Real World Estimates – Exclusive Contracts with University Clients

By Wonderful Machine CEO Bill Cramer

Though we now work with nearly 500 photographers around the world, Wonderful Machine started out as a small cooperative of photographers in Philadelphia—sharing equipment, facilities, staff, supplies, insurance and know-how. Sharing those overhead costs is great, but it’s even better when we can develop client relationships that we couldn’t tackle individually. (Here’s another recent post about some other photographer cooperatives.)

One of those clients is a single department of a major university with a regular need for documentary photography. I started working for them nearly ten years ago, when their creative director saw my pictures in a couple of magazines and asked me to meet with her. At that time, their regular photographer charged 1800.00/day plus expenses for unlimited use of his pictures forever. But it was clear they weren’t happy with that photographer. I tactfully explained that I price my work based on usage, not just by time. And if they were willing to structure their licensing agreements that way, they could attract a higher caliber photographer (like me).

We agreed on a rate that covered her basic needs, which were local advertising, collateral (internal and external and including web), and publicity (press kits). To keep the fees within their budget, we limited the duration of use to one year. For anything beyond that (national advertising or subsequent use), we would negotiate an additional fee. We worked up a (non-exclusive) contract, which we tweaked periodically.

Then when I started collaborating with other photographers, I saw an opportunity to introduce them to that client as well. The university’s needs were growing. I was growing out of some of the assignments I was getting from them. So I had to figure out a way to incorporate our other photographers into our agreement.

It occurred to me that at the same time, we were in a position to create an exclusive relationship with the university in a way that could serve both parties better. The client could agree to give us all of their photographic assignment work, and in return we would agree to handle whatever they threw at us. The client would have the benefit of one point of contact (our studio manager) when they needed a photographer or a reproduction file. Our photographers would grow familiar with their people, places, and needs. And our photographers would have the benefit of a steady revenue stream. It’s a classic win-win that we’ve all been enjoying for several years now, and generates close to six figures in annual revenue.

You can see the actual contract and a typical invoice here:

And here’s an explanation of each paragraph:

<DEPARTMENT OF UNIVERSITY> WONDERFUL MACHINE INC.
2009-2011 MEMORANDUM OF UNDERSTANDING

Memorandum Of Understanding was what my client wanted to call our agreement. Clients will sometimes say “memorandum of understanding” instead of “contract” to avoid dealing with their own legal departments. It’s debatable whether this makes any legal difference. I’m confident that the clarity of the agreement is what protects will govern the relationship, rather than what we call it.

AGREEMENT – This agreement between Wonderful Machine Inc., (hereafter “Photographer” or “WMI”), and (hereafter “Client”) governs photographic assignments (“Photographs”), shot between August 26, 2009 and December 31, 2011, and constitutes the entire agreement between the parties concerning those assignments.

I like to give contracts expiration dates. Otherwise, whenever you make changes, you have to nullify the previous contract. It’s messy when you work with a client over a long period of time and it’s not clear which contract governs which project.

RATES – WMI will offer Photographers at the following rates:

A – 225.00/hour on site, plus 450.00 start-up fee, plus incidental expenses
B – 175.00/hour on site, plus 350.00 start-up fee, plus incidental expenses
C – 125.00/hour on site, plus 250.00 start-up fee, plus incidental expenses

In order to be able to handle all of their photographic requirements, we need to offer photographers at a range of skills and price points. Each of our photographers decides on his hourly rate. Then the client decides when they need their “A” team for a particular project.

In cases when I charge for my time, I’m usually billing by the day, not by the hour. However, the typical assignment for a university client like this is a couple of hours. Rather than agonizing over whether a project was a half-day or a full-day, I chose to structure it on an hourly basis. This is one of the concessions I made in exchange for a high volume of work.

The Start-up fee will cover normal pre-production arrangements, normal photographic equipment, digital files captured and delivered by web gallery for editing, and image archiving. There is no charge for the first two hours of round-trip travel time. After that, travel will be billed at half of the normal hourly rate. Incidental expenses may include mileage (at current IRS rate), parking, meals (on full-day shoots), tolls, assistants (as needed, 30.00/hour including travel and load/unload time), reproduction file preparation ($25.00 each), file upload ($25.00 for any number of files) and retouching (upon request 150.00/hour).

Charging by the hour only works when you have a suitable “start-up” fee to go along with it. That start-up fee covers the time it takes to do all the things that any assignment requires, no matter how short the actual shoot is.

Subject to availability, WMI will arrange for photographers in other parts of the U.S. and around the world, at the same contract rates listed above. In these cases, WMI will charge a 75.00/hour production fee to cover the staff time required to find and book the photographer, handle any post-production, image processing, captioning, archiving, and billing, over and above the actual photographer cost. WMI will provide a cost estimate in each case, and will alert the client if the anticipated production fee will exceed $250.00.

