Album Pricing Strategies
Now, we are about to tackle the beast. Album pricing is the most complicated thing out there, because there are a million choices for things that you can include in an album. So, this is where, for a year, I just would start working on it and have to set it aside because I couldn't even figure out how to do it, but here's the trick. You have to decide what you want to offer as an artist, pick a couple of things. So, for us, in our albums we offer three. Why, because people usually buy in the middle, right. We have three albums, one's small in size, one's medium in size, and one's large in size. They also improve in quality as you go up in size. The inside of the albums, they're all the same. They're all photographs mounted on matte board, they have thick pages, I'll show them to you later. They're beautiful inside, we never compromise on the quality of our images, the only thing that's different is the size and the cover materials, okay. Those are the three things, and when I show clie...
nts our albums, the small one is very simple, leather cover, embossed, simplicity is what we call it. The next one's a little bit bigger, it includes a cameo on the cover, it has a photograph on the cover, it's a nicer leather. The last one, the big one, is an exotic hardwood cover, with a cameo on the front. Our clients are never choosing what the cover looks like other than color or texture, we've already decided that. So, two of them have a cameo, one of them doesn't, simple. They're all square, because Peter photographs in a two to one ratio, so his images are twice as wide as they are tall, when you open up a square that's the dimensions, that's why we chose that particular shape. So, our clients aren't choosing shape, they're only choosing size and cover materials. Then, we go through and we do the pre-design, we say okay, this is how we think the best way to tell your story is. It may be 10 spreads, which is what's included, or there may be an additional charge depending on how many images we have. And since you guys had so many great images it's probably gonna be a little bit bigger than that, because you know Peter's gonna go crazy on these images, and I can say that in a sales session and they're like oh my gosh, I know, right. (laughs) And so they know that there's an additional charge coming, I give them a heads up. So, decide what you're gonna offer, don't make your clients choose on the album, and then it's easy to price. So, you know there's gonna be a cameo on it, or imprinting, or something like that. Pick a base number of pages that you're gonna include. I picked 10 because it's happy math. And then calculate how much it costs you, and then you multiply it by your markup factor, you use your per hour figure, based on how many hours it takes you to make that album, and then your answer is easy, it's right there in the math. So, the cost of the album is 25, plus 25, plus the $200, that's where we get this $250 of hard cost, our cost of goods. We're gonna say, in this world, that it only takes two hours to design an album, but anybody that's ever designed one in Photoshop by hand knows that it's much bigger, but there are so many great tools out there now that maybe it's more realistic. So, we know that for, we're gonna say this is, where do you think this $800 came in, $250 plus two hours of labor, the target sale is $1,800, do you guys see where that number came from. What it is is I used the markup factor of four, remember that was the safe markup factor, I took that and multiplied it here, $250, that came up to $1,000, right. So, then, the additional spreads, let's say that they cost us $15 each to add a spread to a book, so our target price multiplied by four is, we need to charge $ for that spread, does that make sense. Okay so, if our target sale is actually 15 spreads, and we factor in our labor, we're gonna have to charge $2,100 for this book. Lots of math, we use our target sale, we use our per hour figure, and we use our markup factor of four. You guys with me, okay, yay you guys are good at this. Okay, so then we have to go back to our strategies, right. So, we know we have this dollar sign out there, we used our math, our math and our business told us that. So, now we have to come up with the strategies of how to do it. So, we know we have a target sale of $1,800 for an album with 10 spreads, or $2,100 for 15 spreads. So, we can divide that purchase in half, we could divide it into thirds, we could divide it into fourths, there's a million different ways to get there, and it all depends on how comfortable you are and how your clients react to this. So, I have a confession, I am a total mad scientist when it comes to pricing, and I love to change things and play with them and see how people react, because that is how I am creative in our business. And so, I might try dividing it where they pay for half of it at the sales session and half of it whenever it's booked, and see how clients react to that. And if I get five strikes, clients don't like it, it's outta there and I try something different. Sometimes I don't have to beat my head against a wall that many, sometimes it's obvious I've totally screwed up on my price list. Whenever we first started our business Peter did the sales, and he would go into the sales room and he would have to execute these crazy price lists that I came up with, and it would change like on, every two months. And he'd walk in and he'd be like I don't even know what this price list is. So, as you guys are diving into this, know that it's okay to be a mad scientist and play around with your pricing a little bit and experiment, because there's no right answer. Any combination of all of these things will impact your client, so if it's working the way you want it to work that's great, keep doing that. If it's not working, try a different strategy, try a different technique, try talking a little bit differently in your sales presentation, okay. So, know I'm giving you permission right now to experiment with this, because it's really cool when what you're trying to implement works, you're like yes, I finally figured it out, and then something will change and you'll have to adapt, but I promise it's worth it. Okay, so we can divide it into two parts to hit these sales, $1,600 for a 10 spread book, hmm, let's look at that $1,600, but my target sale is here, what do you think my plan is. We're gonna add additional spreads, we're gonna do pre-design right, and we're gonna hope for that additional sale. Will that $200 make or break my business, probably not, I just won't be able to go out to eat as much, right, I'll still be okay. So, that's one of the strategies, collect $1,600 when they purchase the book and an additional $500 for the spreads. Okay, that's one way to do it. Okay, example two, rule of thirds, divide it into thirds, $1,500 for a 10 spread book, with additional spreads at $120 each. So, here's the big difference, last time the additional spreads were $60 each, this time they're $120 each. So, as a sales person, where is my confidence. The first time, when the additional spreads were a lower price, I was uncomfortable with the additional sale. In this example, I know they're gonna love the book, I know they're gonna want the additional spreads, and they're gonna pay whatever they need to pay to get them. Okay, you use those additional spreads as a tool on how comfortable you are in the process and how your clients invest with you, does that make sense. Okay so, you collect half of the book price when they place their order, collect half of the remaining amount whenever they approve the design, and when you deliver the book you collect the rest, rule of thirds. Okay, rule of fourths, spread it out a little bit more. It's the same thing though, divide it into fourths. Here, you have a lower entry price, our price has gone down here for the base price. So, if what you're hearing is your clients are saying I'm uncomfortable spending $1,600 on an album you know you need to lower the price. You still have to get to the same target sale, but you do it in a different way. If the barrier to entry is too high for that album, you lower the price knowing that you're gonna make up the sale on the backend, because they're gonna love that album so much they're willing to invest $150 per spread. It's a strategy. Okay, so they way they pay it, you do the $500 session fee with a $400 credit, remember session fee minimum purchase, collect half of the book price, collect half when you do the design and half. Isn't that funny how three halves equal rule of fourths. So, but it is half at each time, half of the book, then half of what's remaining, so three parts equal two halves.