Pricing For Profitability
Out of all the questions I am asked by other photographers, the most common is “how do you know what to charge?”
Figuring out your pricing is a tricky thing
Set your prices too high and no one will hire you. Set your pricing too low and you’ll put yourself out of business. So how do you go about figuring out the perfect price point for your business?
At the beginning of my career I thought the best way to figure out what to charge was to see what other photographers were charging and do the same.
I was wrong.
Every business is different and has different needs and expenses. Learn from my mistakes and don’t base your pricing off of what someone else is doing. Instead, be smart about it!
Here is a simple formula to figure out what you need to be charging to stay profitable!
Figure out your costs of doing business (a.k.a. C.O.B.s) C.O.Bs are ALL of your costs. Film and processing (if you are a film photographer), CF or SD cards (if you are a digital photographer), rent, insurance, products, marketing, phone, internet, equipment, camera repairs…. Everything you spend money on in your business. Write it down and add it up!
Figure out (realistically) what you will be paying yourself per year (yes, you should be paying yourself!!!) Do you pay yourself $1000.00 a month or $10,000.00 a month? And remember what your business brings in ISN’T your salary. That is your gross income, or what your business makes. You should be paying yourself a salary out of your gross income.
Add your COBs to what you are paying yourself. That number is the minimum your business needs to be bringing in per year.
Figure out how many clients, on average, you work with each month and multiply that by twelve. That is the number of client you want per year.
Divide the minimum amount that your business needs to be bringing in with the number of client you plan on working with each year. Write it down. That is the minimum that you need to be charging per session.
Now, if that number seems HUGE to you for where you are in your business, that is okay! At least now you know where your pricing needs to be and you can start building your business around making sure you are bringing that money in. More on how to do that later.
Remember, business by definition, is about making a profit. If you are not making money, you are not in business, you just have a very expensive hobby! So be smart, and make sure you are setting your pricing for profitability!
Need some help figuring out your pricing? Download my Pricing for Profitability Worksheet here!