|Fuji X-E2, FUJINON XF 55-200mm, ISO 500, ƒ/6.4, 1/500|
My stepson looked at his first paycheck and asked, “Who is FICA?” This was his first hard lesson about where the money goes - the cost of doing business.
A lot of the money we pay for a service doesn’t stay with the service provider.
According to Dun & Bradstreet, “Businesses with fewer than 20 employees have only a 37% chance of surviving four years (of business) and only a 9% chance of surviving 10 years.” Of these failed businesses, only 10% of them close involuntarily due to bankruptcy and the remaining 90% close because the business was not successful, did not provide the level of income desired or was too much work for their efforts.”
So many good photographers I know have to turn to other ways to make a living not due to any lack of photographic skills, but because of poor business practices.
|Nikon P7000, ISO 100, ƒ/6.3, 1/1000|
Two things caused their businesses to fail: 1st - they didn’t know their real cost of doing business and 2nd – they failed to promote themselves.
In 2001, I left a staff position and started full-time freelancing. My business has averaged a 20% growth rate each year for the past six years. Many of my colleagues ask me how I do it.
This coming week I go to
Hawaii to teach business practices for the third year in a row at the in Kona. First, I require the students to calculate how much it costs them to live for a year. I’ve found that even the older students who have been on their own for a time typically do not know what it costs them to live. University of Nations
|Nikon D4, AF-S NIKKOR 14-24mm f/2.8G ED, ISO 200, ƒ/22, 1/15|
No matter the profession, if you do not know your cost you cannot estimate what you are worth in the market place.
Once you’ve know your cost and decided how much net income you want to earn it is easy to determine what to charge for each project in order to reach that goal.
Take a moment and think of everything needed to do your job. Here are some categories from the National Press Photographer’s Association list I use just substitute your terms for similar categories to figure your annual cost of doing business.
- Office or Studio
- Photo Equipment
- Computers (Hardware & Software)
- Internet (Broadband, Web site & email)
- Auto Expenses (Lease, Insurance & Maintenance)
- Office Supplies
- Photography Supplies
- Professional Development
- Advertising and Promotion
- Subscriptions & dues
- Business Insurance
- Health Insurance
- Legal & Accounting Services
- Taxes & Licenses
- Office Assistant
- Retirement Fund
- Entertainment (meals with clients)
Add your desired net income to your annual business expenses, divide that total by the number of projects you reasonably expect to do in a year. The answer gives you the average per project you must charge clients so you can pay those bills, stay in business and live the way you want to live.
Now you must find out if the market place will sustain this charge.
Let’s say you need to charge on average $1,000 for per project to reach your goal. If the services you provide are what people can get anywhere then they will shop for price. If the going rate in your community is $1,200 then you are in good shape. If the going rate is $900 then you need to look at cutting your overhead—your hoped for income or business expenses or both.
The key to earning what you want comes down to service. You must be able to demonstrate to potential clients that you offer something more if you want/need to charge more than other photographers do.
I have found that I need to know about the subjects I cover more than other photographers do. In addition, I deliver my images a good deal faster than most others do. I also listen carefully to what clients say they want and try to, not only meet their needs, but to go beyond their expectations.
When I first determined my cost and income goals, it was a revelation just as my stepson’s response to FICA and other deductions from his pay were for him.
I do my best to keep my overhead low, but even so close to 50% of my gross goes to business expenses. It was quite shocking for me to see what I must charge to pay the bills. This knowledge was the fire I needed to get me to put the time and effort into finding ways to make me more valuable to clients and to find those clients by seriously marketing myself.
Do you know what you cost?