Fear? Lack of confidence? Ignorance? Why are some (most) photographers not profitable? I began my photography career like most, as a hobby. I photographed my experiences along my travels and tried to document everything around me. I pretended my Facebook audience was a National Geographic subscriber and they cared about my trip to New Orleans. Desperately waiting to see where I went, what I ate and the beautiful landscapes in between. After 15 years of that, I finally decided to start photographing people. A few friends asked me to photograph their weddings and the rest is history. Three months into starting a real photography business I was profitable. One and a half years later I had built a six-figure photography business. How? I’m not the best photographer by any means. I don’t have the most followers. I don’t have some secret formula or some magic trick. It’s about building a sound business and pricing yourself to be profitable. I went into starting my Orange County Wedding photography business with profitability in mind. So how did I do it? Let’s dig in.
Actually, before we begin, let me drop in a disclaimer. The following has worked for me. Everyone is different. When you talk about price and profit people seem to get super weird. Maybe it’s because photography is an art because we’re insecure because we lack confidence in our work, whatever. I am not an accountant, and if you’re not one either, I’d recommend working with one to make sure you cover yourself for the dreaded taxes and learn about all of your expenses. With that said, let’s jump in.
First, let’s figure out how much you want to make this year. Let’s say $100K. For me, I’m a wedding photographer so you would figure out the number of weddings you want to photograph this year. Let’s say 30. You can do this for whatever type of photography you do, just come up with the number of shoots you want to do.
So if you want to make $100K and shoot 30 weddings, you need to take 100K and divide it by 30. You end up with $3,333. That is the average amount you need to charge per wedding.
Want to shoot less? Increase your prices. Want to make more? Shoot more or increase your prices. Pretty simple.
Next, let’s figure out the expenses you’ve had or are going to have for the year. “The Cost Of Doing Business”. Here’s a sample of some things to get your brain working:
Camera equipment (lenses, bag, cards, bodies, etc)
Website hosting and domain
External Hard Drives
Editing programs (Photoshop, Lightroom, Alien Skin)
Photo delivery program
Client management system
LLC, Business License, etc.Permits
Insurance (General liability, gear, etc.)
Driving (track your mileage)
There’s probably quite a bit more, but that should get your brain thinking. Now add all those up. You’ll get a big number, let’s say $25K. That’s your known expenses for the year and a write-off on your taxes so make sure you keep those receipts.
So then you take $100K and subtract $25K from it, you won’t have to pay taxes on your expenses (again, check with a real accountant). You’re left with $75K. Now you’ve got taxes, as a safe estimate let’s say 30%. $75K x .3 = $22.5K in taxes. $75K minus $22.5K = $52,500. That’s your net sales. In margin terms, you’re running a 52.5% margin. Not bad. In most businesses a 50% margin is the benchmark, so you’re sitting just above that. If you want to increase your margin/net profit, you can lower your expenses, work more or charge more.
So where do people go wrong? They desperately try to book jobs at too low prices. “I can shoot your wedding! Oh, your budget is only $1K? I’ll do it!”. Thirty one-thousand-dollar weddings later, you’re tired and broke. Between taxes and expenses, you’ve ended up losing money. That’s the formula for a failing business.
So you know your expenses, you know your average price per wedding you need to charge, what next? I recommend creating your packages with somewhere around the $3,333 price at the bottom end of three packages. That way every wedding you get is hitting your average and driving up your median. The lowest package should offer enough to cover the wedding but be missing some crucial items like an engagement shoot or enough time to truly cover the entire day. Your middle package should be the one that’s most attractive, include an engagement session, enough hours of coverage and really be priced to make people be drawn to it. The highest package is the one with all the bells and whistles, add-ons people didn’t even know they wanted. Chances are you’re only going to book a couple of those in the year if any, but you’re stoked when you do. The psychology of the middle offer has been well studied and proven to work. If your pricing and packages make the middle package seem the best you’ll be driving higher sales than your necessary average. I’d highly recommend reading some studies on it before setting up your packages.