Day 10: Pricing For Profit Part 1
I put this in here I just thought it would be kind of fun to show you guys like my first pricing my first real marketing you know margie piece that was pricing and the prices are super super chief they're not terrible but there's so many things wrong with this and this was back in I think this was nineteen, ninety eight I was trying to figure out when this could have been but it may have been ninety seven I know that it was actually was ninety eight because it was right after my third child was born uh in the in the far right corner is my arm my older too and their dad and so I gauged that by the year probably was about nineteen, ninety eight and so that was a long time ago and you know, pricing for profit is one of those things that of course back in the day I had to learn the hard way this was film so we didn't have shooting burn photographers for me to compare myself to and I did work at another studio for a year and so I was able to say, you know well they're charging this much for...
and eight by ten I should probably charge about this much based on you know where I am with my skill level and getting started and all these things but the two years before that I shot all on location and did things very inexpensively, and then at this time we had moved to colorado and I was, you know, ready to say, I am a professional photographer in here are my prices, so I just thought that would be fun to throw in there, not really, completely revel revel in, but, uh, that was fun, but all right, when we're thinking about pricing, there are a couple of methods of pricing and the very bottom, the very bottom that you can be priced at to be profitable is costs based pricing, and what that means is we're going to look at all the costs involved in creating your product, and then based your your cost of your peace based on a markup on that, and what I want you guys to teo, think about and shoot for is a twenty five percent cost of sale. And so to do that, we're gonna look at all your hard costs involved in producing your product. We're going to look at a time cost, which that's the hardest thing for everybody, nobody wants to include their time in their pricing on then that desired profit. You know what we're going to look at as well. So bliss, look at working through an eight by ten and you've got in your downloads, and in your workbook you've got a price calculator that you can keep reprinting and, you know, figure out you're different products for each product you want to do this for if costs bases your rock bottom from there you're gonna work up, you're going to go to demand great based pricing, which is where it gets fun, but it's going to start with the hard cost and working on acosta sale basis so your prints from the lab is probably gonna be about two dollars and seventeen cents. I based this at a c I a lab. These prices, the mountain cost the text during the leicester coating, and those are the hard cost of the print. And then I want to figure out a time cost, and so I would love to see you have your time value be much more than this. I would love to see you say, you know, I probably have a half an hour in my eight by ten and I want to make this much an hour, so I'm gonna look at half of that and add that in as a time value, but at the very, very minimum we've got to consider if something happened to me and I can't retouch this image, if I can't get it, send to the lab, I need to know that I can send it out and outsource it and the cheapest place that I can find that will finish a print that the way that I want it finished was three dollars and seventy five cents so that's why I have that in there so you think about it for you, and I wanted to show you this because I want to show you a rock bottom for finishing a print. We're also going to add in packaging costs. I've got about three dollars, in my packaging for smaller prints and that's going to be in a folder it's going to be sometimes and also in a box and then in a bag with my label on it and maybe a a tag hanging from it, and you're going to see all that in our packaging day, but I want to figure in our packaging costs into that. And so with all those costs, if we add those together it's about fourteen dollars and five cents now, the normal thing for most photographers is to say, ok, I've got about fourteen dollars, in this product, so if I charge twenty, I'm making money well doesn't really work that way. We've got all kinds of things that go into running a business and pricing for profit and it's more than just this cost me ten bucks to all charge fifteen and be profitable, right? Eh, so what we're going to do to come up with a twenty five percent cost a sale it was we're going to take all of our cost, and then we're going to multiply it times for to give you that twenty five percent cost of sale and to do that, the very rock bottom minimum that we have here is fifty six dollars and twenty cents that, you know, to be profitable. We need to be charging for an eight by ten, and I know that scary for some people, but you know, when you really start looking at the numbers and we'll continue to look at the numbers as we go along, but when you start doing that and really figuring out what you need to do to actually make a living at this, you know, those numbers become very valuable to you. So, uh, this doesn't include your shooting, your editing, your it should include I'm sorry you're shooting your editing, your retouching, your say on your packaging all that time about you should be added in there as well. And so against rock bottom, fifty six dollars and twenty cents. So really think about your time value. This is the hardest thing for photographers when we're starting, because