Raising Your Prices
Let's talk a little about pricing. This is a big one that a lot of people get stuck on. Who here has questions about pricing that they feel are stopping them? I know you do, know you do, okay. We're gonna pull a couple of you out here, not yet, in a little bit, and we're gonna talk about pricing as it relates to things that are really stopping you from moving forward. But, right out of the gate, I can tell you that there's few things that are going to stop you from raising your prices more than one word. Insecurity. It all drives back to that. But there's not. And who's gonna? What if I'm not? What if I lose? That is the main thing that is stopping you from raising your prices. I can teach you exactly how to price yourself, how to make sure your cost of goods are extrapolated up to the level you want, how you can track your margins, how you need to maximize your cash flow, how to metric yourself across the board, and up and down, and left and right, but I can't teach you self worth. I ...
can't teach you to have that light bulb go off in your head that says I'm worth it. I'm putting so much energy into this, I am worth these rates. That has to be, you have to do that. I can try to get you to see it, but you have to make that decision in your head. So we're gonna talk to a couple of you towards the end of this about exactly that as it relates to pricing. But I will tell you, you need to price when you know what things are costing you. And if that sounds like simplistic, let me tell you what I'm talking about here. What does it cost you in money, like your cost of goods? Not just how much a thing costs that you sell. But everything, like your operating spaces, your Internet, your phone, the person you are hiring to help you. That paper and also all your time, that's one thing. What's it costing you in terms of actual cost? But even more significant, what gets overlooked more, and what I don't hear a lot of people talk about when they talk about pricing or give advice about pricing, is this. What it's costing you in time. I don't mean how long you're taking to do something and making sure that it's extrapolated in your price list and you're adjusting for it, that's important. But that's not what I mean by this. How long this all takes. So I mentioned that it was a shock to me when I actually put the clock on the stopwatch and said, "I did a shoot, it took two hours. "How long is it taking me to edit this?" And I was getting back figures like six, eight hours, for one portrait session to edit it. Why? I wasn't very good at shooting. I was trying really hard to fix the things I wasn't good at. I didn't feel secure enough to show my clients the before or the raw images, or even a simple proof edit because I wanted them to think I was really good, so I was gonna work super, super hard on it and show them that cause then they would think I was really good. But I was crushing myself with edit, edit, edit, edit time. Separately from that, think about something like a really brief amount of time. So, what is like a short session you might do, and what do you think it really takes you? A good example in our studio is we do these head shots, and head shots are a great way to steadily make money. People come in and out all the time. You build up a good practice, people refer, you've got companies on retainer. It's a great way to just keep money flowing in your business if that's something you're interested in doing. But we have something where you have the shooting times. It's a 15 minute slot, a 30 minute slot, a 45 minute slot, etc. What does it take for a 15 minute studio head shot? What does it really take me? Well, I've gotta field the inquiry, I've gotta schedule it, I've gotta set up a shooting space. I've gotta clear my cards, I've gotta charge my batteries. I've gotta have small talk. "How are you doing, oh my God, yeah, yeah, you do what?" I have to do the actual shoot, I have to edit it, I have to deliver it, and then I've gotta sell it. Do you think that takes me 15 minutes? What is a 15 minute shoot really costing me? How aware are we of what we're charging? And if I'm sitting there saying a 15 minute head shot is 40 minutes, a 30 minute head shot is 60 minutes, why am I charging half for 15 minutes? Why do I only incrementally add on as I go, or why don't I incrementally add on as I go versus just up and up and up? If I'm setting up a price structure where 15 minutes is gonna be, I'll just throw this out here, 200 dollars, and a 30 minute session, right? Well that's 400 dollars. And an hour long session, that's going to be 600 dollars. So my clients are gonna look at that and say, "Oh gosh, I only need a couple shots, 15 minutes of course." If I had priced it where I had more time in there, I'm gonna make more money cause I'm doing everything else anyway. I'm spending 10 more minutes shooting, but all those other are fixed times in there. That's gonna happen no matter what. Are you thinking about your pricing that way? So, thinking about gauging your profitability, not only on the amount you're charging, but how much is really going into it. Clocking yourself. You're not out there shooting an eight hour wedding. It's a week worth of work, at least. And that's after you shoot it. Every single person you bring in, you're doing all those things anyway. It doesn't matter that much how much time you're spending. Go ahead and charge, go ahead and give yourself some wiggle room to shoot with more time. I shoot two to three hours on a normal portrait session because I don't want to ever have to do a re-shoot. I want to be able to leave plenty of time in there for a meltdown or an outfit change, or let's stop and have a drink, or let's get an orange slice, let's go back in. I spend a lot of time with that and I get so many different looks and feels and I have such a variety of images to show that I sell more. I'm not going to charge you more of a session fee for a three hour session than I would for a 30 minute session. Because logic would say, well of course you want to charge more for a longer amount of time. No, cause I'm gonna sell more and my money is not in a session fee. It's in a sale. I'm going to price that way. I used to say I'd charge more for a session fee on location than I do in the studio, but I always wanted to leave the studio, so I was encouraging everybody to pay less and come to the studio when I didn't even want to shoot there. Thinking about that in terms of where you're spending your time.
