Cost of doing business

[leeonmaui]

aloha,

A Pentax 645 35mm FA 3.5 is 1200 to 2000 dollars, that's a really nice lens, its not $5000
I spent a hell of a long time shooting with one body and two lens, and only built a "dream system" when I could afford it. My camera and lens expenses for the past two years is a whopping 0 dollars!
(Ok  i had a little dslr converted to IR so $380, but that was a want not a need :-))

your going to need to turn lots of money prior to getting to 70k profit on your "taxable income" side.
and I'm just saying there are many ways to structure the way you manage your money.

Telling a person there are costs that they need to consider is reasonable and prudent, assigning that persons cost of living to that persons cost of doing business makes sense. Assigning anything over his cost of living does not make sense, and in the context of starting a new business is not very reasonable.

I have shot about 20 days this year, it works for me, But I sell my stuff to collectors not clients.
I don't know what would constitute a good year for a wedding, portrait, fashion, travel, real estate photographer, certainly plugging in simple numbers of cost verses income is reasonable and will give you a general idea of how many widgets you'll need to sell to keep the doors open.
It is brilliant advise to at least show someone what the could be in for!

I continually look at only three numbers in my business now; costs, daily average and trend.
Then I work on plan or change what I am doing to improve those. My business model now looks very different than when i first started, the goals are about the same, but the way I will get to them has matured.   

There intangibles at work in any business, which you are not paid for directly, and these can have great value. Every day you are in business you are building this value!

In reviewing the information, I see less than $1000 dollars slated for promotion. Perhaps shifting the 10,000 dollars invested in extra camera gear to to promotion would have greater benefits?
Again trying to give advise to a new business from your more mature perspective, doesn't always work. 

It is entirely commendable to show someone there are things they need to consider but, I don't thing its a one size fits all by any means and what works for you now and what you need now is most likely much different from what you needed when you first started; Steve Jobs probably couldn't move back to the garage where he first started Apple for instance, but telling the next Steve jobs, it can't be done from a garage is not necessarily true or helpful either.

[Craig Lamson]

So if I produce a set of images and it costs me £1000 to produce them - and 6 different Editors want to use them, for a one time only editorial feature in each of their magazines - over a 5 or 6 year period - how does that work then ?

And if 3 of them are national magazines and the other 3 are just local magazines, how does that work ?

And what if a national company also wanted to use 3 of the images for their magazine ads, brochures and on their website too, for the next 3 years - how does that work ?

Or is that just semantics too - as they will all understand what I mean, no matter what words I use ??

You STILL build your time in the equation, and yes if you sell them more than once you do indeed make more and it amortizes the cost of your TIME downward.

Regardless you need to know the cost of your TIME when you price that first set of images, and you never know what will sell and h ow many times.

You shoot stock. I shoot model year products.  Your model will not fit mine and mine will not fit yours.  HOWEVER both of us really do bill for our time, its just packaged. 

BTW, I don't shoot day rate, I shoot flat rate,...a specific kind of photo costs x...plus I also bill for production costs like styling and files. But without knowing what my photo and post times COST I can't arrive at a profitable 'X' cost.  Not to mention I do have others competition for the same clients and projects so pricing must be competitive, at least on an apples to apples level. Just one more reason that CODB knowledge.

And  the industry I work in cashed to the ground in 2008.  Massive. When it started to come back the clients simply would not pay pre 2008 rates.  In fact rates were slashed in half, and it you did not compete you got now work.  Once again KNOWING the CODB...or more to the point , what COBD would allow me to continue to work, was what allowed me to create a new business model and succeed, and in fact see an big increase in net, on half the rate.  My TIME was a huge component.

Bottom line, it is just semantics.  You just package your time and it gets amortized differently based on sales.  Rationalize it anyway you like.



 

[David Eichler]

You STILL build your time in the equation, and yes if you sell them more than once you do indeed make more and it amortizes the cost of your TIME downward.

Regardless you need to know the cost of your TIME when you price that first set of images, and you never know what will sell and h ow many times.

You shoot stock. I shoot model year products.  Your model will not fit mine and mine will not fit yours.  HOWEVER both of us really do bill for our time, its just packaged. 

