Capital Cost Allowance for Photographers

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Who doesn’t love talking about income tax?

A photographer uses form T2125 to calculate the capital cost allowance (CCA) of their equipment when doing their income tax return. Each class of equipment has a different rate of depreciation.

Most camera gear goes into Class 8, most computer equipment goes into Class 50, and other business property, such as a vehicle, goes into other classes. Be sure to read the description for each class. The Income Tax Regulations have the official rules and good luck reading it.

And then there’s CCA Class 12.

Class 12 is a very desirable class because it has a 100% depreciation rate and often no half-year rule. (Some Class 12 items, like non-system software, are subject to the half-year rule.)
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There’s no money in cheap

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Some photographers still insist on pricing below cost or competing only on price. In the race to the bottom, these photographers will always win, or lose, depending on how you look at it.

If a photographer sells very cheaply or works for free, hoping that customers will one day agree to pay much more or that a huge volume of work will magically appear, then this photographer will be greatly mistaken.

On April 6th, CPI Corp., the company that owned and operated all of the Sears portrait studios and about 20% of the Walmart portrait studios, in the USA, shut down its US operations. Its Canadian in-store studios are, so far, unaffected.

CPI, (in)famous for its dirt cheap portraits and free prints, was ….. (wait for it) ….. losing too much money. It owes about US$174.8 million. Creditors gave the company until April 6th to repay US$98.5 million. So CPI is a winner in the race to the bottom!
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Dump and run photography

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When a photographer shoots an event, copies all the digital files to a CD, DVD or USB stick, and then hands you that disc or USB stick, it’s called a “dump and run” (aka a shoot and burn).

If this happens, it means the photographer has left the job unfinished and expects you, the customer, to complete the work for yourself. For whatever reason, this photographer is either unwilling or unable to do the necessary editing and post-processing.

If a photographer offers a “dump and run” then you should do the same; dump the photographer and run away. You shouldn’t be expected to finish the photographer’s work.

Would you go to Tim Hortons if they sold only packets of coffee and cups of water and expected you to make the coffee? What if your doctor handed you your test results and expected you to interpret them on your own?

A dump-and-run photographer is one who dumps their responsibility and runs away from their work. Why do business with such a photographer?

 

Photographer Shopping

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If you’re shopping for a box of Cheerios breakfast cereal, it’s possible to shop price because Cheerios is exactly the same at every store.

When shopping for shoes, you look at, touch and try on every pair that catches your eye. Shoes usually vary from store to store and shoe shopping is based on look, fit, feel and price.

How do you shop for a commercial or corporate photographer?

Every professional photographer works differently so how do you compare? You can’t see the photos before they’re made so how do you choose something before it exists?

Is the $4,000 photographer twice as good as the $2,000 photographer? Will $750 pictures work as well as $2,000 pictures?
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Pricing ups and downs

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Many (most?) photographers struggle with pricing their services. Price too high and customers will think the photographer is gouging them. Price too low and customers will think the photographer does inferior work. Either way, the photographer loses.

Some photographers think that if they lower their existing prices, their business will increase. Their plan is to charge less and make up for it with volume.

But this means the photographer is going to do the same work and provide the same level of service, all for less money. Then they’ll do it many times over again, always for less money, and somehow it’ll earn them more money. But these photographers fail to understand three things:
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Who pays what

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Who Pays Photographers? is a fairly new blog with a spreadsheet listing rates received by photographers for, mostly, editorial assignments. It’s based on anonymous submissions but looking at a few entries, the numbers do seem accurate.

Keep in mind that better rates can sometimes be had. Don’t be afraid to ask for more. In many cases, I’ve been able to get 50% to 100% more than what was initially offered by a daily newspaper or magazine. In cases where I couldn’t, the solution was to say “no thanks.”

A similar site for writers: Who pays writers?

 

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