How To Tell When Your Rates Are Too Low

Discussion in 'Presentation & Marketing' started by Mainecoonmaniac, Feb 3, 2011.

  1. Mainecoonmaniac

    Mainecoonmaniac Subscriber

    Messages:
    3,959
    Joined:
    Dec 10, 2009
    Shooter:
    Multi Format
  2. TheFlyingCamera

    TheFlyingCamera Membership Council Council

    Messages:
    9,441
    Joined:
    May 24, 2005
    Location:
    Washington DC
    Shooter:
    Multi Format
    Yes- the #1 sign you're not charging enough - your clients accept your rate without question or hesitation. The only exception to this rule is when your client happens to be super-rich and doesn't need to worry about money for ANYTHING (I have exactly ONE of these...and they're not high-volume customers).
     
  3. Mainecoonmaniac

    Mainecoonmaniac Subscriber

    Messages:
    3,959
    Joined:
    Dec 10, 2009
    Shooter:
    Multi Format
    As with commercial photography, you have to do create bids where you're working regularly while not afraid of losing any jobs due to estimates being too high. I know in a small town, ASMP rates won't fly. Also when you try to bill for items like mileage and meals in a small town, they'll balk. Your rate comes down to your reputation, your portfolio and the economy. I avoided clients that nickeled and dimed because they're not worth the trouble. Also, they'll also recommend other cheap clients. The worst thing is to be known as the "cheap" photographer. Estimating is an art. If you're lucky, you'll have a rep or a business person doing that for you.
     
  4. TheFlyingCamera

    TheFlyingCamera Membership Council Council

    Messages:
    9,441
    Joined:
    May 24, 2005
    Location:
    Washington DC
    Shooter:
    Multi Format
    This is one reason why I seldom do commercial jobs. I don't have the patience or the business skills to manage the whole pricing/negotiating thing. And it's why I have a day job, to keep me in the toys to which I have become desirous of.
     
  5. Mainecoonmaniac

    Mainecoonmaniac Subscriber

    Messages:
    3,959
    Joined:
    Dec 10, 2009
    Shooter:
    Multi Format
    You're smart

    I learned that the hard way. That's why I have a day job now. I wrecked a hobby, got burned out and didn't pick up a camera for years. I'm doing for the love of it now. It's so much better :smile:
     
  6. wiltw

    wiltw Subscriber

    Messages:
    1,468
    Joined:
    Oct 4, 2008
    Location:
    SF Bay area
    Shooter:
    Medium Format
    When...

    Price < (material costs + overhead + (hourly rate * time))

    and/or when...

    Hourly rate < survival wages

    ;-)
     
  7. TheFlyingCamera

    TheFlyingCamera Membership Council Council

    Messages:
    9,441
    Joined:
    May 24, 2005
    Location:
    Washington DC
    Shooter:
    Multi Format
    Don't forget when calculating materials costs and overhead all those nice little extras like your computer, printer, paper, ink, postcards, postage, electricity, water, and so on... things that so many digitographers seem to forget when setting their prices: "ooh, it costs me nothing per shot, so I'll charge twenty-five bucks for the shoot, and give them a CD with 2,000 images to choose from, all of which have been post-processed!".
     
  8. Mainecoonmaniac

    Mainecoonmaniac Subscriber

    Messages:
    3,959
    Joined:
    Dec 10, 2009
    Shooter:
    Multi Format
    Photographers are their own worst enemies when it comes to business.
     
  9. jnanian

    jnanian Advertiser Advertiser

    Messages:
    19,976
    Joined:
    Jun 21, 2003
    Location:
    local
    Shooter:
    Multi Format
    i have clients that don't try to negotiate my bid ...
    it isn't because my rates are too low, or not in line with
    what others in my field are charging, it is because
    they are educated to what things cost ...

    not "balking" or trying to lower a price isn't always a bad thing.
     
  10. blansky

    blansky Subscriber

    Messages:
    5,985
    Joined:
    Nov 6, 2002
    Location:
    Wine country, N. Cal.
    Shooter:
    Medium Format
    There are a lot of factors involved in pricing. The term used is COST OF SALE, meaning what did it cost you to say produce that 8x10 (for example). Obviously overhead, cost of equipment, staff, personal time, phones, advertising etc all have to be taken into account along with the amount it cost to actually shoot and produce that print.

    The PPA (Professional Photographers of America) has determined that it cost $51 to produce an 8x10. That figure is applicable in home or downtown studios.

    But what your costs are is only part of the equation, because the low cost will place you right down there with the bottom feeders fighting for the price conscious shopper. There are people that don't want the lowest price car on the market. There are people that buy Lincolns, Mercedes, BMWs etc. There area people that wouldn't be caught dead in low price anything whether its clothes or cars or houses. Rolex sells 800,000 watches a year. They range from about $7000 to $100,000 depending on precious metals and if diamonds are involved. You can get more accurate time with a Seiko or Casio for less than $100. Why do you think people would spend that kind of money.

    There is a cachet attached to being the highest price in your market. Firstly there is the perception of since its the most expensive it must be the best. Next there is less competition, and lastly many of the people there don't really care at all what it costs, they just want it.

    So determining what to charge is not as simple as what are my costs.



    Michael
     
  11. c6h6o3

    c6h6o3 Member

    Messages:
    3,219
    Joined:
    Oct 16, 2002
    Shooter:
    Large Format
    My Dad, who was president of a large commercial photoengraving company, always said: "Costing is a science, but pricing is an art".
     