BTW, I don't shoot day rate, I shoot flat rate,...a specific kind of photo costs x...plus I also bill for production costs like styling and files. But without knowing what my photo and post times COST I can't arrive at a profitable 'X' cost.  Not to mention I do have others competition for the same clients and projects so pricing must be competitive, at least on an apples to apples level. Just one more reason that CODB knowledge.

And  the industry I work in cashed to the ground in 2008.  Massive. When it started to come back the clients simply would not pay pre 2008 rates.  In fact rates were slashed in half, and it you did not compete you got now work.  Once again KNOWING the CODB...or more to the point , what COBD would allow me to continue to work, was what allowed me to create a new business model and succeed, and in fact see an big increase in net, on half the rate.  My TIME was a huge component.

Bottom line, it is just semantics.  You just package your time and it gets amortized differently based on sales.  Rationalize it anyway you like.



 

I guess Ashley is looking at his time as an investment, so perhaps he is not valuing it the way someone in your position might.

[Go Go]

It's so hard to make a point on a forum.
Why bother?

[Craig Lamson]

So yes, it's important to know how much you need to earn to at least break even - but as a professional Photographer, it's the Rights to use my images that I'm selling, not the amount it costs me to produce them or my time.

Semantics..you still sell your time.

And WIKI? Really.

Ashley, you are a competent photographer and it appears you do just fine as a business person, "for your business model".  But quite frankly the drum you keep banging is about worn out.  Not everyone, or every market can play by the same rules. 

One size does not fit all. 

[Craig Lamson]

Right - so if you happen to be a Photographer who produces IMAGES (pictures, photographs) for others to use - then you would charge those people who want to use your IMAGES (as that is what you are going to be providing them with at the end of the day), for the use of them, i.e. so as they can use them in their brochures or in magazine ads or in newspapers or on Posters, etc, etc, for a period of time, in the various parts of the world they need to use them in.

Right - So you happen to be a Photographer who makes images for his customers to use..

But instead you :

Bill the customer directly for your time and production costs and you give them unlimted rights to the images

Or:

You bill the customer a "creative fee" that covers your time and you then also add and addition charge for usage, travel, and all production costs.

Or:

You do the above and the client pays the production costs.

Or:

You bill the customer a per shot fee, with an unlimited or even limited usage, plus all production costs and travel.

Or:

You simply bill for your time and give the client a disk of raw images.

Or:

You finance the total production costs and bill the client only for usage.

Or:

Any number of other possible options as dictated by your market and clients ...

One thing always remains...no matter how you package it or word it, you are still selling your time, among other things.

Now if saying, "Rights to use my images that I'm selling" makes you feel better or more "professional", good for you.

One size does not fit all.

[Slobodan Blagojevic]

...no matter how you package it or word it, you are still selling your time...

A guy had a squeaky floor he couldn't fix on his own for weeks. Called a handyman finally. The handyman came, walked around for a few minutes, pulled a nail out of his pocket and with a single hit drove it into the floor. No more squeaking. The owner was quite pleased until he saw the bill: $100.

"What!? $100 for a two-minute job!?"
"No, Sir, $1 for my time and the nail, $99 for knowing where to nail it."

The moral? The less you are selling exceptional knowledge, skill or talent, the more you are selling time.

[Craig Lamson]

A guy had a squeaky floor he couldn't fix on his own for weeks. Called a handyman finally. The handyman came, walked around for a few minutes, pulled a nail out of his pocket and with a single hit drove it into the floor. No more squeaking. The owner was quite pleased until he saw the bill: $100.

"What!? $100 for a two-minute job!?"
"No, Sir, $1 for my time and the nail, $99 for knowing where to nail it."

The moral? The less you are selling exceptional knowledge, skill or talent, the more you are selling time.

I said

"One thing always remains...no matter how you package it or word it, you are still selling your time, among other things."

[Jeffery Salter]

The moral? The less you are selling exceptional knowledge, skill or talent, the more you are selling time.

How does one achieve exceptional knowledge, skill or talent?  I would wager to guess by putting in the time to learn one's craft.  The author Malcolm Gladwell wrote in his book "Outliers- The Story of Success" http://en.wikipedia.org/wiki/Outliers_(book).  That a person must put in at least 10,000 hours to be great at one's craft, skill or whatever.

That being the case you are being paid for not only the present time, but the time you put in to being a professional.