Occasionally, the client will need a photographer outside of our area. In cases where they can’t justify the travel costs, we arrange to have one of our other Wonderful Machine photographers handle it.

USAGE – The Client will have unlimited use of the Photographs in any medium and for any purpose, except for national advertising, (which will be negotiated separately), for a period of one year from shoot date, with an extension for images shot within that year and used in the annual report for that year. After that initial licensing period, the Client will pay one-half of the comparable Getty price for any further use of the Photographs. (The Getty price will be determined at the time of invoicing using the Getty Images price calculator, factoring in the size and prominence of the image, the type of media, duration of use, and quantity of publications produced.) The Client may print additional copies of any publication without any additional fee provided there are no significant changes to that publication. The Client may use any of the Photographs on their web site indefinitely without additional charge. Any publication the Client sends photos to for Publicity Use may use the Photographs without time limit, provided the Photographs had a current license when they were sent out.

The client uses pictures in lots of different ways, but mostly within a year from the original shoot. So we struck a compromise that allowed us to offer a modest rate for one year’s use, then bill additional use separately. We wanted to meet their needs without giving away the farm. Tying that additional charge to a stock industry standard eliminates the time and energy we’d otherwise have to spend negotiating. Half of the stock rate seemed like a fair discount given that they hired us to shoot the pictures in the first place.

EXCLUSIVITY – In exchange for these discounted rates and extended licensing, the Client agrees to assign all of their photographic work to Wonderful Machine Inc. If another department at wishes to use any Photographs created by WMI, that party will obtain permission from WMI and pay an additional fee to be agreed upon, except where that publication is specifically promoting , and the licensing period has not expired. Inter-departmental image usage under these terms must be accompanied by the statement, “Images used by permission of  <department of university>”. WMI will obtain permission from the Client before licensing any Photographs to any third party.

This paragraph says that they’re going to use us for all of their photography assignments and that the pictures we make for them will be for their exclusive use. (They do have the right to purchase stock photos from other vendors, which they frequently do.)

PAYMENT – Client shall make payment within 45 days of receipt of invoice.

30 days is more customary with us, but they asked for 45.

COPYRIGHT – Grant of any reproduction rights to the Client is conditioned upon receipt of payment in full as specified above. All rights not expressly granted shall be reserved by the Photographer.

This is a subtle but important point. Photographers lose a lot of leverage the moment they deliver pictures to a client. Here, it’s clearly stated that if the client uses the pictures and then chooses not to pay, they’re in violation of copyright, which gives the photographer a lot more leverage to collect. As a practical matter, it doesn’t mean that we expect to get paid before the client uses the pictures. It’s really just to protect ourselves from deadbeats.

CANCELLATIONS, POSTPONEMENTS, RESHOOTS – In the event of a cancellation or postponement of a shoot by the Client or subject, Client shall pay for the time and expenses incurred by the Photographer up to the time of the cancellation. If a shoot is canceled within 24 hours of the shoot, Client shall, in addition, also pay 100% of the fees of any subcontractors booked for the job.

As I’ve mentioned in previous posts, cancellation policies should be exercised with care (think about the last time you canceled your dentist appointment.)

INDEMNIFICATION – Client indemnifies and holds the Photographer harmless against any and all liabilities, claims, and expenses, including reasonable attorney’s fees, arising from Client’s use of the Photographer’s work.

I’ve never had a liability situation come up, but you never know. I think it’s reasonable for photographers ask for this protection in cases where they could be exposed to a law suit as a result of a client’s negligence. In the same way, it’s customary now for clients to ask this of photographers. I checked with our insurance company to make sure we were covered for it.

AUTHORSHIP CREDIT – The Client will provide a credit in the name of the Photographer whenever practical.

Often, it’s not practical for a non-editorial client to credit photographers. But in cases like a brochure where graphic designers and printers are often credited, it would be reasonable to credit a photographer as well.

TURN AROUND TIME – Normal schedule for web photo gallery or final file preparation is 48 hours. There will be a 50% surcharge for 24 hour service, and a 100% surcharge for same day service. Client will place all orders by email and also call to advise of any rush orders.

I charge 25.00 for a reproduction file prep for an editorial or institutional clients, which is relatively nominal. (I typically charge 50.00 to corporate clients and bundle the file prep charge into the retouching fee for advertising clients.) The rush charge keeps me sane and keeps clients from expecting everything immediately.

TEAR SHEETS – Client will provide Photographer with two entire copies of any publication his Photographs appear in.

Tear sheets are often good for my portfolio and they help me track usage.

If you have any questions about this contract or any others, please feel free to contact our lead producer Jess Dudley at jess@wonderfulmachine.com or 610.260.0200.

There Are 16 Comments On This Article.

  1. Great info & ideas.

    Now I just wish the giant university I work with on occasion were so progressive as to agree to something like this. The bureaucracy drives us independent folks insane.

