How Do You Decide What To Charge?

- - Working

Taking a cue from the Creative Review Blog I wanted to ask my readers as well: How do you decide what to charge?

Here’s an excellent Cost of Doing Business Calculator (here), where you input your desired salary, then add up all the business expenses that can’t be billed back to the client and it gives you a day rate based on how many days you expect to bill for the year. In cases where the fee is fixed and below your day rate–editorial comes to mind– you would simply make sure you could subtract something from the promotion or testing category to make it all balance out (or your salary if it has some perceived future benefit).

Back when I used to work for photographers and negotiate the shoot fees the goal was to make the client cringe and not hang up. It would have been much better to do a budget and make sure we were making what we needed to. There seems to be a sudden spate of high end photographers headed for bankruptcy (here), don’t be one of them.

“Speaking as someone who enthusiastically sold out, every time I’ve done something just for the money, no matter how much they paid, it was never enough.” — Pentagram’s Michael Bierut

There Are 24 Comments On This Article.

  1. Twice-yearly CODB analysis gives us basic fee for covering overhead. We also have an often updated cash flow analysis to track and predict fast/slow times and flex the price accordingly.

    Fotoquote helps with obscure usage fees, but after a few years, this has become somewhat intuitive. But, current economic conditions have really put usage rates in shambles…

  2. M&I never made a dime of profit. They’re a bad example. They’re a good example of how not to run a photography business. The CR advise and yours is solid however.

  3. Seems everytime we read about high profile photogs going under, it never considers lifestyle choices…which is almost always the cause. Maybe you don’t really need 3 summer houses?

    And the thing that really pisses me off is that they get praise for high production value, but i could do that too if I didn’t worry about actually paying for it.

  4. For me pricing varies on the usage of the image.

    For example, for the average, everyday, general consumer I have a retail pricelist structure for simple studio or location portraiture. Then I use online proof image hosting and print order fulfillment.

    However, I also have a commercial pricing model for jobs that have various commercial image usages.

    My standard invoice formats as line item fees that include a creation fee that includes usage fee, a digital image management fee that accounts for my post production time on the computer, an administrative fee that is equal to 10% of the job (Reference – John Harrington’s “Best Business Practices for the Professional Photographer”) , any other expenses related to the shoot. It also includes a second page of Terms & Agreements that act as my contract with the client.

    John Harrington’s website is also a great resource for my pricing needs.
    If I ever have a question about pricing here is the first place I visit.
    http://johnharrington.com/dc-photographer/site/pricing/

    I am also a member of a few professional photographer organizations which help me network with other photography professionals like myself where we can all get together and discuss how we should charge.

    BlinkBid and FotoQuote are also great resources for the professional photographer who needs help in pricing.

    • @Lenn,

      No offense to John Harrington, but looking at his website and reading through his highly complicated pricing gives me a headache! Most customers will quickly find another photographer whose pricing they can understand. He has more unheard of fees than Citibank! Give me a break!!!

      • @anonymous,
        Really? I have found it easy to understand and the format is pretty concise. My invoices are never more than about 7 or 8 line items so pricing is easily understood. I have had complaints on my Terms & Conditions page that also gets included with my invoice. As it has 17 items of legal speak that goes over most small business owners heads. However it too is pretty standard and most attorneys would review it and think its Legal 101 material.

  5. This is right on time, thanks.

    And I don’t feel sorry for Annie or these two, just as I don’t feel sorry for Plexico Burress ruining his career by shooting himself. Which, by the way, is a good metaphor. I just think that, once you get to a certain level, the responsibility to stay at that level should be a priority.

  6. The quote from Michael Bierut is strangely subtle:

    “…every time I’ve done something just for the money, no matter how much they paid, it was never enough.”

    It was never enough, because the only fulfillment you expected was money. If you’re in the arts ‘for the money’ then you will soon be creatively bankrupt. That may explain why it is hard to make a living as an artist – there is always (at the very least) a minimal value in the personal fulfillment of creating something amazing. But it won’t really fit in the calculator.

