How to set your prices as a professional photographer

Pricing isn’t a topic that most photographers like. While it might be boring, tedious and unimaginative, pricing is an important part of running a photography business. Most of us get into photography because we love the art and creativity. However we quickly realize that unless we can get people to pay us, it’s nothing more than a hobby. Making a living as a professional photographer is realistic, but you have to set a foundation, and pricing is a part of that foundation. Luckily, photographer pricing is a topic that I love (I know … I’m a nerd) and am happy to discuss it in today’s article!

You can’t arbitrarily set your prices as a photographer

This article is all about the mechanics of photographer pricing, and in particular how to price your physical products. At Sprout Studio, our mantra is to be specific, direct and share concrete business ideas. Therefore, to accompany the discussion, I am going to use the example of an 8×10 print to illustrate the concepts. This discussion could be adapted to any physical product, so please feel free to use the ideas here and apply them to your own offerings.

Some photographers pick their prices arbitrarily without a real reason. They simply feel that they should be charging a certain amount, and so they just pick that number. This isn’t the best way to set yourself up for a successful career as a photographer. You can’t really be sure that your “out of the air” prices are realistic, profitable, or appropriate. Also, when you arbitrarily choose your pricing as a photographer, it doesn’t give you any measurable or repeatable way to establish pricing for other items in your product line. You end up with inconsistent pricing that is all over the place without logic or reason.

How to price

The five main influencing factors that should affect your photographer pricing

There are five main factors that should influence your photographer pricing. They are as follows:

1. The quality of your work and your finished product
2. Your perceived value in the marketplace and the perceived value of your products
3. How confident you are as a photographer
4. What your competitors are charging and what the market will bear
5. Your cost-of-goods

When looking at these very basic factors, the first three are all intangibles and therefore slightly subjective. You can offer the best quality, present your work beautifully and be confident in your ability, but this doesn’t help you decide on a price. At best, it gives you a self-focused approach to pricing, which says “This is what I think I’m worth”. But that isn’t enough.

The fourth influencing factor on photographer pricing (competition) is an important one to note. Of course, it wouldn’t be smart to copy your competition’s pricing. I feel it’s important to be aware of what your local market will bear and keep that in mind as you establish your own pricing. You don’t want to be so far off the line that you are looked at as being unrealistic.

The 5 influencing factors on photographer pricing are quality, perceived value, confidence, competition and COGS.

While we’re on the topic of relevancy, creating a pricing structure that your local market will bear is important. There are so many great educational resources available to us as photographers. However, but you must be realistic and relevant to your local market when making business decisions. For example, just because an established photographer from Southern California tells you in a workshop that he charges $165 for an 8×10 print doesn’t mean that you should. You need to set your pricing so it is realistic for your area, otherwise you’ll price yourself out of the local market.

Measurable photographer pricing

While there are five influencing factors on pricing, it’s clear to see that the only real measurable way to establish your photographer pricing is by using the fifth factor – your cost of goods. Before we go too deep into the mechanics here, I’d like to explore the concept of cost-of-goods for a minute. If we’re using an 8×10 print as our example, the cost of goods does not mean just the cost of the print from your lab. Many photographers make this mistake and don’t factor in the real costs of a product. Cost-of-goods for a product is so much more.

Cost-of-Goods is defined as the direct costs involved in producing a product or service which usually includes labor and materials.

It’s important to note that cost-of-goods include labor. Many photographers don’t factor in their time when establishing their pricing. That is a sure way to not make a living with your photography business. 

Use-Case

Walking through an example of these principles, calculating “what does an 8×10 print cost?”

