know how profitable my mini-sessions are in comparison to my other sessions + packages.   My mini-session is the LEAST expensive thing I do, and it’s very profitable, however, I do need to shoot quite a few of them to equate to what my normal average sale is — so I make a choice as to how many I offer, but I do include them as an offering because I then allow clients to work with me who have tight budgets.

• None of the above addresses how you should determine your final pricing.  Your pricing should be a combination of your expense allocation, your COGs, your time [as in time to put together specific products and services], your own value or  your work, the market you live in, and your target client base.  Many people commented to me “I wish my clients understood this.”  And to that, I say “perhaps you need to find different clients.”  I seek out clients who above all, value ME AND MY WORK and do not nickel and dime me, or expect me to be priced just like my competition.  And because of that, I will make my pricing work for people that are respectful of this.

• If you are a client reading this, one of mine, I am sure you already understand why you would not want to work with someone who DIDN’T VALUE HERSELF or HER WORK enough to pay herself. And while a bargain is a bargain, typically you get what you pay for. But this isn’t really a targeted piece to clients, and doesn’t specifically address my clients, my pricing, or my services, my brand, my work.

• Everybody starts somewhere. And $300 for “everything” while you are building your portfolio may or may not be the right thing to do.  I am not advocating that someone who is just starting out set the same prices as me, or anyone else… that is AN ENTIRELY DIFFERENT CONVERSATION.  Additionally, when you first start it can take you 22 hours to proof a gallery that once you were really established and awesome, might take you 2 hours.  So maybe paying yourself by hour when you are just starting out is a little bit skewed!

• You can certainly charge $300 for your services, but offer what makes sense for that (less time and different service) so that you are not operating in the negative – make it fee based, and add on a la carte as your client wants more product and services… no harm in that (like above example of mini sessions).

• Your NET PROFIT IS SUBJECT TO A TAX RATE OF 20-40% depending on how you file your taxes and your household tax bracket (whether you file as a corporation or pass it through your personal income statement) — so if monthly net income of $1,385 felt good to you, keep in mind that it’s really closer to $970. Because that’s how Uncle Sam Rolls. And as someone who has a disaster to clean up with sales tax right now, I can tell you that my INCOME TAX PAYMENT is BEYOND PERFECT down to the dime. And not allocating correctly for it can really try a good thing (like your husband and accountant’s patience, your business credibility, etc.).

• YOU MIGHT HAVE TO CONTRIBUTE TO YOUR HOUSEHOLD. Imagine now being responsible for $1,000 worth of bills each month (or $3K in my case). It basically feels like even if you net $1K (or $3K) that you are still working for nothing. Not free, because your clients are paying you, but you still have no profit in your LIFE.

• You might be GOOD. You might be VERY VERY VERY GOOD. And it might be OK with you to NOT MAKE A DIME. But there are other photographer’s out there who value their time and their service FAR MORE than $15/hour, who have trained for years, and who have given their blood sweat and tears to build their business (and who have families to support). And because you decide that for your first few years you can “capture the market” and advocate that $300 is fair market value, their pricing of $750 or $1500 or $1800 seems GROSSLY out of whack. And so the market begins to re-set itself towards your pricing. And then, wait, a year passes and you realize YOU WANT TO GET PAID and you try to raise your prices… and WHOA, no one likes that… and you look around and WOW there is someone doing it for less than you, how dare they! So you can thank yourself for that, because undercutting the market and working for free… well, that’s all you baby!

So there is SO MUCH MORE to this. And I am writing this and risk angering people (primarily my peers who will scold me for spending 2+ hours writing this and then giving it away FOR FREE). And that last point is to be TONGUE IN CHEEK and POKING FUN and NOT DIRECTED AT ANYONE BUT RATHER TO THE ENTIRE MARKET. I just wanted to get it down “on paper” because it comes up over and over and over again and honestly I think some people defend it because they grab numbers out of the air, and some people just don’t know better… and of course, because for some people, this model actually works for them. So if it makes you pause, and perhaps bristle, please do yourself a favor and take a moment to think WHY.

For the others who actually found it valuable, awesome.