    • Arty Farty

      @Mason,

      “Personal fulfillment” wasn’t accepted by my mortgage company last time I looked.

      • @Arty Farty,

        If that’s your attitude then you’ll always be paying interest, never principal.

    • @Mason,

      “If you’re in the arts ‘for the money’ then you will soon be creatively bankrupt.”

      How creative can a person be with no resources, struggling to pay rent? Balance!!! But before that – There are no free lunches!

      • @Mason, financial freedom provides artistic and creative freedom.

        Refusing to do non creatively fulfilling jobs that pay well because they bore you is just as ridiculous as these people over extending themselves on vacation properties.

        • Say It Ain't So

          @Colin, seriously. I HATE doing biz mugshots … but you know what, my bank account loves them.

  7. I’m in the middle of the retail market and small/medium business market so my pricing varies.
    For retail clients, like Lenn mentioned, I have a published rates for my time and for prints. For the small/medium business clients (architects, realtors, local businesses, clothing designers) I bid the job based on the scope and the usage. It’s a bit of an uphill battle trying to educate some people about this business model and answering the question “what do you mean i don’t get Hi res copies of all the files on disk?”. I stay away from day rates because the last time I assisted a photographer working on a day rate they had us jumping through hoops with ten different lighting set-ups in a day. If they had been paying based on the scope of the job they would have rethought set-ups three through ten.

  8. Ah, the sticky wicket, pricing. The calculator is really a good tool to help understand what the cost of doing business can be. It doesn’t have to be on-the-dime accurate, but it does a great job of giving a bit of the reality of costs. Ooops I hope I’m not late for my next Plus ParentStudent Loan.

  9. Sometimes I use FotoQuote, though I recently switched to a different model that usually makes more sense to my clients. I use a usage based model that factors the client’s cost of placement/production. Then the fee I charge becomes 5% of placement, plus any expenses.

    An example would be a client using an image I shot for a campaign running for one year in a publication: the rate the magazine charges my client would be used to calculate 5%. If that becomes too low a number, based upon my CODB, then I revert to FotoQuote, or I decline doing the campaign; unless I get a great deal of creative freedom, or there might be potential for more notoriety for my work.

    I shoot corporate and advertising, so I don’t think my percentage based system would work too well for editorial photographers. The main idea is that the 5% method places a value on the images that is tied to the cost of running an ad campaign (or other types of usage).

    There are many different budgets out there looking for images and photographers. I have found a method that works for me, and is easy for each client to understand; and it places a quantifiable value upon the images. I don’t know that there is one true method that works for every photographer and shoot, but this has worked well for me.

    • @Gordon Moat, how long have you been using this system? Did you have to educate your clients much on the idea?

      I like the idea in principle but worry that most of the clients I’ll be dealing with have never done this before, and thus it would present me with a number of headaches.

      • @Colin, It takes a little explanation for each client, though I never get questioned about how I came up with a number for my fee. I have been using this method for a couple years on most of my proposals.

        The interesting aspect is when I meet potential new clients, and tell them what projects and concepts I have shot. Some of them think I might be too expensive or high end for them, until I explain the 5% of placement. After that, they can get an idea of how they might work with me on one of their future concepts.

        Obviously some clients will not want to tell you all their placement usages, nor will they want to reveal their budget for placement. Sometimes that can be tough to work around when writing proposals. Usually I find that if they can give me their largest placement destination, or at least their top three (for an ad campaign), then I can at least find out the rates from those publications, and get to a workable usage fee, based upon their time running the campaign.

        Clients who might not want to tell you budget, or be more specific about placement, could be calculated through FotoQuote. Then the explanation for the usage fee becomes that it is “industry standard” rates.

  10. After you plug in all your fixed costs and the only remaining variable is the number of days you can expect to work, the effects of underemployment in the freelance market become dramatically obvious. This is not a metric included in those unemployment statistics you read in the news.

    -Michael

      • @William Brinson,

        I have several associates where that is basically the case.

        Depends on what kind of work you do and the market. See the above ad estimate…