At my favourite buffet restaurant, people under 12-years-old pay only half-price. Kids get the same quality of food and the same service but pay only half the price.
People under 12-years-old pay half-price for movie theatre admission. They sit in the same seats and watch the same movie but pay half the price.
At a hair salon, people under 12 years of age pay half-price for a haircut. They sit in the same stylist chair and get the same service but for half the price.
On Toronto public transit, people under 12 years of age pay one-quarter the price. They ride the same bus and travel to the same destination but pay a quarter of the price.
What’s going on here? Are the rest of us being over-charged?
Of course not. We expect lower prices for children simply because they’re small.
Why do smaller companies seem to pay less than larger companies for the same photography service?
A big company usually requires more photo usage than a small company. A larger business has a larger audience which means pictures must be used more to reach that audience. More usage means a higher fee.
What if the photo usage is identical? Say a small company and a large company each require a picture for one-time press release to the same media outlets. Same photography service, same picture usage. Should the photographer charge both companies the same fee?
Similar to the children examples above, the photographer should charge the small company a relatively lower fee. Why? A small company derives relatively fewer benefits than a larger company from the same photography.
Let’s put it another way. Say a small company earns $40,000 per month and a large company makes $800,000 per month. If a photographer charges each business the same $2,000 fee for the same photo assignment, that fee equals 5% of the small company’s monthly earnings but only 0.25% of the large company’s monthly earnings. Is it right for the photographer to charge the small company 20 times more than the large company for the same assignment?
The photographer isn’t charging the big company more. Instead, they’re giving the small company a discount simply because it’s smaller. Isn’t this small discount for small businesses exactly what we expect?
