Pricing Portrait & Wedding Photography, part 1

Pricing considerations for portrait and wedding photographers.

By Ann K. Monteith, M.Photog.Cr., Hon.M.Photog., A-AS
First published December 2000

The task of pricing photography is greatly simplified when you understand the relationship between what it costs to do business and how much to charge in order to be profitable.

Professional Photographer presents a look at some underlying pricing considerations for portrait and wedding photographers.

Of all the many services-for-hire, photography is one of the most difficult to price. The complex nature of the service being rendered makes it a challenge to determine how much to charge for most types of portrait or candid photography.

Most businesses provide a service, sell a product and/or manufacture goods. Photographers, however, provide a service, sell a product, and usually they supervise the “manufacture” of the product. This makes the management aspect of a photography business infinitely more complicated than other businesses and adds complexity to the task of pricing photographic goods and services.

The task of pricing photography is greatly simplified when you understand the relationship between what it costs to do business and how much to charge in order to be profitable.

Business Functions that Affect Pricing

The profession of portrait and wedding photography comprises four essential business functions: marketing and merchandising; client consultation/ education; product sales and service; and product manufacture.

Each function has a reciprocal effect on the studio’s pricing structure, which in turn has a profound impact on the photographer’s ability to manage the business. Too many novice photographers set their prices according to a competitor’s price list. This can be a fatal management mistake, not simply because a competitor may have set his prices too high or too low, but because these prices most likely do not reflect the new photographer’s cost of doing business or his place in the market. No two businesses are alike, and it is the differences among them that affect pricing.

Factors that Affect Pricing

Among the factors that affect pricing portrait and wedding photography are the quality of the photography, the perceived value of the work, the cost of doing business, and the amount of business that can be transacted by a given staff. In general, photographers pay entirely too much attention to what their competition is doing and not enough to improving their own products and services and promoting their businesses.

Competition can affect your success in reaching a targeted market when a rival business delivers a credible product at a much lower price. Tough competition, however, never justifies dropping your prices below the cost of doing business. Instead, develop strategies to make the public perceive that your products and services are superior to, and a better value than, the competition’s.

The Cost of Doing Business

The quality of your work and its perceived value are qualitative attributes, and are somewhat subjective. The quantitative attributes of doing business —the amount of business you can handle and the business expenses you will incur—are the most important indicators in setting prices.

Photographic expenses fall into three categories: Capital Expenses, Cost of Sales, andGeneral Expenses. Cost of Sales and General Expenses are day-to-day expenses. Capital Expenses, like equipment, furnishings, business buildings, and vehicles, are “expensed” over time through depreciation.

General Expenses are often referred to as “overhead” or “indirect expenses.” Cost of Sales is sometimes called “cost of goods,” “cost of goods sold,” or “direct expenses.” A good way to differentiate between Cost of Sales and General Expenses is to remember that you incur Cost of Sales expenses by creating a product only when you have a customer to serve, but General Expenses are ongoing—they exist whether or not you have any customers. For example, a wedding photographer doesn’t have to buy film in January if she has no weddings in January, but she still has to pay the electric bill for the studio.

Determining Cost of Sales

Whether you are a part-time wedding photographer or a full-time studio owner, accurate financial record keeping is essential. Financially successful photographers do not run their businesses by seat-of-the-pants accounting. They know where their money comes from and where it goes. Pricing is directly related to accurate record keeping and affects both money coming in (income) and money going out (expenses). You begin the process of pricing your work by identifying the Cost of Sales for each item you intend to price, from wedding packages to individual photographs.

In portrait and wedding photography, Cost of Sales is made up of the goods and services that are required to create the products you sell. Some of these are easy to identify and account for, such as film, film processing and proofing, albums, frames, and presentation mounts.

Others, such as proof albums that you might reuse several times before discarding, are harder to account for because you must arrive at a figure that reflects their useful life. Other Cost of Sales that are easily overlooked include packaging materials for your proofs and finished pictures, retouching costs, mounting materials, and finishing sprays. Retouching costs are particularly easy to miss when an employee serves as both office worker and retoucher. In this case, you must assign a per-job retouching cost when calculating prices.

Another tricky Cost of Sales expense is the salary paid to the photographer. Generally, the salaries of full-time employees are considered as part of business overhead, and these wages and benefits are accounted for under General Expenses. However, the wages paid to contract laborers you hire occasionally for specific jobs, such as photographing weddings, are accounted for as a Cost of Sales expense under the heading “contract labor.”

A contract laborer is a non-salaried worker for whom you do not pay employment taxes. The contract laborer is required to submit an invoice for his or her services, and the business owner must report the income he pays to this individual on relevant governmental documents (your accountant can give you this information). However, a contract laborer who works only for you can be deemed an employee in a government audit, and you could be forced to pay back taxes and penalties on the laborer’s wages.

Some business owners, particularly those who plan to supervise photographers rather than shoot assignments, will establish a job cost for sessions they photograph themselves. Then they pay themselves for two separate functions: as the photographer and as the owner/manager. This clearly shows the studio owner how much it would cost to replace himself with an employee and how much he can expect to receive as the owner/manager when he does.

Accounting for the owner’s compensation is complicated, but at least in the early stages of a business, it is generally preferable to view owner’s compensation strictly as a General Expense item. Here are some typical Cost of Sales categories and items in a portrait/ wedding photography business:

• Film, black-and-white and color

• Contract labor or hourly rates based on the kind of photography you are pricing (which usually comes into

play with wedding photography)

• Lab costs: film processing, printing proofs, making finished prints (be sure to include chemical and paper costs for all items produced in-house)

• Shipping charges for proofs and finished pictures

• Retouching/print finishing, including artwork charges and supplies, print spraying charges or

supplies, mounting charges or supplies (if an employee\ will do these tasks, a per job charge must be established)

• Accessories such as frames, albums, proof folios/presentation mounts, photographic merchandise, and packaging materials

Why Cost of Sales is Important

The obvious reason why accurate accounting of Cost of Sales is so important is that you have to know what your costs are in order to charge enough to make a profit. Yet some novice photographers, because of their enthusiasm for making pictures, actually charge less for their finished work than they spend for the raw materials. This happens because it is easy to overlook charges such as retouching or shipping and handling.

More than a few photographers have forgotten to list film as an expense! Once you know how much it costs to make your various products, it is a relatively simple matter of mathematical mechanics to determine how much to charge in order to be profitable.

Abridged excerpt from “The Professional Photographer’s Management Handbook” (Marathon Press), by Ann K. Monteith, M.Photog.Cr., Hon.M.Photog., A-ASP, CPP, a PPA-approved business instructor

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