we do think it was just time it's not costing me anything, but you know what it is costing your family. And it is costing your health and it's it is costing you by not being not considering your time and the you know, the value of that time and we're going to go through each one of these things as we go through ours scheduling and planning segment but just kind of as an overview my client schedule from start to finish is going to take me over seven hours but from the first phone call to the final delivery of the product is going to be over seven hours and so as we work together through the planning segment, I'm gonna have you put a time value on each one of the things that you're doing in your business but you know, for me that's what I came up with and this is not including all of the other staff that we do as business owners and their you know, there are so many things and, you know, it's not just taking pictures that's what we get excited about and in our heads when we start that's what we think we're pricing for when really you need to be pricing for profit for your entire business, you know, if you look it okay, I want to say really business owners were real business owners too, but when you look at other businesses, you know they aren't pricing just for the shirt that's hanging on the on the hangar there they're pricing for their overhead there lighting their you know this kind of lighting not our kind of lighting but you know there internet service their employees you know, all those things have to be considered as their building their profitability plan and we need to be considering that too we are business owners and so you know think through everything that you're investing in your business and remember that out of every dollar that comes into your business twenty five to thirty five percent is going to go to the that cost of sale I want you to shoot for twenty five percent cost a sale and even lower than that as you move forward in the business and get more more busier uh more profitable and more busy on your business but twenty five percent is a great place to shoot but you know we've got twenty five or thirty five percent in our cost of sale we've got thirty to forty percent in our general expenses your general expenses are going to be anything that happens in your business that you have to pay for whether you shoot or not your kostya sale is based strictly on your product that you're delivering and your general expenses are all the things that you have to pay for that photo shot monthly fee your internet service, your trash pickup cleaning service if you're mi I don't I don't like to clean you know, all those things are going to be included in your general expenses, your employees and, you know, and then that's all broken down for you there but all of that you have to think about when you're pricing that eight by ten and that alone by fourteen and that image box and album and so cost base pricing is the minimum from there we can move up and demand based pricing comes next and like I said that's where it gets fun that's where you can cut start saying, you know, man, I am busy and I know I need to be raising my prices and I know a couple of you girls are turning people down right now and that's, you know, carly that we're going to be seeing tomorrow and that I've been working with through the thirty day process, you know, that was one of the things for her I sent her an email uh when we first started working together and the email reply that came back to me was I am no longer taking sessions for two thousand thirteen, you know, contact me in two thousand forty I mean, it was like, really negative and really just like I'm done with you, you know, and but then that's the way she feels because she is working her butt off and she's not making any money and you know, so one of the things that I want to encourage you that if you are busy even though you're you know, you're doing it all for free, you know, if you're if you're busy and you literally can't take any more clients, put some appointments on your calendar that our premium sessions do not say no to people that are calling say this session is available, all of my regular sessions are booked for this year, but I do have a premium session available on x date it's that yes, answer for the client, so you're not being negative but it's going to be a yes for your business and hopefully your family as well, you know, sit down with your husband and say, what is it? What would it take for me to be gone on this saturday morning? Even though I'm gone every single night the weak before is there a number? And if there's a number put it out there, all they can do is say, I think I'll wait till next year and that's okay, but you still giving him that? Yes answer there will be those some of those people that will say yeah, this is important to me, I really want to get photographed this year and I really want you to do it I will take that premium session and so you know and you can think about that even as you're working through your schedule you know what times are going to be your regular appointment times and what times are going to be your premium times and that for me if I shoot on a saturday or a sunday people are going to be paying me a lot of money because I don't want to work on saturdays and sundays I am getting now to what I spent probably ten years where I never photographed on saturday or sunday it just was not an option and I'm gonna talk you through how to say that very positively to your client and make it work for them but just recently now that I have two kids out of the house and my youngest one is fifteen and totally into his own thing and most saturday mornings he's in bed till noon he does