pricing

Three Little Rules

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A recent book, The Three Rules (link to PDF), written by Michael Raynor and Mumtaz Ahmed confirms that competing on price is not a successful business strategy.

The two business authors spent five years studying more than 25,000 companies, in hundreds of industries, covering a 45-year span. They narrowed down the list of companies to 344. These were companies whose long-term success was not due to luck but rather to specific business decisions.

They found that these companies did three things in common from which the authors formulated their three rules for how successful companies think:
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How not to run a photo business

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Many photographers struggle with their pricing. This is normal. The best way for a photographer to establish their business is to understand how their business operates and, for that matter, how any (photography) business operates.

The photographer learns to price according to their location, their business plans and their market positioning. This takes time and effort and, yes, mistakes will be made along the way.

And then there are photographers who like to take shortcuts.

I got a phone call today from someone claiming to be an office manager. She said they needed some business portraits. She asked how much I charged, how the pictures would be shot, whether I use softboxes or umbrellas, what type of backgrounds are best, how the photos are selected, what amount of retouching I would do, and how the pictures would be delivered. After I answered all her questions, she suddenly hung up.
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Fear Photography

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As a photographer, which would you prefer: lots of low-paying customers or only a few high-paying customers? For example:

Photographer A shoots three business portraits every week at $100 each. His annual gross revenue is 3 X 52 X $100 = $15,600.

Photographer B does only one business portrait every other week at $600. Her annual gross is 26 X $600 = $15,600.

Which is better: low price with high volume or high price with low volume?
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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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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?

 

Working for free

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Photographers, do yourself a favour and read this article by US brand strategist Patty Soffer:

Freebies are the scourge of freelance workers everywhere. Beginners notwithstanding (yes, we all pay our dues) many are tempted to work for free because they believe it will lead to paying work. News flash: it won’t. It leads exactly nowhere. When the un-payer decides to ante up, they hire someone else because they want to work with professionals who value themselves. Clearly you don’t if you were willing to give it away for nothing.

– Patty Soffer

 

When someone asks you to work for free, it means they think your photography is worthless. When you work for free, it means you agree.

The best situation is to charge what your photography is worth. But if you must offer a discount, rather than work for free, simply charge less than what your photography is worth but more than what it costs.

 

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