Methods For Pricing
Hopefully your wheels are turning about what you wanna do with your product offerings. The kinda things you wanna offer. So now the real question is how do you figure out what to charge for 'em? So there's two ways to go about it. There is competitive or demand-based pricing, and there's cost-based pricing, okay? We're gonna talk a little bit about both. So competitive and demand-based pricing is charging as much as the market will bear. It's saying, so think about it this way: I could go to Walmart and buy a purse for $5. I can go to an exclusive boutique and I can spend $5,000 on a purse. They both hold my money, right? Why is one worth so much more than the other? Is it that the materials that make it are so much more expensive? Of course not. They may be better quality materials, but it's the brand. It's the feeling that you get whenever you buy those things. Right? So that's competitive demand-based pricing. When you're established, when you do something that nobody else does, you...
can charge what you wanna charge, okay? That's the goal. (laughing) That's not where most people start out. So the more demand you have, the more you can charge. The fewer people doing that, the more you can charge. The more people see value in it, the more you can charge. So if I were to take a family kayaking down the Grand Canyon and I was to photograph the entire experience over three weeks and this was a family that had a budget, like, I can't even comprehend, how much would that be worth? If I were to take your family kayaking down the Grand Canyon and I could tell the story of that extraordinary adventure, what dollar sign would you put on that? I saw $20,000 go on somebody's lips for the photography. Right? I mean, that's valuable, right? It may not be your thing, or it might be. You never know. But that's the kinda thing where you can say, yeah, it's gonna cost you $100,000. It takes a month out of my life, but you will never forget that experience. And nobody else is doing that, right? Okay, it might cost me that much just to get a permit to film in the park, right? (laughing) So, competitive and demand-based pricing is the goal. We're gonna start with something a little more definitive. We're gonna start with cost-based pricing. But before we do that, we have to know that some products are more price-sensitive to our buyers than other products. So I talked about the Grand Canyon trip. But what about an 8x10? What's that worth? Do you guys all have a dollar amount in your head, what's that worth? Well if I get it on my phone and I take it to Costco, it's 25 cents? Maybe $2? There's a value with that. Our customers have a value associated with that as well. A digital file. Anybody can create a digital file, right? What's the value associated with that? Those are free, right? (laughing) So some things are more price-sensitive than others, and so, we have to be really strategic about how we position those things in our product offerings. We have to know what our competition is doing. So if the guy up the street is selling a whole session in digital files for $100, we've gotta know that, because one of our clients may say, "Hey, I love what you do. "I'm on a limited budget, "and the guy up the street does it for $100. "Can you match that?" You better have a really good answer for that question. "Well, no, of course I can't match that, because... "Here's what I offer that's different," right? Okay, so you've gotta develop strategies to compete on price-sensitive products. Okay, so we talked a little bit about 8x10s. We talked a little bit about digital files. What else are you guys seeing out there that people are a little bit touchy on the price about? Are there other things out there going on in the industry that people are like, "Whoa, that's too much?" Or they're calling and they're saying that, you know, so and so is doing this for this price. Are you guys seeing anything out there?
One of the things that have come in from David Colton who said, "My clients want gallery access for friends and family," and so, that's sort of like how widespread do you go with allowing people to digitally order?
Yeah, absolutely. Okay, so this is the most important thing. If you learn nothing else out of this workshop, this is the answer. Photography has a very distinctive pattern in how people enjoy it. So when you first see an image, you're like, (gasping) "Oh my gosh," and you're excited about it, and you wanna share it. There's huge value at that moment. When you share it with other people, and those people say, "Oh my gosh, that's the best picture that I've ever seen. "Look how cute your daughter is," it's incredible. You get immediate gratification. There's value there. And the more you share it, and the more you look at it, it starts to feel different. It happens when we're editing images, right? You see it at first and you're like, "Yes!" And then like, "Yeah, it's okay," a month later, right? Right? We experience that. So your customers feel like that too. The really neat thing about photography is it goes up in value, it plateaus, it drops in value. But it comes back. In 10 years, when you look back at your child, how sweet and precious and amazing they were in that moment, or you look back at your parents and you're like, "Oh my gosh, I remember when they were like this." There's incredible value to that. But the time in between when those images are tabled or filed, or wherever they go, they're not so valuable. So if you give your clients access to gain all of the value from those photographs without charging 'em for it, you've lost your sale. So for our business, our clients never get to walk away with our images until they've purchased them. Okay? So we show 'em one time in person. Everybody has to be there, and they make the decision there. Then if they purchase the images, absolutely we'll give 'em a gallery. We want 'em to share those images everywhere, but only if they've paid for 'em. That's the only way we can make a living as a photographer. Great question.
You might have just answered my question. I am so new at doing any of this, and people like my pictures because I give them all-access and then they get to create their books and their pictures, whatever they wanna do for grandmas, grandpas, and because I don't have any time. I also work a full-time job, so at the moment I like to just hand 'em off, but I know I'm losing, but people still call me, so I guess my question is, is it really so bad if you don't have any products and you just sell your digital prints, or digital files?
It can be a great business model. It's a great question. It's okay. Breathe a sigh of relief. It's okay to do that. But when you do that, you're competing on price. Not on service, and so you have to be very efficient with how you handle those files. It's gotta be, I take 'em and here you go, and you have to know what that session needs to earn for you. So there are lots of businesses that run that way. And it's okay, but you need to know your numbers so that you can say, "Okay, I spent an hour on this session "and in five years I'm gonna be really happy with that "hour of time that I spent creating those images "away from doing other things." Because oftentimes what happens is people come into this industry and they get started in it and they charge a little bit as they're learning, and they don't have time or whatever, and they sell the discs, but in three years, they find that they haven't made any money. And so, all that time that you did spend creating those images, you could've spent with your family. You probably went in the hole buying equipment and software and things like that. So as long as you do it knowledgeably and intentionally, and you know that you are profitable in what you're doing, it's fine. Absolutely. But I would challenge that maybe you could do way less sessions and make way more money by taking the hour to do in-person sales. Yes?
I'd just like to encourage you to think about in-person, 'cause I was shooting burn in the beginning and then I switched totally to in-person, and it was just a session-based fee, and you get a minimum product credit and then you can buy digital files. And some people would balk about just wanting digital files, so then I offered here's a custom in-home. Let me show you how your photos from our session literally looks on your living room wall through a software that I have, or you can just do digital. And they always go for the custom, come to your house, show me what it looks like and they buy more, because they don't know what they want until you show them.
Absolutely. And later in the class we're gonna walk through every single step and so, how to do that, and how to make your clients feel really good, so I would probably ask you the same question at the end of the workshop and see what your thoughts are.