Real World Estimates – Regional Hospital Ad Campaigns

- - Pricing & Negotiating

by Wonderful Machine producer Jess Dudley

I recently helped two different photographers quote on two very similar projects, so I thought it would be interesting to present them together (see estimates below).

Shoot A was a series of simple, tightly-cropped portraits on a plain background, with no props and minimal wardrobe needs, depicting “everyday” people. Shoot B entailed a series of pictures of people engaged in various athletic activities (like bowling and yoga) to show that the hospital could provide treatments to help people stay active.

The Similarities

  • both projects entailed creating a series of similar (relatively simple) pictures with a number of different people
  • the clients in both cases were regional hospitals
  • the intended use for both was primarily local advertising
  • both required just one shoot day
  • both shoots would happen on a plain background in a studio

The Differences

  • client A wanted to be able to (theoretically, at least) use the pictures anywhere in the world, while client B just needed local use
  • shoot B needed a pre-light day and a digital tech
  • shoot B required a lot of compositing and retouching after the shoot
  • shoot B required a series of test pictures ahead of time to help nail down the concepts
  • shoot B found professional models through traditional casting and model agencies, shoot A hired models from a “real people” casting company
  • shoot A happened on the West Coast, shoot B on the East Coast

The Creative Fees

The overall scope of the two projects was very similar, but the fact that we ended up quoting exactly $18k for both creative fees was just a coincidence. Client A originally asked us to quote six tight portraits for “unlimited use, anywhere, forever.” Client B wanted four action shots (showing bowling, yoga, jogging and swinging a baseball bat) for “unlimited use, locally, forever.”

The “creative fee” covers the work required to make the pictures plus the licensing to use them (I normally bundle them into one number). Licensing is made up of the type of use (advertising, collateral, publicity), geography of use (local, regional, national, international) and the duration of use (one-time, one year, forever). Clients sometimes ask for broader licensing than they actually need, just for the convenience. The trick is to judge what’s reasonable to charge for the unused portion of the licensing. In this case, Client A is essentially asking for international use of the pictures. But since they’re a local hospital chain, they’re simply not going to have an occasion to use the pictures outside of the area they serve. Broader licensing is always worth more than narrower licensing, but it’s not worth nearly as much as if the client could actually take advantage of it. Both clients wanted to use the pictures forever. But as a practical matter, the pictures are going to have a lifespan of a couple of years. Both clients were asking for publicity, collateral and advertising use. The advertising part will have the most impact on the price. So I do my best to get my head around the likely use of the pictures, then assign a reasonable premium to account for the actual licensing.

I figured that in Project A, the first picture was worth $5k and each additional was worth about $2.5. I rounded it off to $18k. The broad use certainly adds upward pressure on that price, but the simplicity of the pictures adds downward pressure (there was very little pre- or post-production required, and the degree of difficulty and specialization of the actual shoot was pretty basic. So on balance, I was comfortable with the $18k.) The client said they would pay $18k, but asked us do eight pictures instead of six. Deciding how much to concede in any negotiation is difficult. A basic rule of negotiating is to never give something up without getting something in return. The weak economy is a factor generally, but a bigger factor is how busy the photographer is. In this case, the photographer wasn’t busy enough to risk losing the job over those extra two pictures. So we agreed.

Project B was only four images, but the pictures were more complex. The ads each needed to show a series of pictures to demonstrate range of joint motion with a recognizable sport or activity (like swinging a baseball bat). Initially, the client asked the photographer to do some test pictures to show what a range of motion would look like for a bunch of different activities. After a day of testing everything we could think of (for which we charged 1800.00), we settled on bowling, batting, yoga and jogging. We decided to depict each action with three pictures to illustrate the range of joint motion. So compared to Project A, the actual work to make the pictures happen was somewhat more involved, but the licensing requirements were a bit more modest. So I figured on 6000.00 for the first and 4000.00 for each of the other three, for a total of $18k.

Another influencing factor for licensing fees is whether the pictures are simply promoting one product among many, or whether they are promoting the entire company’s brand. There are times when promoting a small company’s entire brand is worth more than promoting a small part of a global company.

The Expenses

You’ll see variations between the two quotes for support services. They’re less about the regions where the shoots took place and more about the individual photographer’s idiosyncrasies. Photographer A likes to say, “Digital Capture Day”, the other says “Digital Tech Day”. The costs for the assistants, hair/make-up, wardrobe stylists varied just because of what those individual subcontractors charged. In both cases, the demands of the support staff were pretty modest. But certainly in situations where there’s more of an emphasis on the wardrobe or props or other element of the shoot, the photographer would be foolish to skimp. If you’re shooting a cosmetics ad, you’ll want to get your hands on the best make-up artist you can find, and you’ll have to be prepared to pay for it.

