How I Did It - Jill Liebhaber

How Jill Liebhaber broke free of chain studio pricing and created her own brand of success.

By Jeff Kent

In 2001, after graduating Northwestern University with a degree in painting and a few classes in black-and-white photography, Jill Liebhaber went to work at a portrait studio franchise, eventually becoming the manager. Yet she wasn’t really inspired by portraiture.

At Imaging USA 2006 in Austin, she got inspired by portrait artists like Vicki Taufer,M.Photog.Cr., CPP, and Liebhaber’s perspective changed completely. “I was blown away,” she says. She saw how she could use her painting talents in children’s portraits and turn portraiture into art.

Back home, Liebhaber worked on a business plan for a studio of her own. She’d heard about PPA Studio Management Services (SMS) and knew she’d have to be on a waiting list for its services, but just knowing help would be available gave her confidence to move forward. In May 2006, she got her business license and left the chain studio. She secured a storefront in her Chicago neighborhood and spent the summer setting up a portrait boutique. The official launch of her creation, Jookie, was in August.

From the start, the business went pretty well. Liebhaber built a client base through participating in neighborhood events, word-of-mouth and small-scale local promotions. In the first five months, 117 sessions brought Jookie gross sales of $52,000, enough to keep rolling, even though Liebhaber declared a loss for the year due to the startup costs.

That was to be expected. Liebhaber felt she had a good foundation. She was more concerned about workflow. She’d based her pricing on the high-volume, low-price model of her former employer.

After five months, the pace proved unsustainable; something had to change. Liebhaber engaged SMS at the end of 2006, and asked for help in three areas: incorporation, managing business volume, and improving her price structure.

Liebhaber’s SMS consultant, Bridget Jackson, explained that incorporating the business as an S-corp would lead to substantial savings on self-employment tax, while helping her separate her personal and business accounting.
 
Together they worked out a plan to bringin seasonal help. Jackson said she needed a full year’s worth of financial data to establish an employee budget, so that had to wait until 2008. Jackson helped Liebhaber budget for employee expenses based on the PPA benchmark of 6.9 percent of gross sales, and Liebhaber hired a part-time seasonal employee for the busy fall months. Liebhaber used only about 60 percent of her employee budget, so in 2009 she added a paid intern. The employees helped Liebhaber focus on her photography while maintaining the bottom line.

“The scariest part was raising my prices,” admits Liebhaber. “I wanted to break free of the high-volume studio system.”

Jackson and Liebhaber established a four-year plan to gradually raise her rates without alienating her initial clientele. In 2007, Liebhaber increased the price of individual small prints in a way that made buying larger prints look much more attractive. She raised 4x6s and 5x7s to the same price, $48—her own costs were identical for these sizes. She also boosted 8x10s from $52 to $73.

In 2008, Liebhaber raised the session fees, and in 2009, she bumped up print prices again to encourage sales of big-ticket canvases and wall prints. This year she’s making another small print increase in the final stage of the plan.

“With higher small print prices, I get fewer clients who are just shopping based on price,” she says. “That led to more clients coming to me because they are interested in my work, not because I had low prices. People spend more per session now, so I don’t have to shoot as much. I can spend more time on each client, putting a higher level of artistry into the work as opposed to just churning out prints. It also freed up more of my time to market Jookie and develop the business.”

Over the past three years, Liebhaber’s price increases have led to steadily increasing sales with steadily decreasing session numbers. In 2007, her first full year of business, she shot 250 sessions. In 2008, with both her print and session price increases in place, she shot only 170 sessions while maintaining her gross sales. In 2009, with another print price increase, she decreased sessions to 160 but grossed about $10,000 more than the previous years.

As is typically the case when prices go up, Liebhaber has seen a decrease in cost of sales—from 22 percent in 2007 to 21 percent in 2008 to 19 percent in 2009. “Those changes may not sound like a lot, but each percentage point drop in cost of sales represents several thousand dollars of money that Jookie keeps in net profit,” explains Jackson.

By keeping more of what she earns, Liebhaber has been able to reinvest in the business and continue its growth. Through SMS guidance, she paid off her initial business loan more than a year ahead of time. She has been able to invest tens of thousands of dollars into Jookie over its first three-and-a-half years without incurring any additional debt. In fact, Liebhaber has established an impressive cash reserve for the business, which allows her to promote the studio’s growth through marketing and capital expenditures.

“Most important, she has a plan,” says Jackson. “She knows what she needs to have in place at all times, and she prepares for her busy season well in advance. She’s really set herself up for positive growth.”