Perception of value

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The repair guy comes to fix the washing machine. The machine is quickly fixed in 25 minutes and the charge is $175.

What?! $175 for only 25 minutes of work?! That’s an outrage!

The repair guy comes to fix the washing machine. The machine is eventually fixed after tinkering with it for 4 hours and the charge is $175.

What? $175 for 4 hours of work? That’s not too bad.

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A photographer charges $13,000 to do 24 portraits.

What?! $13,000 for just 24 pictures?! That’s an outrage!

A photographer charges $13,000 for five days of photography, transporting a full studio setup to the location five times, four days of retouching dozens of photos, assistant fees for five days, equipment expenses, other overhead expenses, full copyright transfer and 24 timeless portraits.

What? Only $540 per portrait? That’s not too bad.

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A customer’s willingness to pay is based upon their perception of value (aka “the customer is always right”).

For better or worse, this perception comes more from the customer’s recognition of the effort involved in producing a product or service rather than from the benefit to be gained. It’s difficult for many people to “see” something that’s intangible or, at least, something that’s not immediate.

Customers generally won’t pay for efforts they don’t recognize or understand. Of course, the hard part is getting the customer to recognize the effort involved. An educated customer is always the best customer.

 

The first 7,300 days

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According to my calendar, as of today, it’s been 7,300 days, (not that I’m counting). If you do the math and remember to account for leap years, that works out to a handful of days short of 20 years.

So how have the past 7,300 days been for you?

Seven thousand, three hundred days ago, a chap named Tim Berners-Lee showed off a working computer program called “WorldWideWeb”. The overall project he was working on was named “World Wide Web” which beat out his other name choices of “Information Mesh”, “Information Mine” and “Mine of Information”.

Note that the “official” 20-year anniversary was in March 2009. But that marks the day when Berners-Lee first submitted his proposal for the project:

Tim Berners-Lee holds a copy of his 1989 proposal titled, “Information Management: A Proposal” during an event to mark the 20th anniversary of his proposal to create the World Wide Web, at CERN labs in Geneva Switzerland on 13 March 2009. Berners-Lee stands next to the computer he used as the first web server. (Note: my caption. Handout photo contained no caption information.)

Photo credit: Maximilien Brice/ © 2009 Cern

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Turn Down The Volume

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A well-known saying from an unknown source:

“We lose money on every sale but we make up for it with volume!”

There are several web sites which sell discount vouchers to groups of online shoppers. A business will publish a discount offer on such a site and as long as a certain minimum number of folks buy it, the discount vouchers are e-mailed to the buyers. If there aren’t enough buyers, the discount is cancelled and no one’s credit card is charged.

This volume discount voucher system can work well for a company that sells “widgets”, meaning anything where the marginal cost is very low. It can also be good for a business such as a sports, theatrical or other event that needs to unload unsold tickets. Unloading leftover or end-or-line product at a discount can help reduce a loss.

But…
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The Paradox of Price

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Okay, a little Monday afternoon math and no calculators are required.

Consumers want the most value for their money. Value can be defined by the benefits provided by a product or service, divided by the cost of that product or service:

Value = Benefits / Cost

This over-simplified equation shows that for a given set of benefits, as the cost decreases, the value to the customer increases. It might seem that maximum value would be reached if the cost is zero. But if you remember your grade school math, you cannot divide by zero.

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Door Number Three

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While viewing a news web site tonight, there was a survey asking readers a question and the possible answers were: Yes, No, Undecided.

Why would anyone take the time to respond to a survey and then answer “Undecided”? It’s like a student raising their hand in class to answer a question posed by the teacher and then, saying, “I don’t know.”

Why did the survey even offer the third option? If everyone chose “Undecided”, the survey would be meaningless.

What does this have to do with running a photography business?

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All that glitters is not gold

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Should you peruse some of the job “opportunities” for Toronto photographers on LinkedIn, you may see these glittery gems:

1. The job: Go to a few dozen used car lots each week and photograph cars for a publisher’s used car web site and print magazine.

Required: an “awareness of fumes, odor, gases, compounds or dusts related to the automotive industry.”

Not required: any photo experience.

Benefits: may get free parking at one of the publisher’s offices.

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Publicity photography minus the publicity

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A few nights ago, I was assigned to photograph celebrities arriving for a fundraiser at an exclusive home in Toronto. The event had set up an arrivals area in a small parking lot off the front driveway of the home, (did I mention it was a large house?). The red carpet was nice and wide, and the area was covered, lit and heated. Perfect, considering it was a cold, dark November night.

Canadian composer and producer David Foster arrives to host a fundraiser for his charity foundation in Toronto, Canada, 19 November 2010.

The three largest wire services in the world were there specifically to photograph the two main celebrities attending. The headlining entertainer for the event would also make for a usable news photo. Other photo agencies and TV were there as well.
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