Photographer A worked out of his own small studio space, so quoted a modest 400.00 for it. Photographer B worked out of a more substantial rental studio, plus the client asked us to bundle the catering charge with the studio fee in order to “get it past accounting.”

Client B was comfortable working with the usual modeling and casting agencies to find the talent. Client A suggested we use an agency that offers “real people” at a much cheaper rate. So they were able to get models for about $630.00 each. Project B paid 2000.00 for each model, plus 1000.00 for the casting day. Just like any business decision where you’re trying to get the best value or return on investment (ROI), you have to decide when you can cut corners and when it’s not worth the savings. We often have the models bill the client directly. Some clients want to see those fees in the photography estimate, others are happy to leave it off.

Photographer A likes to quote a line item for a hard drive for archiving. Photographer B doesn’t bother.

In both cases, the equipment demands were pretty basic, so we chose to bundle the equipment charge into creative fee. However, it’s perfectly reasonable to break that out separately.

I normally don’t split hairs by quoting 6.5 hours of retouching. But we were so close to $30k that I decided to dial that number back just enough to keep us under that amount.

Photographer A chose to do his own production. Since there was a bit more to manage, Photographer B had me handling all the pre-production and I was on set the day of the shoot to make sure everything went smoothly.

Quoting wardrobe is always a crap shoot. A wardrobe stylist will generally pull a lot of options and return whatever doesn’t get trashed. But it’s a hard to predict.

In both of these cases, we were charging for production time and we were also getting a 50% advance payment on the entire quote. So we billed the client actual cost on the out-of-pocket expenses. I find that it’s customary to get expense money upfront on projects like this. But in cases where we don’t get an advance, I’ll normally mark up my expenses 15-20% to float that money.

Photographer A didn’t need a separate certificate of insurance because he was using his own space. Photographer B needed to provide one to the rental studio, so we charge 100.00 for that.

Photographer A charged a fairly typical 150.00/hour for his retoucher. Photographer B used his in-house retoucher, for which he charged 100.00/hour. Of course, just because you have someone on staff doesn’t mean you should charge more or less for it. Price is more a function of the value you bring to the client rather than the cost to you. In this case it was just another item that would allow that photographer to be a little more competitive on price.

If you have any questions or if you need help pricing and negotiating, or producing one of your projects, you can reach me at jess@wonderfulmachine.com.

There Are 29 Comments On This Article.

  1. As always, tremendous information. This is the part of the business that is most critical, yet least written about – at least with such detail, clarity of purpose and logic. These real world examples are the most valuable posts on APE. Thanks to Wonderful Machine and Rob for making them available.

  2. Like what bear cieri said, I too find your description and breakdown of the thought processes behind billing extremely useful. Thanks for sharing!

  3. Michael Gauthier

    Hoping not to sound too repetitive, but the value in this type of post is incredible. It is great to be able to see the actual quote and understand each line item in detail. Thanks again!

  4. This is why I love me some Wonderful Machine. Your spreading of information helps the industry as a whole, and not just your photographers. Keep it up guys.

  5. Two questions:

    1. Is it standard practice to request 50% of the total fee up front before the shoot?

    2. How easily can such pricing as in the above Wonderful Machine estimates be applied elsewhere in the world? I have a potential job for an international outdoor advertising company through their branch in Bucharest, Romania. Can Western prices be estimated for a Western company in a poorer country?

        • @Davin Ellicson,

          If we have substantial up-front costs, or multiple days of crew, we get cash forwarded for editorial as well. Of course you have to ask for it, editorial is as stingy as ever.

          Rarely is this the case though as they often handle such things like travel and lodging. And the multiday shoots have all but disappeared.

          • @craig, Ok, many thanks. Any idea on doing jobs for Western companies but in non-Western countries? In Romania the average wage is just $400. Of course there are all the big companies and rich executives, it’s just that there is no middle class. It seems a bit crazy suggesting US prices for an ad shoot in such a place. . .

            • @Davin Ellicson,

              Of course, for local Romanian photographers the price will be more in line with local standards. But, if they were to hire photographers from outside of Romania, such prices would make sense because their costs remain with wherever they are based from.

              I imagine acquiring and paying for equipment is very difficult in a country with a low wage standard as the price doesn’t magically decrease once a lens crosses the border…

              As for what to charge the local division of an international company – that’s anyone’s guess. They may have their own budget and it might be relatively small to be in line with the local costs. After all, they can’t be making very much either.

              • @craig, well, no that’s the thing—some people are making huge money. I see more AMG Mercedes driving around in Bucharest than in New York City. The former second tier Communists under Ceausescu have stolen he country from the people. There are average people making a few hundred dollars a month and then there are millionaires and billionaires and not much in between. There is no real middle class. So there is money here, but the general idea is that an ad shoot that might cost 20K in the US is only worth at most 1/10 of that here. I don’t know how to begin educating people here about the real cost and worth of serious photography.