  2. I haven’t done much work with university clients, but some of my photographer friends have. The nightmare stories they’ve told (about working with large, very well endowed universities) couldn’t be farther from the scenario presented in this post. Constant downward price pressure (to the $100/hr level) with virtually unrestricted licensing and increasingly particular file sizing/renaming/delivery requirements. It’s the kind of work that long ago I would have walked away from, but I’m not in the position of being a low-overhead photographer for whom a few hundred bucks on a semi-regular basis can be a lifesaver. The question I have is how to get from a nightmare scenario (with a university, or any client for that matter, who has neither the time nor the inclination to negotiate when any number of other photographers are happy to work for table scraps) to the mutually beneficial one illustrated here. Maybe the better question is this: how do you find clients willing to pay for quality rather than the countless masses (who really should know better) pushing for the lowest cost via work that is “good enough”?

    • @Bill, “Constant downward price pressure…” and “client who neither have the time nor the inclination to negotiate when any number of other photographers are happy to work for table scraps”.

      Dead on, Bill. Try shooting directly (non-rep) for a Fortune 500 company these days. Unlimited usage. PERIOD! And don’t mention us as a client on your website beside our corporate counsel say’s it shows favoritism. Huh?

      Aside from a large corporations high-end advertising or annual report work, it is no secret that “good enough” carries the day (i.e. PR, headshots, day-in-the-life images, etc.” And this is where most of the work, volume wise, is at.

      Well guess what, most of us didn’t make our reputation by making pictures that were just good enough.

      The main plus I see with Wonderful Machines (WM) “Memorandum Of Understanding” is that he can help his client receive a consistently high quality product and be a one stop shop for his customers. All a client has to do is email/call WM saying we a need a photographer for X assignment and WM takes it from there. One less thing for our overworked clients to have to deal with.

      If a customer doesn’t like work/photographer they are receiving from WM, WM simply finds another photographer and most likely, clears their choice with the client to keep them in the decision making process. It is in WM best interest to make sure their clients receive the best talent at their agreed price.

      Great article Bill Cramer. Nothing like a good T-Bone of a topic to start the day on.

  3. I think more photographers should look at the creation of co-ops. The co-op creates a leveraging tool. It keeps market pricing where it should since there are tiers of skill level. It helps reduce the infusion of johnny come lately with his new kit that daddy bought for him because of the wild hair up his arse, The is a bit less undercutting because he still lives at home with his parent and has no overhead.

    There is always strength in numbers and if you can do what Bill has done, life can be much better.

    Thansk for sharing Bill.

    • @Ed Hamlin, I like the co-op idea as well. I’m curious though, if there is any danger of getting into legal issues involving collusion or they like. IIRC ASMP at one point got into trouble just for publishing national rates of photographers.

      • @Jim Newberry, I think if you follow the example the Bill Cramer has provided you’re pretty safe. Bill indicated that each photographer set his own pricing. He set up tier pricing to cover each skill level of photographer within the co-op. It would seem to me that puts the co-op outside of price fixing.

        The bottom line is a photographer may not quite make the cut as an A-team photographer and is categorized as a c-team and will have to adjust his pricing until he moves up to the A-team. If he so chooses to do so. He doesn’t have to be a part of the co-op either.

    • @Kah Hoe Wan, the photographers in our local cooperative share expenses and revenue roughly in proportion to our individual revenue. Each photographer splits his revenue (after out-of-pocket expenses) with the group 50/50. Then at the end of the year, each photographer gets a share of the profit in proportion to what he contributed that year. When one of our national or international photographers works for this client, WM doesn’t take any commission, we simply charge the client 75.00/hour for any pre or post production time necessary.

    • @Bettina, the way I look at it, there are agencies, reps and co-ops. Agencies (like Redux, Aurora Select, Polaris, Reportage) tend to have a lot of photographers all over the world, and they tend to emphasize editorial and corporate photography. Reps (like Art + Commerce, Bernstein & Andriulli, Marge Casey) tend to have a smaller number of photographers, geography is less important, and they tend to emphasize advertising photography. A co-op refers to a shared ownership. I’ve heard that Magnum is owned by its members, but I don’t know what their arrangement is. I think most cooperatives are like our local group who share expenses and to some extent, revenue.

  4. seems too low like the rest of Wonderful Machine quotes but, what do i know. i’m certainly not too busy with work.

    • @anon, I promise that we are getting as much money as possible on every deal we negotiate. A couple of things to consider. Most photographers brag about the one lucrative job they got all year, and you’ll never hear about all the cheap jobs they shoot. Other well-meaning photographers will talk about what you “should” charge. We think there’s value in simply sharing what we’ve actually done. We’re not saying it’s what everyone should do. The important thing to take away is understanding the mechanism of the pricing and negotiating process, and adapt it to your own unique situation.