 Craig is correct.  There are many different ways professional photographers charge for their work.  I'm an American magazine and advertising photographer.  When I receive an assignment to shoot an editorial, the editor usually asks for an estimate.  The estimate will have 2 or 3 sections.  Creative fee + Usage + production costs.  Sometimes I simply merge the Creative fee + Usage together.  The type of magazines my work appears in ranges from National magazines like People + ESPN to smaller targeted magazines like Crains.

When my advertising agent in NYC bids me for an assignment, she always breaks it up like this:   Usage + Creative (photographer's fee) + production costs.  The type advertising agencies I have sent bids range from National to regional to micro-local.  Getting ad work is a royal @#%.  (But that's another topic....)

Let's all shoot some great pictures today and get paid.

[Jeffery Salter]

Do clients pay you in advance for your 'creative fee' & for your 'production costs' or do you have to cover the cost of both of these 2 things, until after you have produced the images and possibly provided them with the images too ?

Good question.  That's where the pill can get bitter....  When I do an advert we request 50% of the production costs upfront.  When I shoot for an editorial magazine, my production expenses are sitting on my credit card or out of my pocket for 30 to 90 days....  It's a crazy business model and very painful to photographers who often have to be bankers to major media companies.

One way of working around this model is to start your own separate  "Production company" to rent gear and production equipment out to other photographers (including yourself...)  In the Miami market where many fashion designers come to shoot their catalogues some photographers rent out there own studio space, rental equipment and even speciality cars for photo-shoots.  

[Go Go]

Hi Ashley,

Sorry if I may have sounded curt, or impatient earlier. Time is precious right now.

In my experience as a photographer if you fail to charge your clients for the use (usage) of your images by specifying (license) the exact allotted use and time of use then you are leaving money on the table.

There is no simpler way to explain this. Now if you are working in the retail environment and shooting portraits for people that is a different story. I am talking about business to business photography for publication. Advertising or editorial use, basically photography produced for commerce. In this arena there is only one consideration and that is value, as in what is the value of your effort in creating a picture. And thanks to the law of the land (USA) as the creator of your image you own all rights to the image. Take into consideration that you sometimes need property releases or model releases etc, but make no mistake this is commerce and as a creator of original work (your picture) you have the right and obligation to oversee it's use and usage.

This model works for me and if a client does not understand, then it is my job to explain it.

It's business, if your not going to do it well business will eat your lunch.

[Craig Lamson]

In my experience as a photographer if you fail to charge your clients for the use (usage) of your images by specifying (license) the exact allotted use and time of use then you are leaving money on the table.

I'll make my point and I'm sure Ashley will make his.

Markets and clients are different.  You are from New York.  I'm from small town Indiana.  Others everywhere in between.  What a customer is willing to pay and for what will vary everywhere. 

My market demands certain things.  Any given manufacturer I shoot for will want unlimited usage.  Print, web, PR, editorial (trade and consumer pubs who request product images, which the manufactures see as PR) Dealer usage ( for their retail advertising) and even letting suppliers use the images for their own trade advertising (which the manufactures consider PR).

I'm not alone in the number of guys who have tried to sell in this market by usage. And we all saw the clients stop buying photography from us.  You can "educate" until you are blue in the face but they want what I listed about and they ultimately dictate the price they are willing to pay for it.  Within reason, even if they really like the images you make, money talks and BS walks.  So you choose, work within the system or find another client base.

Do I license my work?  Of course.  At least we have gotten THIS far and the term buyout  does not get tossed about much any more. But quite frankly this is 'feel good" verbiage for me..  A blurb from a fact sheet of mine.

Usage Rights

We understand your clients needs are vast and varied and can change at a moments notice.

We grant unlimited first and second party usage rights for all RV images we produce.  Your client and their dealers may use these images for all of their needs, including web, editorial, and advertising.  We also grant the agency unlimited usage rights for self promotion.  We do however ask that third party usage such as trade show displays or advertisements by a supplier to your client, only be granted usage rights after contacting us.  We many or may not assess a licensing fee.

I don't care about the length of time, simply because the images we produce are useless after a model year. 

There is simply no money here left on the table because the end user simply won't pay for the multiple usage licensing model. And if I did my part correctly they call me the next model year to shoot here products all over again.

BTW, that was written for agency customers, but quite frankly I'm not working directly for the agency much anymore, but rather direct for the manufacturer and I generally get paid in 15 days. 

