Photographers are often uncomfortable, anxious and unsure about putting a dollar value on what they do for a living. As with any art form, the value of a photograph is abstract. One person’s treasure can be another person’s trash. So how should you price your work? There are practical ways to approach price that all photographers should consider when building their business.
As the name suggests, this pricing model relies heavily on what your competition charges for a similar service or product. While this may be the simplest figure to arrive at for some industry segments such as wedding or portrait photography, it does not take into account that your cost of doing business may be radically different from the guy down the street. The temptation to undercut the competition as a means of bringing in business without doing the hard work of understanding your own cost structure or differentiating yourself in ways other than price will ultimately reduce your product or service to commodity status, and you may not be in business for very long.
Cost plus pricing
This model bases price on your cost of doing business plus a desired profit margin. Your cost of doing business includes everything from studio rent and camera equipment, to advertising and marketing expenses to more mundane things like insurance and depreciation. Add up your expenses and then add to that the profit necessary to support you, your family and your lifestyle to arrive at a gross amount you’ll need to bring in. The formula then becomes how many assignments will it take at what price to reach your goal. This a great exercise to understand what your cost of doing business really is.
Value pricing is based on perceived value. Companies who deliver a highly specialized or unique product or service recognize that their customers have few options in the marketplace and may charge a premium as a result. Other companies who understand brand building concentrate their marketing efforts to not only draw a quality distinction, but also to project their brand as synonymous with a certain feel or lifestyle. Think Ralph Lauren, Apple, or BMW. These brands command higher prices due in large part to the aura built around them. Their customers feel almost part of an exclusive club. The price is fair as long as the brand messaging is sufficient to erase doubt from minds of buyers who know they are paying a premium.
When it comes to selling a lifestyle or vision, Revlon founder Charles Revson probably said it best: “In the factory we make cosmetics; in the store we sell hope.” Photographers would do well to learn from him. Wedding photographers in particular should remember their clients are planning an event they may have dreamed of since they were little girls. If you can help them visualize that dream in a more real sense, picture themselves in the starring role of that dream and place it within their reach, you’ll find that price matters less and less.
In the end, knowing what your competition is doing is useful, understanding your expenses is critical, but just like pricey fashion labels and luxury brands, perfecting your brand story so your prospects see a glimpse of the look and lifestyle they desire will be where you’ll want to focus much of your attention when it comes to pricing.