not miss me if I'm out doing a saturday morning session and so I've chosen to put some premium spots on my calendars for saturday mornings but they're gonna pay a lot of money to reserve that spot you know and so think about those things when you're when you're calculating out and that demand based pricing becomes available for you to be able to use and price in that way that you're going to start raising your prices the busier you get on the more demand the risk for your work and then competitive based pricing is the third and with competitive based pricing, I definitely do not recommend uh basing your pricing on your neighbor or the girl down the street or the guy down the street and because we don't know what their expenses are, we don't know what their life looks like. We don't know what else is available to them a ce faras income goes the one thing that I do like about competitive pricing is to look and see what's being offered all around you and offer something completely different. And so if everyone around you is offering digital files, start offering products if everyone around you is offering, you know saturday sessions make thursday night the night of the week I don't know, you know I mean make it different also the presentation of the pricing can become different there's not a lot of people who are offering a product menu. Most photographers either have a price sheet or there was one there's one girl in my town I will not say her name, but I actually had to someone just as a, you know, like I it was I was going through an exercise and actually for another workshop I showed this whole thing happened we did it at a workshop where I had one of the photographers there message or called this photographer and say, you know, there was no lying done, it was just you know, hey, I wanted to find out about your prices for your session and you're in your eight by tens or something whatever she said and this photographer said, you know what? I'll text it over to you and is this the best number detection she said yes in two minutes she got a typed out list of pricing you know, nothing professional, nothing no continuing the conversation not even at the end of and it was literally eight by ten five by seven four by six and all these prices written out on a text message and no, I would love to get together with you tell me about your family I mean, there was just nothing it was the answer to the question sure, I'll send it over to you and done, you know, if you know that people around you are doing that, how easy is it for you to present something in a new and different way? You know, so on that no, I do suggest looking at what's around you so that you can be different you can be unique but don't base how you're going to price on what's you know, on your competitors and then there's a couple of different forms of our ways to present your pricing and the first is ala carte and that's going to be where everything is listed out individually that's the method that I use for my regular studio sessions and that's because I do not want any type of box around my clients I want to be able to leave them through the process I'm gonna be able to get them exactly make those suggestions for their home exactly what I want them to buy and so um ala carte works very well for that packages are in the next thing and tomorrow on tomorrow's day I'm actually going to show you our regular menu our package menu and then are building up a collection menu so you're gonna get to see all three different options but and we use them for different product lines and different things that we're doing in the studio so packages we set up for our special events even for our portrait parties even though those of those air higher end uh, you know, many, many events and but we're selling packages and the reason is is because packages make it very easy for the client to make quick decisions. The negative about packages is that they, you know, they do put a box around the client, you know, you're telling them these air your options choose a, b, c or d and so there are some pros and cons layer, but I love them for a special events when we're showing our clients the images immediately following their session and I can just be quickly plunged into the package that's right for them so we like that and then the next is the build your own collection and that's where we're actually walking the client through steps and when they do each of those steps when they purchase from each one of those steps they're going to get a certain percentage off of their order and our clients have been loving this for our senior sessions we've been doing this for several years now with their high school seniors and it works really well because we're still walking her clients through the process of purchasing exactly what we want them to buy step one, two three and four and you'll see that tomorrow but as we do that you know they can choose one or more products from each one of those categories so it's not quite the box because they can choose more we're not, you know, ending it for them and uh you know and we are walking them through the process like a regular client. We have chosen this for our high school seniors because most high school seniors expect packages moms that are calling and there, you know, seeing what everybody's offering everybody's dude does packages for high school seniors and so I wanted to put a little twist on it we offer packages for years, but I realized I was leaving money on the table and so we did the bill the collection so that we can walk people through the process it makes it very, very easy for me to even train somebody else to do it. So if you're at that point where you want to bring somebody else