That's what works for ME.  And quite frankly I do pretty well with this model.  I net low 6 figures, which might not be a lot in NY, but its a very good living here where the cost of living is among the lowest in the country.

I don't chase more traditional b to b, or other local advertising work because the rv, and marine stuff keeps me plenty busy.  But I do know that paying by licensing is is not a staple.  One of the more prominent agencies  in the area ( I was shooting for an RV company and they were producing the print and web for them) told me they were surprised I could bill like I was.  Their standard was to pay day rate and require all the raw files.  And they had no trouble getting photographers to play.

Would I like to get paid MORE for the use of the images I make?  Of course, but that's not going to happen if I continue to work for the clients I have.  And at 60, I'm not really interested in looking for a different niche.

Is there money left on the table ...here?  Nope.

One size does not fit all.

[David Eichler]

I am curious, for those who use a creative fee model, what part of your production time do you include in that? Do you just include the time spent shooting, or do you include the time spent retouching and processing the images and preparing for the shoot as well?

Also, when using a creative fee model and including the licensing and production time within the creative fee, how are you making adjustments to the fee whenever there is a subsequent change in the number of images you initially agreed upon with the client, and how do you explain how you arrive at the adjusted fee to the client?

[alan_b]

I am curious, for those who use a creative fee model, what part of your production time do you include in that? Do you just include the time spent shooting, or do you include the time spent retouching and processing the images and preparing for the shoot as well?

Architectural shooter here - generally working with a scope/fee model.

For the Creative Fee (I call it Photography) I include prep time (packing/unpacking, estimating, etc.) but itemize scouting and travel separately.  For processing, I include basic processing (bulk color, distortion correction, etc.) that gets the files to a proof state - trying not to require too much imagination from my clients.  Retouching is quoted separately either on request, or many times I will make recommendations.

This is on projects where I'm actually itemizing things - many times I will just give a total fee for X images delivered for Y usage.

Also, when using a creative fee model and including the licensing and production time within the creative fee, how are you making adjustments to the fee whenever there is a subsequent change in the number of images you initially agreed upon with the client, and how do you explain how you arrive at the adjusted fee to the client?

I generally list a fee schedule up front in my estimate for additional images delivered from a shoot.

[jjj]

How does one achieve exceptional knowledge, skill or talent?  I would wager to guess by putting in the time to learn one's craft.  The author Malcolm Gladwell wrote in his book "Outliers- The Story of Success" http://en.wikipedia.org/wiki/Outliers_(book).  That a person must put in at least 10,000 hours to be great at one's craft, skill or whatever.

Moving slightly off topic here - Needing time to learn one's craft is certainly true. The 10,000 Hours rule is a pet peeve of mine as it is well.....utter bollocks.    Even the guy who did the study that gave rise to the term does not use the word 'rule' with regard to his findings.
This is basically the nature Vs nuture debate. And in my view, to use a British colloquialism "you can't polish a turd".

A cyclist who lives near me once said about skill, "If it was just a matter of practice everyone could be as good as me."
I just read this week, a magazine article about the 10k hour 'rule' with regard to  sport and it seems the current top female triathlete, Chrissie Wellington, is leaving everyone trailing way behind her. Including many men and she only took up competitive sport in her late 20s and right from the start she was beating others waaaay more experienced than her.

[Craig Lamson]

This right here...

.. is what I believe your clients are actually paying you for i.e. for the use of your images, as clearly stated here.

Nope they are paying me for my time.  They don't get to use the images until they pay me for the time and costs to produce them.  And quite frankly there have been many times they paid me for images they NEVER used because they changed the product after the photos but prior to release and then the paid me for my time to produce them again.  

The licensing clause is simply feel good wording for me.  They get the equivalent of a buyout, and quite frankly, not a single one of them cares about the license and I'll never enforce it anyways.  Tried  few times when clients gave a photo or two to a supplier and I requested payment for the supplier.  I was told in no uncertain terms IF I enforced the payment that would be the last I would shoot for them.  And quite frankly the one time fee from a supplier paled in comparison to the continued payment for my time from the original client over a A DECADE.

I shot without this verbage for years and I suspect I have clients who are not even aware of it.  We never issue contracts or purchase orders.  Someone gives me a shot list, usually via an email, I give them the time to produce the images.  They know exactly what my prices are and how much the job will cost.  I'll bet I've not produced more than 10 quotes over the last dozen years. And once I start working for a client the quotes stop.

