How To Set Photography Prices
Pricing your photography services can be one of the most challenging aspects of running a photography business. For many photographers, the tendency is to look around at what others in the area are charging and match those rates. However, copying competitors’ prices without a clear understanding of your own costs is a sure way to undermine your business’s profitability. To build a sustainable business, it’s crucial to calculate your Cost of Doing Business (CODB) and select a pricing structure that not only covers those costs but also reflects the value of your work. In this post, we’ll explore how to calculate your CODB, considerations for choosing a pricing structure, and the pros and cons of various pricing models.
What is CODB (Cost of Doing Business)?
The Cost of Doing Business (CODB) is the total amount you need to cover all of your business expenses, pay your taxes, and earn a livable salary. Every photographer’s CODB will be different depending on their unique situation—where they live, their business expenses, and the number of sessions they can handle each year.
Why CODB is Important
You can’t build a profitable photography business unless you know your numbers. Pricing your services too low without considering your expenses means that you will be working hard, but not making enough to cover your costs. CODB ensures you account for everything that goes into your business, not just the time spent shooting.
How to Calculate Your CODB
To calculate your CODB, start by determining the number of sessions you can realistically manage each month. The average portrait session typically requires 10 to 15 hours of your time. This includes the time for shooting, editing, pre-session consultations, post-session communication, and any other services such as hair and makeup or in-person sales.
For example, let’s say you can book 8 sessions per month, or 96 sessions per year, and you need to gross $200,000 annually to cover your salary, taxes, and expenses. Dividing $200,000 by 96 sessions means you would need to charge about $2,100 per session.
It’s important to remember that this is just a basic formula and your specific salary needs and business expenses may vary. However, this approach ensures that you are not undervaluing your work.
Ask yourself: If you were working full-time elsewhere, what salary would you need to meet all of your financial obligations? Your location can play a significant role in this figure. A small town with a low cost of living might require a $50,000 salary, while a larger, high-cost city might necessitate $200,000.
A Simple Formula for CODB
If you don’t have access to a CODB calculator in our evergreen business content here, use this general rule of thumb:
Take your desired net salary and add 33% for taxes.
Take your business expenses from the previous year and increase them by 20% to account for growth and inflation.
Add these two figures together.
Divide the total by the number of sessions you plan to conduct in a year.
This will give you a rough estimate of what you should be charging per session.
Example Calculation:
Desired salary: $100,000
Taxes (33%): $33,000
Total salary + taxes: $133,000
Previous year’s expenses: $50,000
Increase for growth: $10,000 (20% of $50,000)
Total expenses: $60,000
Total CODB: $193,000
Number of sessions per year: 100
Minimum session price: $1,930
By understanding and calculating your CODB, you ensure that your pricing reflects the true cost of running your business, not just the cost of your time behind the camera.
Considerations for Choosing Your Pricing Structure
Once you’ve determined your CODB, the next step is to decide on a pricing structure that works for you. There are several factors to consider when choosing a pricing structure:
1. Minimum Spend
Does your minimum spend cover your CODB and leave you satisfied? It’s important to ensure that each client you book contributes enough to your bottom line to keep your business profitable.
2. Pricing Clarity
Is your pricing structure clear and easy for clients to understand? Potential clients are more likely to say "yes" when they can easily see the value they’re getting and know what they’re paying for upfront.
3. Sales Workflow
Do you have a sales process in place? Whether you conduct in-person sales (IPS), online sales, or even sales over Zoom, having a structured workflow can make the selling process more efficient and help clients feel confident in their purchases.
4. Product Offerings
What do you plan to sell? Your offerings might include a mix of digital files, printed products, albums, or wall art. The type of product can influence your pricing structure, as digital files tend to be priced differently than printed products.
5. Client Communication
Have you clearly communicated your sales process and pricing to clients? Transparency in communication builds trust, reduces confusion, and sets clear expectations, ensuring that clients aren’t surprised by pricing or other aspects of your service.
6. Business Goals
What are your business goals? Are you aiming for high volume sales, positioning yourself as a luxury brand, or looking for a steady income stream? Your goals will heavily influence which pricing model will work best for you.
7. Growth Potential
Does your pricing structure allow room for growth? As your business expands, you may want to scale up your services or increase prices. Choose a pricing model that allows for flexibility and growth over time.
Pros and Cons of Popular Pricing Structures
Different pricing models have their own set of advantages and disadvantages. Below, we’ll explore the pros and cons of three common pricing structures: all-inclusive, collections, and a la carte.
1. All-Inclusive Pricing
All-inclusive pricing is straightforward: one price covers everything, including the session fee and the final gallery of images. Typically, clients pay the full amount upfront at the time of booking.
Pros:
Simplicity: Easy for clients to understand.
Predictability: Guarantees a set income for each session.
Upfront Payment: Collects the full fee before the session.
Streamlined Workflow: Reduces the need for upselling and additional client interactions after the session.
Cons:
Higher Upfront Cost: Clients may hesitate to pay a significant amount before seeing their images.
Lower Sales Potential: Since everything is included, there’s no room for upselling additional products.
Print Usage: Clients might be less likely to print their images when they receive all the digital files upfront.
2. Collection Pricing
With collection pricing, you offer clients a choice of bundled products. These packages can be sold either upfront or after the session through in-person sales (IPS) or online galleries.
Pros:
Clear Value: Clients feel they are getting a better deal with a collection compared to buying items a la carte.
Flexibility: Clients can choose their collection based on the images they love.
Upsell Potential: Clients may opt for a higher-tier collection if they fall in love with their images.
Cons:
Complexity: Too many options can confuse clients.
Inherent Discounts: Collections often include discounts, which can reduce profit margins.
3. A la Carte Pricing
A la carte pricing allows clients to choose individual products, such as digital files, prints, or albums, after their session.
Pros:
Flexibility: Clients can customize their purchases based on their needs.
No Sales Cap: Clients can add as many products as they want, increasing the potential for high sales.
Low Upfront Cost: Clients only pay for what they want, making it more approachable.
Cons:
Lower Sales Risk: Without strategic pricing, a la carte models can lead to lower overall sales.
More Client Interaction: This model often requires more time spent with clients during the sales process.
Conclusion
Understanding your CODB and selecting the right pricing structure for your photography business is essential to long-term success. By taking the time to calculate your expenses and develop a thoughtful pricing strategy, you ensure that your business not only covers its costs but also thrives financially. Whether you choose an all-inclusive, collection, or a la carte pricing model, the key is to find the approach that aligns with your business goals, meets your clients’ needs, and allows room for growth as your business evolves.
