mystical $$ secrets revealed. (no, really)

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Archive 2008 · mystical $$ secrets revealed. (no, really)

ksmahgrts
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p.1 #1 · mystical $$ secrets revealed. (no, really)

since there are a couple of threads right now addressing pricing, i figured i'd make this a post of its own since it applied to more than one of those.

ultimately pricing is easy. there really is a magic formula.

it's just a recipe. you follow all the basics then adjust to taste (circumstance)

are you ready?

wait for it...
wait for it...............

here.

personal expenses + business expenses = $$ needed to survive

$$ needed to survive
--------------------------------
# of probable bookings = fee for time/talent

EXAMPLE:
50,000 + 50,000 = $100,000
personal + business = total bucks needed to not be a destitute bum

$100,000
-------------
20 weddings = $5000

bingo.

the minimum amount you charge to walk out your door and show up at a wedding is $5k

THEN it's simply a matter of looking at your product prices & marking up based on what your market will bear. how do you know what albums cost? how do you know what people will pay in your demographic? also simple. do the work. research it. the nuances of packaging need to be your own. you need to know what brides want before you can give it to them, right? (that or be amazingly innovative and create something everyone has to have before they even know they want it!) adding items that have perceived value but very low or no cost to your packages (things like a slideshow, online proofing, 'unlimited' time, an e-session, etc.) also makes that $5,000 (or whatever) number more palatable and justifiable.

and there you have it.

pricing.

DISCLAIMER: those example numbers are just pulled from the air. do the work. get your crap together and really figure out what all of YOUR personal expenses and all of YOUR business overhead is. ASMP has some terrific resources if you're at a loss for where to start. but honestly, if you don't know how much money you need to survive, i'm not sure you want to start a business without a business/accounting class or two.

hope that helps folks!

Nov 26, 2008 at 05:02 AM

radioblurs
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p.1 #2 · mystical $$ secrets revealed. (no, really)

that's so confusing and complex-can you go over it again? how many $500 wedding would i have to shoot to make 100K per year?

daniel

Nov 26, 2008 at 05:13 AM

ksmahgrts
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p.1 #3 · mystical $$ secrets revealed. (no, really)

you daniel? just 3.

everyone else... i think maybe um... 27?

Nov 26, 2008 at 05:16 AM

sboerup
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p.1 #4 · mystical $$ secrets revealed. (no, really)

Behold the power of math.

I really wanted to say cheese there, but I guess not. Good post, hope this will help the beginners!

Nov 26, 2008 at 07:25 AM

BrianO
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p.1 #5 · mystical $$ secrets revealed. (no, really)

The good news is that, as in all algebra, there are equivelent expressions.

For example, you can increase the number of weddings to lower the per wedding cost while still maintaining the final income.

Or you could work at reducing the cost of doing business, lowering the total income while keeping the personal take-home the same while lowering the per wedding cost.

And so on.

Nov 26, 2008 at 08:31 AM

Sam Hassas
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p.1 #6 · mystical $$ secrets revealed. (no, really)

You're a doll for this.

~Sam

Nov 26, 2008 at 09:07 AM

mauriceramirez
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p.1 #7 · mystical $$ secrets revealed. (no, really)

...And stuff like this is why she's been at the top of my FM watchlist for awhile now.

-m

Nov 26, 2008 at 10:25 AM

paulhodson
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p.1 #8 · mystical $$ secrets revealed. (no, really)

Sad thing is - there will be people struggling to understand this. I used to be a financial adviser (boy - am I glad not to be one at this present time

) and you wouldn't believe how naive some folks can be!

Nov 26, 2008 at 10:34 AM

runner301
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p.1 #9 · mystical $$ secrets revealed. (no, really)

What if all my dollars needed to survive are provided by another job...what do I charge then?

