Pictures by the numbers

First basic rule of business: cash in must exceed cash out.

Revenue from assignment – cost of assignment = gross profit

Gross profit – overhead expenses = net profit (before taxes)

Revenue from assignment is what the client pays you, not including taxes.

Cost of assignment is expenses incurred to do the assignment.

Overhead expenses are expenses that have to be paid whether or not you have an assignment. For example: camera gear, computers, software, car, insurances, utilities, cell phone, rent, etc.

Net profit: if there’s any money here, remember that you still have to pay income tax plus all your normal living expenses.

Second basic rule:

Cost of assignment should be a maximum 30% to 40% of Revenue.

Gross profit should then be a minimum 60% to 70% of Revenue.

Overhead expenses should be a maximum 50% of Revenue.

Net profit should then be a minimum 10% to 20% of Revenue.

So to increase net profit, a photographer must lower expenses and/or increase revenues. Just like every other business.

The rules of business always trump the rules of photography. Unfortunately, this means that being able to make nice pictures isn’t enough. A photographer has to keep their numbers in focus.