  6. Excellent post, thanks so much for sharing!

    Question: How accurate were these estimates in relation to the final invoices? Did any line items change dramatically? If so, how was that handled?

    • @Marc Altman,

      What’s most important is to invoice at or under the overall approved budget (this includes the original approved estimate and any subsequent overages approved in writing). So long as your final invoice comes in at or under the approved budget, it normally doesn’t matter to the client if individual lines items vary from their estimated amount (clear that with your client before making the assumption).

      Jess

  7. Jess, thanks for posting this. Like everyone else has said, it’s great to see some real world numbers.

    One question…did you get any resistance from the client on anything…even if they eventually saw it your way, did they question anything here?

    • @Jon DeVaul,

      There was some give and take along the way for both estimates.

      The client in estimate “A” pushed for more images at the same price (which we ultimately gave into). Also they were unwilling to budge on their licensing language on paper even though they did so in conversation. Sort of a “CYA” situation.

      Nothing significant was questioned production-wise.

      Jess

  8. Sorry, I don’t find it that useful. The line items all make sense, but again, there’s that 18k number pulled out of the air. “I figured that in Project A, the first picture was worth $5k and each additional was worth about $2.5. ” You “figured”. I’d like to figure they were worth 10k, because I’d like a new car, but in reality, standing about a studio, shooting 8 images doesn’t really justify five thousand dollars each, or even twenty five hundred, in my mind.

    Now, if you said, my hourly rate is $500 for 8 hours at $4000, and the licensing fee was $2000 apiece, I’d say that’s better, but still makes no sense. I mean, generally, an RF image with wider usage rights costs less than $500. Ok, they probably want exclusivity, so is that worth $1500 an image? Providing exclusivity doesn’t really add much, since a competitor could easily shoot similar headshots on a plain background, if they wanted to.

    Anyways, my point is, that even though a whole paragraph or two was written on the ‘creative fee’, I just don’t understand where you pull these numbers from.

    • @Justin,

      I understand your frustration. Licensing fees are challenging to figure out and the process of determining them is almost as difficult to articulate.

      The reason you shouldn’t charge an hourly rate is because each different use by a client truly has a different value. If you decide to stick to one hourly rate for all of your clients, you will be overcharging some and grossly undercharging others.

      For most commercial projects, you should be charging based on the value created for the client, not your time spent shooting (although it’s certainly a factor to consider). Billboards, print ads and corporate reports are often much less effective in conveying the client’s message without original photography. The value of an image is primarily dictated by how the client intends to use the image, where they intend to use it and for what duration.

      I’d love to be able to give you a rate sheet for every type of licensing, but because every project, client and photo are subject to different variables and pressures, there is no hard and fast rule for pricing licensing.

      The best I can do is present estimates that help demonstrate what’s possible and what has been successful for our photographers in the past. I’m sorry if you didn’t find this information useful.

      Jess

      • I don’t see the issue with charging an hourly rate, and adding the licensing on top of that, or maybe that makes the licensing fee too obvious. But I certainly think it’s appropriate to say, “At X skill level that I’ve reached, and with my overhead costs, etc., my hourly rate is Y. Now, let’s talk about the licensing fee where I try to figure the ‘value’ you derive from the content created.”

        So, I’m not saying the hourly rate includes the licensing fee. It seems though, that it’s easier to pass to a big buyer, something that says:
        “black box: $18,000″
        than
        “8 hours @ $500/hr – $4000
        8 images license fee @ $2000/image – $16000″

        Not that it isn’t interesting or useful to look at other peoples’ numbers, but it’s also interesting to know if they accepted it, so as to give a general guideline for overall budgets out there.

        • @Justin,

          Both of these projects were awarded to the respective photographer.

          I must have misread your initial post. It’s perfectly normal to charge a day rate (or other time based) creative fee and licensing on top of that.

          It’s just my personal preference to lump them together.

          Jess

  9. Thanks so much for sharing these estimates with us. It really clarifies a lot. I understand a day rate and lumping it together with the usage fees, but I am still a bit murky on the “value” associated with the image. Is this value based on usage fees and similar to pricing licensing for stock photos? I guess over time you become experienced with knowing how to value the image in its intended use… but I’m just starting out. :) I’ll keep watching your posts for more information.

  10. I love this blog! I’m so glad I found it and you sharing this type of information on quoting for advertising photographs is such a help! Unfortunately where I work the market is pretty screwed up, and agencies hardly pay the 50% up front and then take months to pay the final balance… but that’s another story… Anyway I’m hooked. Duly bookmarked and will return. Cheers!