Nov 26, 2008 at 12:44 PM

Lucky_Dog
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p.1 #10 · mystical $$ secrets revealed. (no, really)

Awesome post! I spent time with an accountant the other night trying to put all the pieces together... the problem for me is that it is a second job so personal expenses are already covered. I still want to make a profit, though, and I may eventually move towards photography alone so I want to move in that direction.

I think the distinction for the $500 dollar crowd is that they are either young with limited personal expense or using photography strictly as extra disposable money... likely not even paying the requisite taxes on the income.

Nov 26, 2008 at 01:18 PM

Mike Mahoney
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p.1 #11 · mystical $$ secrets revealed. (no, really)

runner301 wrote:
What if all my dollars needed to survive are provided by another job...what do I charge then?

Nov 26, 2008 at 01:19 PM

Lucky_Dog
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p.1 #12 · mystical $$ secrets revealed. (no, really)

Mike Mahoney wrote:
runner301 wrote:
What if all my dollars needed to survive are provided by another job...what do I charge then?

A very simple question which demonstrates the serious flaws in the OP's thinking.

Photographers have one of the highest failure rates of any business, mostly because of a total lack of understanding of even the most basic business principles.

These "mystical $$$ secrets" would even be laughed at in business school kindergarten.

Not really, Mike, and is actually the crux of the present problem. When the profit made is extra money with not much expense required to make the money, ie. no taxes, fees, etc., the actual profit margin may be higher than for those running legitimate businesses.

I would love to not pay tax.

Nov 26, 2008 at 01:26 PM

ksmahgrts
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p.1 #13 · mystical $$ secrets revealed. (no, really)

clearly mike my accounting practices aren't as simple as described above, but i'd be interested to hear exactly what these serious flaws are in the basic premise of my post.

at its core, that is the perfect way to arrive at a rough sketch for pricing structure.

and if all of my dough was made through alternate employment/spouse/swanky trust fund, and i was serious about wanting to pursue photography as my full-time gig, i would approach the pricing scheme as if i had no job/sugar daddy/wealthy bavarian uncle.

Nov 26, 2008 at 01:46 PM

Mike Mahoney
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p.1 #14 · mystical $$ secrets revealed. (no, really)

Here's a real business secret for you:

Your customers really are the ones who determine your pricing, you only offer up your suggested asking prices.

Customers could care less about your desired profit, tax situation, other jobs, expenses, etc. They just want to get a quality product at a good price.

This reminds me of a thread a few weeks ago from a newer shooter (Segio ?) who was having trouble booking his weddings at his pricing, and some suggested that he stick to his pricing and "have faith".

Yes, let's all just calculate our desired profits, sit back, and have faith. The road to success is revealed, close all the business schools.

Nov 26, 2008 at 01:49 PM

runner301
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p.1 #15 · mystical $$ secrets revealed. (no, really)

This is a great thread, and my comment was mostly in jest. But there is some truth to it. Where I live, I am not required to pay taxes until my income reaches certain level. So, my price structure is based on the amount of work I want to do balanced with how much is available.

Nov 26, 2008 at 01:57 PM

runner301
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p.1 #16 · mystical $$ secrets revealed. (no, really)

ksmahgrts wrote:

and if all of my dough was made through alternate employment/spouse/swanky trust fund, and i was serious about wanting to pursue photography as my full-time gig, i would approach the pricing scheme as if i had no job/sugar daddy/wealthy bavarian uncle.

This comment is kind of silly. Ignoring the reality of one's situation is not a good business method. Everything else being equal, if you can increase your profits by lowering your prices, and hence increasing the number of clients,why wouldn't you? Unless you are happy with the current amount of work you are doing that is.