in for sales, build a collection system makes it super easy to say here it is that's step one, two, three and four walk the client through the process done um you know, never never put into your packages or your build a collection the must have items you want to make sure that those things are always add ons if they if you know they have to have, like, wallets with high school seniors, you're not going to build him into any package, you know? So there are a couple things there and we'll talk a little bit more about, uh you know, ways to make those things work for you, but and then the next uh next method is the credit system and I have never used the credit system. But I know photographers do. I have heard from photographers that have tried it that's a little confusing for clients and basically what it is is you spend a certain of money not of money and you get a certain amount of credits or points and then each product is has a value of point value on it and so you're spending, you know, x amount of dollars to buy a hundred points and an eight by ten is worth a hundred points and so it's for the photographer who it's really, you know, it's really hard to say a dollar number, you know, if you can't say one hundred dollars, but you can say one hundred credits, you know, it may work for you, I've never personally done it. Um, the other saying with a credit system, another thing that you could do is actually sell credit with your session fee. And so, you know, maybe it's our session fee is five hundred dollars and includes four hundred dollars in credit towards your order, and so, you know, so that's a great weight, oh, be able t o get people to a certain point, a certain price point if you're struggling with that. And then of course, we've got the shooting burners, digital files only and, you know, I'm throwing that in there because of course it is a method of pricing we know this, but I hope that as we walk through together through these next days, that you'll see a better way uh, I am I am not against selling digital files, we offer digital files in our studio now. Ask me five years ago when I would've said I would never sell a digital file but you know now we know it's what the marketplace wants and so I do offer digital files but I would never ever just give my client a dvd of images and walk away from them. I feel that that is a huge disservice to our clients. You know, our client's digital files are going on their computer they're going on screen savers air going on facebook and then they die you know? And so one of the things that I want to do when I'm communicating with my clients is is communicate that you know, digital files are not forever they are fragile it's there not a permanent product for you you know, every hard drive has a shelf life they're all going to die someday every computer you know, it's it's it's not forever and now we've got cloud storage and some of these other things but there are no guarantees, you know, prints something and have something that is a beautiful memory that you can have for ever never never so um you know, just educating the client along that way I do wanna encourage you guys tio not chamber and uh you know, and I'm not saying any buddies you know, horrible for doing it, but if that really is the only thing that you want to deliver to your clients make sure that you are pricing yourself so that you can be profitable with that product consider it a product don't charge seventy five dollars and hand them all their images and walk away from them you know give them options for printing somewhere you know set up something where they can actually get finished products from you or you know add them onto another product that you're selling but make sure that they're worth a lot of money you know um digital files if somebody came into my studio and only about digital files there's only two options for them and they could buy ten images for two thousand dollars or thirty images for three thousand dollars we set it up in that way so that if somebody really is a digital file client if they're going to buy ten for two thousand they're going to buy thirty for three thousand and I kind of felt for me and my business that at three thousand dollars I wasn't gonna cry if they walked away you know that was kind of my happy place where I was willing to say yes and how that yes answer for my client but still make it yes for my business and my family and so the option is available to them but it is priced for profit in the business you know, digital files are a great thing now to be able to add on two things and so if you are, if your clients are used to getting digital files for you and you're ready to start producing wall portrait sor albums or whatever it is that you're excited about, you know, it's a great thing to say, you know, you're still going to get all this for free when you purchase x y z, you know where I'm going to show you how you can get those for free and haven't have it on your menu where you're walking them through. When you go through each of these four steps, you're going to get those digital files for free because what that means is there now purchasing, what do you want them to purchase? And then they're getting what they think they want? Uh, so so thanks. You're all those things, and we made it through day ten and your download for today are going to be these cute little accordion albums, and you guys have a set of these up there too, but we've got a boy version in a girl version these air from a c I a lab, and they're just cute little according albums, and you'll have the boy template and the girl template that you can again go in and change colors, move things around, drop your images in and all that good stuff.