Are you a photographer struggling with pricing your services? Many photographers feel that they need to overhaul their pricing structure or rebrand in order to move their business forward. However, making dramatic changes could potentially alienate your existing market and clients, ultimately leading to a loss of business.
So, what’s the best approach? Our advice – make small changes in short bits for long-term impact without losing business and clients. Similar to The Scorecard Approach when reaching your goals!
We’ll focus on one of the best places to make short-term changes that can generate significant long-term payoffs: your pricing. By raising your prices by only a small amount and amortizing it over the year, you can increase profits significantly.
Let’s take a closer look at how to do this and why it’s important for the sustainability and longevity of your business. As a photographer, optimizing your pricing strategy is essential for maximizing profitability and sustaining a successful business.
What is profit?
Let’s define the term “profit” for a minute, and figure out exactly what it is comprised of.
Let’s define the term “profit” for a minute, and figure out exactly what it is comprised of. Profit in its very basic definition means the amount of money you have left over when you subtract your expenses from your income. Furthermore, your income, simply put, is calculated by multiplying the number of sessions you have by how much you make per session. Therefore, profit can be broken down into the simple formula:
Profit in its very basic definition means “the amount of money you have left over after expenses.
Profit = (# of sessions × $ per session) – expenses
When we look at it this way, it’s clear to see that there are really only three ways to increase your profit:
- Increase the # of sessions
- Increase the $ per session
- Decrease your expenses
The first profit-increasing method – booking more sessions – is a marketing discussion, and so I will leave that for a future article. Certainly booking more sessions will increase your bottom line, but this also means that you will be working more hours or having to pay more for staff, so its effect on profit will be proportional and limiting at the same time.
The third profit-increasing method – decreasing your expenses – is a great way to “trim the fat” and increase your bottom line, however often there is only so much to do in this area. Some expenses can’t be reduced or cut out and so we will find that there is eventually a limit as to how these changes will affect our profit.
The second way to increase profit – increasing the amount of revenue per session – is the simplest method and can have the greatest impact on the bottom line. Simply put, I am suggesting that the most effective way to increase your profit is to increase your prices. The only way to do this while maintaining sustainability is through a rational and measured approach to price increases. Small increments of 10% or 15% will yield significant increases to your bottom line.
Case-Study for Increasing Profits
Diving into an example for calculating higher profits
Let’s say, for example, that you were a wedding and portrait photographer, and you currently photograph:
- 25 weddings per year at an average of $4,000
- 2 portraits per week at an average of $800
This equates to gross annual revenue of $180,000. A small 10% increase in your prices will bring your average wedding revenue to $4,400 and your average portrait revenue to $880, and this equates to a new gross annual revenue of $198,000. Your cost of goods haven’t gone up, your expenses haven’t gone up, and so the additional revenue that you make is pure profit.
Who wouldn’t want an extra $18,000?
Take Action
What steps to take next
My actionable lesson for today’s article is to consider small incremental changes to your prices. Determine what is reasonable and “safe” for you, your market and your clients, and make the change. I suggest starting with a 10% increase in prices. This will yield immediate returns and it is something that will ensure business sustainability and longevity.
If you enjoyed this article and would like to read more about the mechanics of pricing for photographers, you should definitely check out our book “Pricing for Profit”, which you can purchase physically from Amazon here.
