PRICING FOR A PROFIT: PART 2
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In PART ONE of this series, we talked about pricing the products we provide. In this post, we'll talk about one of the hardest things for creatives to wrap their brain around: how do we compensate for our time?
Most photographers have no idea where to begin when it comes to pricing their time. It’s hard to have an understanding of the value of a photographer’s time when the market is so varied. It’s also hard because most photographers don’t have a complete sense of the time actually involved in various tasks, and we discount the cost associated with our time.
So, how do we value our time? How do we begin to price for the value we bring to the equation. And how do we balance that with a market force that is moving towards the commoditization and depreciation of value in photography?
First, let’s look at what a reasonable amount of compensation is for the various tasks we perform and the amount of time we spend. Let’s say we decide that number is $30/hr. That’s actually pretty fair, and a good place to start.
Then, we need to begin to understand the amount of time you really put into a shoot. Track the time it takes you to prepare for a shoot. The time it takes you to perform a shoot or event, the time spent in post-processing, and the time it takes interacting with clients. For our studio, a 10 hour wedding, ends up being about 25 hours of time (not including sales, etc).
For some studios this needs to be more, or less depending on your workflow, systems, etc. Whatever it is, you have to begin to consider the amount of time - and the value associated with that time - that goes into a shoot. And we also have to realize that we still have to mark that up to cover our expenses. So, in our situation, every hour we spend shooting is 2.5 hours total time. So the hourly rate we charge for shooting needs to cover that.
What this means is that our “cost” for an hour of shooting is $30 * 2.5 = $75.00. That’s the cost of labor behind every hour that we shoot. Now, we still have to mark that price up by 3 in order to cover our other costs. So for our situation, we should charge no less than $225 per hour for photography coverage. Your math may be different depending on how much time you spend on the back end.
We counted up everything we put into a wedding, from meeting with clients, post-production, and selling, and totaled that time. You’ll need to make sure that you’re tracking your time to be sure you’re fairly compensating for your labor.
Now, there are really two ways we can look at this.
1. We can decide that we need to make the equivalent of $30/hr for full time work. This is a little more than $62,000 a year. If you shoot 20 weddings a year, you’d need to take at least $3,100 per wedding as compensation. This means that you’d probably be charging $7K - $9K per wedding. This is a perfectly reasonable way to look at it, provided you are able to meet your targets for booking.
2. A second way of looking at it is to decide that your time spent in your business is worth $30/hr, and you’re going to factor in exactly what time it takes for a wedding. In my case, I might take that $225/hr (to cover my other expenses), and multiply it by 10 hrs/wedding and I get $2250.
This is the minimum amount I need to charge for my time in order to take out my $30 per hour. Now, 25 hours per wedding isn’t full time work. And it’s especially not full time work if I’m only shooting 20 weddings/year. This means I’m essentially being paid for part time work. This is okay too - especially if you’re willing to fill your other time with other work. In our situation, we actually charge our clients more than $225. In the examples that follow, we used a figure of $300. There are several reasons we used this number - one of which is that it’s a higher profit - and it’s easier to add in examples!
Either way, you have to have a place to start to value your time. You need to place a value on your time, figure out how much time it takes, and be sure you’re charging to cover your time and expenses. This is the value you bring to your business. You are essentially an expense of your business.
How do you price your time?