Let’s go back to our example of an 8×10 print.  Let’s walk through the process of producing an 8×10 print, from start to finish, and see what is really involved:

• First, you spend 10 minutes retouching the image in Photoshop to make sure it’s perfect.
• You spend a quick minute cropping and sharpening the image for the size of print (8×10) ordered by your client.
• Now that the image is ready, you spend 3 minutes ordering the print from your lab, choosing the right paper stock, finish and so on.
• The print costs $3.50 from your lab.
• The shipping charge to get print from your lab to your doorstep is $6.50.
• When you get the print into your studio, you spend 3 minutes unpacking it and inspecting it.
• You package up the print in an arrival sleeve, a beautiful box with tissue paper, a “caring for your print” card and wrap it up with ribbon and a bow. All of this goes into a custom-printed tote bag with more tissue paper. The cost of your packaging is about $5.00 and it takes you roughly 5 minutes to package it up.
• You spend a minute writing the e-mail to your client, letting them know that their print is ready for pick up. You propose a time for them to come in.
• When your client comes to pick up the print, you spend 10 minutes chatting, making sure they’re happy and talking about their next session.

That sounds fairly average, right? I don’t think that this is an unrealistic workflow. If anything, it may be underestimating some of the time calculations, but let’s go with it for now. Let’s calculate what actually went into the print.

If you’re a full-time professional photographer and want to make a sustainable living from your business, let’s put your annual salary at $60,000. We have 50 weeks of work (2 weeks vacation) and 40 hours per week, which calculates out to $0.50 per minute:

If our per-minute wage is $0.50, and we put a total of 33 minutes into the 8×10 print, then that means our labour cost of the print was $16.50. Add to that the $15 hard cost, and this brings our total cost of the 8×10 print to $31.50.

Mark-Up

So far we haven’t taken into consideration any other ongoing fixed expenses such as utilities, taxes, equipment, education, and so on. The PPA benchmark survey recommends that a home-based studio operates a business model of 35% cost-of-goods, meaning that your variable expenses (cost-of-goods) should be 35% of your total revenue. The remaining 65% is eaten up by fixed costs and business profit.

Therefore, if we’re operating under a 35% cost-of-goods model, we must mark-up our costs by 2.85 (100 ÷ 35 = 2.85) to arrive at a final product price that:

1. Covers our hard costs
2. Pays for the time that went into creating the finished product
3. Leaves room (65%) for overhead expenses and business profit

This means that we need to multiply our 8×10 cost of $31.50 by 2.85, which gives us a final product price for an 8×10 print of $89.78.

Let’s stop there for a minute. Many of you may be saying that $90 for an 8×10 print is outrageous and that you couldn’t sell a piece of paper for that much in your area. That’s ok. You’ve just hit on the other “influencing factors” that we discussed earlier:

• Confidence – you don’t think it would go over
• Perceived value – you feel that it’s just a piece of paper
• Competition/Market – your area wouldn’t support prices that high

These are important discussions to have when deciding on photographer pricing. Maybe with these three influencing factors, you have come to the conclusion that somewhere in the $65 price range is more appropriate and realistic for your 8×10 print price, and that’s ok. That just means that you need to price other similar products in your line-up (i.e. 16×24 prints) to have a higher markup so that it’s balanced with the lower markup on this product (8×10 prints).

There still ends up being some guesswork with using the factors of confidence, perceived value and quality to adjust your prices, but at least using the cost-of-goods pricing model, you have a foundation to start off with. 

Action item

What to do next

First, calculate what your per-minute wage is (annual salary ÷ 50 weeks ÷ 40 hours per week ÷ 60 minutes per hour).

Determine your labour costs by recording how much time goes into the production of the finished product and multiply that time by your per-minute wage (above).

Determine your material costs by adding up the hard costs associated with the product (printing, shipping, packaging).

Add the labour costs to the material costs to determine your total cost of a product.

Multiply your total costs by your markup of 2.85.

Adjust your price if necessary to be in line with your quality, confidence, perceived value and local market area.

This process might seem tedious, but it is crucial to the long-term success of your photography business. Repeat this process for each and every one of your products and services. If you’re interested in learning more about the mechanics and ideas discussed here in this article, you should definitely check out our book, “Pricing for Profit” where we dive deeper into all of these ideas. You can buy the physical book from Amazon here.