In reality it is a question of assessing your costs and then setting a price which covers that cost, your personal expenses as well as insurance for the future. Remember, your photography business is your only source of income and that means if you fail in correctly pricing yourself you will end up in the red at the end of the year.
Most photographers don’t understand the business segment of photography. This is where they struggle big time. Most find the calculations a bit too difficult to grasp and end up just plucking a number out of thin air. There cannot be a better recipe for disaster. All numbers must be based on solid facts.
If this is your first business venture you should take help from someone who has a bit of knowledge in accountancy and certainly good with cost accounting matters in order to correctly pricing yourself.
So how much is about right?
There’s no easy to way answer that. It depends on your experience, the kind of investment you have put in your business and of course your expectations. The market you are operating in, the demand and supply dynamics, as well as the kind of service that you offer, the uniqueness of it are also important factors to be considered.
A photography business, just like any other business works on the dynamics of demand and supply. You cannot expect to get a lot business if your prices are too high and the demand is low. The same way if the market is flooded with low priced photographers that can ruin things for you too. You will struggle to find a foothold in such a market.
Instead of cutting price you should look to offer something unique, something that no one else is doing. Let’s say that you have a drone and you offer wedding photography using your drone. You happen to be the only photographer in your district that does this. Your services become a novelty. Depending on how you pitch you should get brisk business in you are fairly accurate in pricing yourself.
Cost of doing business
When pricing yourself the most important thing to take note of is your cost of doing business and the cost of production. Just like in a manufacturing business a comprehensive costing analysis is done, you have to do the same for your photography business as well.
In a manufacturing business costs would be segregated into direct and indirect expenses. Direct expenses would involve the cost of the raw materials used, labor used in the factory floor, power used to run the machines etc. Indirect expenses would involve depreciation of the machinery, rent of the factory and so on. Then there are other overheads as well.
All these expenses are considered and then allocated to the different products using cost accountancy formula. In your case, you have to ascertain how much is your direct expenses for shooting a specific wedding and how much is the standard expenses that are the same across all weddings.
There are some expenses that will depend on the number of images that you have to deliver. This is because you will have post-process them before delivering. Other expenses, such as the depreciation of the equipment is allocable across all weddings equally.
Normally, a wedding photographer also shoots other types of work from time to time. Thus, it becomes very difficult to allocate expenses like depreciation, rent and other indirect expenses proportionately. A solution might be this –
Replacement cost of your equipment
Let’s take an example. Let’s say that you invest in a new DSLR worth $1500. You expect to recover the costs of the camera over 100 weddings. That means you can allocate $15 towards the cost of the camera for each wedding.
An even better solution would be to find out how much the replacement cost of the camera would be in 2-3 years; an approximate time based on 30-35 weddings a year. Prices always move upwards and that means the $1500 camera you currently own would cost more to replace 3 years down the line. Also, people always move on to higher value equipment as their income grows. That means you would probably be looking for something like a $2500 camera after 3 years.
In a photography business, your investment involves both time and the cost of the equipment that you use. It would also involve power used for running your equipment, lights, computes, mobile bills etc.
Future purchase of additional gear
No business stays the same over the years. In the ideal scenario they would grow and that means you need to buy additional equipment as well as replace the equipment that are dated. Though lights and lenses don’t need frequent changing, if at all, photographers do upgrade their cameras once in at least half a decade. One thing that you need to upgrade is your computers.
Then there is the question of ongoing software fee. With some of the biggest names in post-processing tools going the subscription model there is always going to be the question of software licensing fee. The worst thing is this licensing fee is only going to go up.
You will also have to think about and provide for your taxes at the year end when pricing yourself. Personal income tax isn’t a form of indirect taxes and you cannot pass it on to your clients. But that tax has to come out of your income. And that means it is a burden on your income. An expense that you will have to consider for.
In some countries you have the option to pay advance taxes which is a sort of self-assessment of your income for the year in advance and an estimated tax amount after providing for the deductions that you are entitled to claim. Most business pay some taxes in advance to avoid having to pay a hefty amount right after the conclusion of the year. You will have to provide for that in your costing as well.
Photographers have to prepare for their retirement as well. You wouldn’t want to be working at the ripe old age of 70 and trying to make two ends meet. So, saving for your future and for the future of your children assumes paramount importance. Consider how much you need in order to retire and incorporate that in your costing analysis when pricing yourself.