I had a question that came in.
From this man named Steve Lackey.
Oh, I know him, that's my husband. (laughing)
So, Steve Lackey asks, So, with respect to...
Oh, he's asking a real question?
With respect to managing profit margins, how often do you actually look to see if your prices, as they stand, are too low, and is there some kind of trigger that other photographers could look for with some kind of frequency to make sure that they are maximizing their revenue?
I don't understand his question. Is he, can you rephrase that? Cause it didn't sound like the way he asked it was very good. (audience laughing) So, is there something that triggers, for you the photographer, that you have to re-look at the costs, is that right? I'm gonna be honest, you started saying that halfway through and I just imagined him, thinking oh he's so cute that he wrote in on... And then I didn't actually hear the rest of the question. Say it again.
Okay, so with respect to managing profit margin, how often do you look to see if your prices are too low?
Yeah. So, is there a frequency or some other kind of trigger...
That should make people look to see that they make sure that they're maximizing the revenue...
And therefore, margins.
Yeah, so a wonderful trigger is to set a consistent timeframe where all you do is review your prices, review your market, review your costs, and it's scheduled. It's like once a quarter, I would say, is a good amount of time. Once a quarter, you sit down and you're like, "Let me look through everything." One of the things I do every single day as it relates to money, is I check my bank account, I check all my credit card balances, I look for any fees, I do a report on my fees, see if there's anything that snuck in there. I mean, it sounds like, this I love. I love looking at these things. You know what I mean? I love seeing, okay, where's my money? Where's the visibility? Where's it coming, where's it going? I think that's one of the coolest ways to kind of be running your business without having to do the spreadsheets for capital expenditures. Like this part, I love. And so a quarterly analysis of, okay, let me just take a pulse on what I'm selling, how much it's costing. Vendors will raise prices all the time and they'll not necessarily notify you. Your line items just go up a little bit, and you don't know. You don't know. Are you cross-checking every invoice that comes in with what you ordered, and does it compare to the last time you bought something? You can watch your prices creep up and creep up without even knowing that it's eating and eating into your profits. So a quarterly review is what I would suggest. Once a quarter, spring, summer, every, you know. Make sure you sit down and say, "Okay, what are these things really costing me? "And what am I selling at, and is it "time for a price change?" And actually, that's interesting because this is our coffee shop, this is Addie, one of our baristas. And one of the things we realized with the coffee shop is that there are certain expenses that we have that, and this is the same thing with the photography studio, that change pretty drastically. So we're on Amazon Prime for subscription models, things come in. I do the same thing with our photography business, but we'll subscribe to certain items we're using all the time. I joked about lens caps, but seriously. Things are just constantly coming in, batteries, you know. If you can think of a way to offset your effort. Set it up one time, auto pays. Set it up one time and let it just work for you. Make it an effort that you don't have to actively do all the time. In our coffee shop, we noticed the cost of almond milk creeping up and creeping up and creeping up, but our charge wasn't changing at all. So, eventually we were making less and less money on it. That's kind of how that works. So there's a chance to step back and say, "Should we raise our prices, "or should we get smarter about our cost of goods?" In this case, we're gonna buy an almond milk maker because it pays for itself. I think we determined, in eight weeks, and then the dramatic savings are out of control. Like, the amount of profit margin we're gonna have after those first eight weeks, same thing with a new camera or a new lens. Like, how long does it take to pay off a camera that enables you to do so much more with your art? Put it together, what's your average sales session? What is your average sales session, how many of those do you have to do to pay off the difference to sell this camera and get the next one? It's sometimes just that. It's not a mystery, it's not like some vague question out there. It's just dollars and cents, and then kind of putting them together. Again, if your head's not there, and you don't love looking at that stuff all the time, have somebody do that, and say, "Okay, you know what? "It's time for the quarterly review. "Can you please go through all our prices? "And double check what we're paying "and making sure that we're pricing "according to what we're paying? "And that there's not been a shift to that? "Let me look around my market. "Can I move up a little bit and move "into that next level echelon, "in a way that's relatively subtle?" When I changed my prices, you know what I didn't do? When I had that big shift, I did not call everybody and put an announcement on my website or put an announcement on Facebook or whatever that said, "I'm changing my prices "and I cost a lot more now." I didn't, but I've seen people do things like that. I didn't do that. In fact, what I did was I wanted to be cognizant of keeping a lot of my client base, knowing that I probably would be losing a chunk, and I did. But back to earlier, I said you'll lose a chunk here, but you'll gain a lot of new people coming in that wouldn't have looked at you before. It's kind of a yin and yang. But what I did do was, every time I'd photographed a client before, I'd say, "We're gonna keep your session "fee as is, no matter what changes. "You're grandfathered in. "So even though you only paid 100 dollars "and now it's 500 dollars, "for you it'll always be 100 dollars. "Here's our new price list, but you're in." And that made a difference to a lot of people.