Nov 26, 2008 at 02:06 PM

ksmahgrts
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p.1 #17 · mystical $$ secrets revealed. (no, really)

first: my post was addressing the topic of arriving at a jumping off point for pricing.

that being said, a pricing structure is not a business plan. nowhere do i suggest that establishing a pricing structure makes you any or all of the following:
-a good business person
-a talented photographer
-the queen of sheba

next: let me just extrapolate your theory out for the slow folks.
-i want to be a photographer when i grow up.
-i want to leave my crummy job at payless shoes.
-i'm a single mom with a mortgage, and insurance, a car payment, and 7 kids and one on the way.
-my personal expenses total $50,000 bucks a year - and that includes my weekly pedicures and root touch-ups, a carton of smokes per day (parliament lights thankyouverymuch), and a regular trip to play keno at the corner bar - ah luxury!
-i'm going to open a legit store front studio, sole proprietorship, pay my taxes and all that other legal jazz
-coincidentally (this is my scenario and i can be crafty like this) my anticipated business overhead from all of that businessy-type stuff ALSO totals $50,000 bucks a year
-bringing my 'i must make $x dollars to get all of the things that i deem necessities' figure to a whopping $100,000.

in your theory, i find that there are only 4 brides in my town and they are only willing to pay $19.95 - and that figure must include a 40 page flush mount album that shoots fireworks into the air that reveal the couple's wedding date. so i pack my ass up and head back to the trailer to wallow in my sad state. because the consumer determines my pricing. and the consumer sucks.

in my model i calculate a 'what makes it worth my while to walk out the door cuz mama needs a new pair of shoes' figure and put all the necessary strategies in place to make it happen. a pricing plan does not a business make.

none of those strategies include the 'pull & pray' method of sitting on my butt and letting faith intervene. and i'm pretty sure if you ask the successful folks around here who are living the dream, you'll find that they don't do much rockin' on the front porch waitin' for the big break either.

might i decide that i could survive on monthly pedicures or half a carton of ciggies a day? sure. but plain and simple, being successful in a consumer driven market does NOT mean lowering your standards and subsisting on stale bread crust. it means evaluating, re-evaulating, getting creative, getting innovative.

but yea. my initial post was not about any of that stuff. it was about a method for arriving at a jumping off point for pricing. a completely valid and successful method.

Nov 26, 2008 at 02:22 PM

ksmahgrts
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p.1 #18 · mystical $$ secrets revealed. (no, really)

runner301 wrote:
This is a great thread, and my comment was mostly in jest. But there is some truth to it. Where I live, I am not required to pay taxes until my income reaches certain level. So, my price structure is based on the amount of work I want to do balanced with how much is available.

my point exactly runner. but in order to know what you should charge, you need to figure out every last dime that could potentially go out the door. then whatever combo of work/price you use to arrive at your desired level/lifestyle is yours to pursue. high-price/low-volume? passive income through associates? shoot 367 weddings per year? whatever.

Nov 26, 2008 at 02:29 PM

ksmahgrts
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p.1 #19 · mystical $$ secrets revealed. (no, really)

runner301 wrote:
ksmahgrts wrote:

and if all of my dough was made through alternate employment/spouse/swanky trust fund, and i was serious about wanting to pursue photography as my full-time gig, i would approach the pricing scheme as if i had no job/sugar daddy/wealthy bavarian uncle.

This comment is kind of silly. Ignoring the reality of one's situation is not a good business method. Everything else being equal, if you can increase your profits by lowering your prices, and hence increasing the number of clients,why wouldn't you? Unless you are happy with the current amount of work you are doing that is.

silly? not really.

if i want photography to be my sole source of income, i first want to consider approaching my business as if i didn't have the income derived from my full-time job (or other source.) what would i need to charge? what are my barriers? what does my market look like? who's my competition?

take that 20 number from my original equation and make it 50 or 500 if you want to.

for me it's about lifestyle. sure i could shoot every night of the week. one of the best event photographers i know works constantly. he makes huge money. he never sees his apartment. he loves it. i'd hate it. i want a family. i want a life.

Nov 26, 2008 at 02:38 PM

ksmahgrts
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p.1 #20 · mystical $$ secrets revealed. (no, really)

ps. maurice ramirez makes me all tingly. don't tell my hubby!

Nov 26, 2008 at 02:40 PM

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