  12. Mainecoonmaniac

    Mainecoonmaniac Subscriber

    Messages:
    3,959
    Joined:
    Dec 10, 2009
    Shooter:
    Multi Format
    Very profound. Finding what is cost is pure accounting while trying to figure out a price that will make people buying is an art.
     
  13. Mike Wilde

    Mike Wilde Member

    Messages:
    2,936
    Joined:
    Aug 10, 2006
    Location:
    Misissauaga
    Shooter:
    Multi Format
    Yes, here at work we just time estimated a big design job for 16km of freeway widening including about 8 bridge replacements.

    Work for me is at a 1500 person plus multi-disciplinary consulting engineering firm with some subconsultants hired in as specific niche expertise is required.

    We applied our standard markup factor, which is 3x our team salaries for our executive team review.
    This markup rate is aimed to cover insurances, salaries and benefits, office and leasehold gear payments, equipment supplies, internal overheads of support functions like accounting, HR, IT, internal Project Management, etc.

    Senior executives cut the markup to 2.7x (still profitable) in a bid to secure the job. Our bid proposal (which is evaluated and scored on qualifications 50%, past ratings with the client agency 40%, and our fees 10% has been accepted.

    So now 130 full time person years of design work to the usual full qualtity assurance and quality control requirements needs to get done and issued for construction bids in the next three years.

    Fortunately I just have a team of 5 to manage and liaise with only three other departments groups most of the time. Oh, and 10 other work assignments presently in various stages of completion, as well as two proposals for smaller jobs for existing clients I still need to finish and submit.

    So when you grouse about the challenges of freelance, rememeber the corporate alternative. It pays, but there is not a lot of artisitc creativity in my day job.
     
  14. jnanian

    jnanian Advertiser Advertiser

    Messages:
    19,976
    Joined:
    Jun 21, 2003
    Location:
    local
    Shooter:
    Multi Format
    hi mike

    typical mark up is 3x cost
    1=cost
    1=overhead
    1=profit

    i bid on a huge job a while back, and
    i was asked to state in the estimate
    hard (direct) and soft(indirect) costs, and what percentage
    of the total job my profit was to be ....

    it was a brutal estimate ...
     
  15. MattKing

    MattKing Subscriber

    Messages:
    16,809
    Joined:
    Apr 24, 2005
    Location:
    Delta, BC, Canada
    Shooter:
    Multi Format
    This thread really, really needs to be moved to the Presentation and Marketing forum.
     
  16. JBrunner

    JBrunner Moderator Staff Member Moderator

    Messages:
    7,075
    Joined:
    Dec 14, 2005
    Location:
    Basin and Range Province
    Shooter:
    8x10 Format
    Done.
     
  17. Greg Davis

    Greg Davis Member

    Messages:
    2,057
    Joined:
    Feb 4, 2004
    Location:
    Nicholasvill
    Shooter:
    8x10 Format
    Blansky is right. I used to work for a studio in Kentucky that is the highest priced in the state. It attracted a high dollar customer. We even had President Clinton while he was in office. We charged the hell out of stuff. A single 5x7 RC print would cost $89 unframed. But that print had to pay for his time shooting it, my time processing the film, retouching the sitter, printing the negative, spotting, mounting the print on board, our office staff calling and scheduling the sitting and sales appointments, and the sales person presenting the proofs. That still doesn't include the film, paper, chemicals, water and electricity for all of the above, business licenses, and taxes.

    Because of all that, we charged a lot. $120 for a one hour sitting, prints are sold separately. Large framed fiber prints were pushed during sales for several hundred apiece.
     
  18. Danielle

    Danielle Member

    Messages:
    71
    Joined:
    Jun 19, 2011
    Location:
    Melbourne, A
    Shooter:
    Multi Format
    I can directly relate to that.

    Now with some life experience I've started again and Im approaching the 'not quite just a hobby' mark again too. Strike two it seems. This time I stand a better chance. Wish me luck. :smile: Backing it up with a nursing qualification this time.
     
  19. Rick A

    Rick A Subscriber

    Messages:
    7,417
    Joined:
    Mar 31, 2009
    Location:
    northern Pa.
    Shooter:
    Multi Format
    The last commercial job I took, I accepted scale from the publication. Happens that I made $400 plus all expenses for a one day shoot for "Fine Homebuilding Magazine" The shoot was above Teluride, Co. for an article a friend was writing for them, and I was working as a carpenter on that project anyway. I made double my regular days pay plus some extra for that, took all of an hour of my time after work to shoot the items needed.
     
  20. brucemuir

    brucemuir Member

    Messages:
    2,266
    Joined:
    Dec 25, 2007
    Location:
    Metro DC are
    Shooter:
    Multi Format
    The real tip off of this problem is the flickr credited (probably only payment made) in the image on that page.
     
  21. John Austin

    John Austin Member

    Messages:
    521
    Joined:
    Oct 2, 2010
    Location:
    Southern For
    Shooter:
    Large Format
    I find it is the rich are the work hagglers, more accurately they pay bean counting people huge salaries to haggle for them - I sold real silver jelly prints to a premier tourist complex owned by one pf Australia's richest men and the haggling took months - Including all the "poor me" stories about arts budget cuts as building costs increased - In the end they halved the number of prints ordered and argued that the overall cost should be halved, conveniently forgetting a first discussed bulk discount

    I much prefer it when someone buys a print from Mountford Gallery http://www.mountfordwines.com.au/Gallery.html or from here just because they love it

    I recommend you sit quietly with a good Cognac, work out your prices and stick to them, remembering to add the cost of Cognac to your outgoings (For the record, R.Martin VSOP and my birthday is in November)

    I digress