Small town, friendly, handshake business.  Not one size fits all.

We can go round and round for days Ashley.

[David Eichler]

Nope they are paying me for my time.  They don't get to use the images until they pay me for the time and costs to produce them.  And quite frankly there have been many times they paid me for images they NEVER used because they changed the product after the photos but prior to release and then the paid me for my time to produce them again.  

The licensing clause is simply feel good wording for me.  They get the equivalent of a buyout, and quite frankly, not a single one of them cares about the license and I'll never enforce it anyways.  Tried  few times when clients gave a photo or two to a supplier and I requested payment for the supplier.  I was told in no uncertain terms IF I enforced the payment that would be the last I would shoot for them.  And quite frankly the one time fee from a supplier paled in comparison to the continued payment for my time from the original client over a A DECADE.

I shot without this verbage for years and I suspect I have clients who are not even aware of it.  We never issue contracts or purchase orders.  Someone gives me a shot list, usually via an email, I give them the time to produce the images.  They know exactly what my prices are and how much the job will cost.  I'll bet I've not produced more than 10 quotes over the last dozen years. And once I start working for a client the quotes stop.

Small town, friendly, handshake business.  Not one size fits all.

We can go round and round for days Ashley.

The more I think about this discussion, the more I have to agree that, unless you are doing something like event photography, we are not selling our time; we are selling our talent. This is the basis for the argument that photographers should quote in terms of a creative fee rather than a day rate. Time is certainly a consideration in the overall calculation, but really only from the photographer's standpoint. As Ashley points out, do the clients really care about this? Don't they really just care about the results? Seems to me that quoting based on time has a tendency to turn the photographic process into a commodity rather than a creative endeavor. Now, I can understand breaking out time spent on purely mechanical, non-creative things such as preproduction preparation or weather delays, but I think I agree that the time consideration related to the creative process should be encompassed within the creative fee.

[jjj]

There's a lot of bickering about how to describe how you charge.
Now obviously doing any photographic work takes time to do, so charging for time seems logical, particularly if your work has a short shelf life/one off use where repeat sales are not going to happen. But if you licence the same work to many people and as usage type [local ad Vs worldwide campaign] will alter fees dramatically, then your income from imagery will not necessarily be related to time taken to produce the work. So charging by time is meaningless in that context regardless of the fact that time is used to produce the work.
Unfortunately, the problem with the licensing model is that nowadays it is being undermined by those willing to do work for a [not very good] flat fee and increasing reluctance of buyers to pay for anything other than the time taken to do the shoot - time taken to do post processing and all the other tasks involved with doing a job seem to not register. As for example when people complain about wedding photographers charging thousands for 'just' a few hours work. Even trying to explain licensing and usage is pointless at times, the client has a budget and that's it.

The thing is there are numerous ways one can charge for one's work.....  
time,
time + expenses,
time + expenses + usage
time + usage,
usage,
talent,
talent + time + expenses,
talent + time + expenses + usage.....etc.

All these variations are perfectly valid as a business model - providing they suit your particular situation.

[alatreille]

I feel part of the difficulty is people need to quantify things.

We understand the concept of 'time' / our clients understand the concept of 'time'
Therefore, it is very easy to compare apples to apples over 'time' (or creative if you'd like) and other costs (production, post, licensing etc)

However...what sets one photographer apart from another is talent, vision, style, what they see, and of course their ongoing relationship with a client.

If a client has two equal estimates from photographers whom they have used in the past.  They will pick the professional whom best suits the job.

We don't shoot under Day rates, or half day rates.  We call it creative rates.  However many of our clients will say 'we've a job that is an x day shoot' would you be interested....

The quantifiable part becomes negligible, however in general the client needs it...

[alatreille]

Generally at this point we have no idea when a shoot will take place. Perhaps we know the month...but the rest is weather and project (construction) completion dependant.  There may be numerous visits of 1-2 hours.

Yes, they are asking for a confirmation that we are interested, and many of our clients understand how many shots of a building can be achieved for a given 'x' rate.  They are able to quantify and budget before they even call us. We will of course at this point provide a confirmation and firm quote of their assumptions or otherwise.

This is a framework and terminology they are familiar with, and it works for us.

One size doesn't fit all.