pricing

Lower The Bridge or Raise The Water?

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Having to lower your price is the penalty you pay for not having raised your value.

If a photographer can’t sell value then they may have no choice but to sell (low) price. Choosing to lower prices is a business strategy that will follow that business for a long time. For example, WalMart will always be associated with “cheap” and everyone knows cheap isn’t really good because good isn’t cheap.

Remember that value is in the eye of the customer. Extra prints or fancy leather albums may have value to retail customers (e.g. weddings and family portraits) but they won’t have any value to commercial or corporate customers.

Part of the job for commercial photographers and corporate photographers is to understand what their business customers need, what has value to them.

Low prices might be okay if the photographer can compensate with a continuous high sales volume. But a high sales volume means a high work volume. To support a low-price business strategy, a photographer will have no choice but to work more and more.

Makes no cents.

 

One Price Fits No one

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One problem when a photographer charges a one-size-fits-all photo fee, (i.e., an hourly fee or a day rate), is that the photographer ends up providing a variety of services to their clients all for the same price. 

For example: an editorial customer may require the photographer to use one camera to cover a one-hour press conference. A corporate customer may need the photographer to bring four cases of equipment to produce several studio-quality executive portraits within an allotted one-hour period.

Those two assignments require different equipment, different skills and different talents. So why should both clients pay the same price (i.e., the same hourly fee or day rate)?

Charging by the hour can even penalize the customer.

For example: a certain photo might take one hour to shoot or it might take four hours. Either way, the benefits to the customer are the same. Charging by the hour would mean that the customer pays more for the “slower” photographer yet gains no additional benefits.

Pricing based on photography and usage may be confusing to some customers but it allows the photographer to customize the price to suit each customer’s exact needs.

 

A Small Discount

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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?
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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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Restaurants and Photographers

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What do restaurants and photographers have in common?

When it comes to choosing a restaurant, or a photographer, a consumer in a larger city usually has many hundreds of choices. In the eyes of the customer, most restaurants, and most photographers, are more or less the same.

Why choose one restaurant, or photographer, over another? Convenient location? A positive previous experience? Price? Good word-of-mouth? Maybe the web site looked nice?

Restaurants rely on their menu to entice customers. They usually post menus online and near their front entrance. But compare how restaurants present their menu.
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