Why you must sell digital files, and how to price them properly
Has the digital file replaced the print?
Will all of our photos live and die on a hard drive? Will we have nothing but iPads and iPhones to enjoy our photos on with our children, and our children’s children?
… Not if we have anything to do with it.
As a photographer, you’re probably asked about digital files often. But, do you have a good answer?
Many photographers are in an awkward transitional phase, where they don’t want to offer digital files, but sometimes they feel like they need to. Do you sometimes make exceptions? Do you have a set policy for digital files? Do you have a good answer to the “Do you offer digital files?” question?
Well, that’s what I’ll be showing you here in this article.
Why you must offer digital files
Here’s the quick answer to “Do you offer digital files” question – “Yes”. I believe that saying “No” is not even an option.
Yes, you heard me right. I said that you must say “Yes” to digital files.
Listen, I am a huge proponent for the printed product. It’s engrained both in my personal life and in the very culture of my own photography business. Personally speaking, my wife and I have boxes and boxes of 4×6 prints; we print everything. Sometimes to a fault! We have two beautiful books from our daughter Ava’s newborn session that we look back at often. We have wedding photographs all around our house and we look through our album every year on our anniversary.
Professionally speaking, prints, books and albums are a part of every conversation with every client, without question. And most of our clients leave their experience with our studio with a beautiful finished heirloom.
But … I still subscribe to what I believe is the #1 rule of business: never say “No” to a client.
There are too many photographers who have had to hang up their cameras because they were unwilling to adapt to change and evolve with our industry. Don’t be like them. Don’t be proud. Don’t be stubborn.
The only thing that is constant is change (Heraclitus), and if you refuse to move forward with the times, you’ll find yourself stale, stagnant and, frankly, out-of-business.
Always remember that you are in the service business, and it’s your job to give your clients what they want. That being said, it’s also your job to educate your clients in what’s available, and build their want for a printed product to be greater than that for a digital product.
Why prints should matter to you
In case you need a reminder, or a “push” as to the importance of prints versus digital, here’s a quick summary of an article I wrote for Digital-Photography-School.com as to why prints should matter to you:
- A print will always be there.
- A print doesn’t need to be enjoyed on a screen.
- A print lasts a lifetime, and often even longer.
- Prints separate you as a “great” photographer.
- Offering printed products increases your perceived value.
- When you offer printed products, you show that you care about the quality of your work.
In summary, prints offer 2 main benefits, one for the consumer and one for you, the professional.
[highlightcenter]For the consumer, a print is the most meaningful way to enjoy photography. As a professional, a print is the vehicle in which you can communicate value and offer the greatest customer experience.[/highlightcenter]
As much as I love prints for all the reasons above, I still have no problem in offering digital files, because I am a service provider and want to give my clients what they want. I’d encourage you to consider the same.
Assigning a value to your digital files
It bears repeating: you are in the service industry, which means it’s your job to say “yes” to your clients and give them what they want. While you must still make it your mission to promote and educate about the value of the printed product (and if you do it correctly, you’ll have them asking for prints instead), you still have to have an answer to the question “Do you offer digital files”, and that answer should be “Yes”.
But … here’s the catch. If you’re going to give digital files, then you must sell them.
You must handle digital files with respect and care. You must give them value. You must not treat them as a throw-away product. Most importantly, you must position your digital files so that they are less-than-desirable in relation to their alternative, the printed product. If you make digital files so easily attainable and more affordable than the alternative, then you’ll have a hard time selling anything but digital files.
By positioning them as more expensive than your printed products, you’re making it easier for your clients to purchase prints, books and albums instead.
How you should price your digital files
I’m normally an advocate for the cost-of-goods pricing model, and I’ve taught this method and written about it more times than I care to count. I love the mechanics of pricing (I know, I’m a weirdo), and since so many photographers struggle with it, it really allows me to help photographers reach break-throughs and structure their business for sustainability.
The cost-of-goods model is simple: you add up the inputs (labour + material) and then multiply by your mark-up factor to get the price you should be charging. This is the only pricing model that is repeatable, consistent and reliable.
But this model doesn’t work with digital files though. Why? Let me show you.
Calculating the cost for a digital file
Let’s say that for a single digital file, your labour input (time spent) is:
- 5 minutes retouching the image
- 1 minute uploading the file for your client to download
- 1 minute to email your client the link to download
And your material cost for a single digital file is nothing.
So your total cost for this digital file is 7 minutes of labour, which if you’re paying yourself $60,000/year, means that the cost is $3.50. Multiplying this cost by a mark-up factor of 2.85 gives you a price of $9.98.
Based on the cost-of-goods model, you should be charging $10 for a digital file.
Calculating the cost for an 8×10 print
But let’s quickly consider the alternative – an 8×10 print of that same image. The labour input is:
- 5 minutes to retouch the image
- 1 minute to order the image from your lab
- 1 minute to unpack the print from your lab
- 2 minutes to package the print
- 5 minutes to meet with your client when they pick it up
And your material cost is:
- $2.50 for the print from your lab
- $5.00 for shipping from your lab
- $3.75 for the presentation and packaging
Therefore, based on the numbers above, with the same $60,000/year salary, your cost-of-goods is $7.00 in labor and $11.25 in material. Added together and multiplied by the same mark-up factor of 2.85 gives you a price of $52.
Based on the cost-of-goods model, you should be charging $52 for an 8×10 print.
Do you think this makes sense … charging $10 for the digital file, and $50 for the print? I don’t think so.
Obviously your client will choose the digital file in this case, because you’ve made the digital option more attractive. And so this is why the cost-of-goods model doesn’t work for digital files. You need to find another way to price them so that you are making the printed option look more attractive instead.
I still wouldn’t recommend guess-pricing though, which is when you just pick a number out of thin air. I still believe there should be a calculated, repeatable, systematic approach to pricing your digital files.
And there is …
The “opportunity cost” pricing model
The method I recommend is the “opportunity cost” pricing model. In it’s simplest form, opportunity cost is defined as “what you have to give up”, which for pricing your products means you must consider what income you’d be missing out on by selling a particular product.
[highlightcenter]If you sell the digital file, there’s a slim chance that you’ll be selling a print of that same file, right? So, therefore by selling the digital file, you’re missing out on the sale of that print. The opportunity cost of the digital file is the income you’d not be making in selling the print.[/highlightcenter]
More specifically, let’s say that if you didn’t sell the digital file, you’d be selling at least an 8×10 print of that image. Therefore the opportunity cost for the digital file is the price of the 8×10 print – $50 from the example above. In this case, I’m suggesting that you price your digital file to be greater than $50, perhaps something more like $65 or $70.
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Let’s look at another example – selling all the digital files from a session. What’s the opportunity cost? If you didn’t sell all the digital files from a session, what would you be selling instead? Perhaps a wall portrait, a bunch of smaller prints and a portrait book? Add that up … what is your average sale? Let’s say your average sale is around $1200. Therefore, your opportunity cost for the whole set of digital files from a session is $1200, and so I’d suggest that you price your set of digital files from a session around $1500 in this example.
When you price your digital files this way, you are still giving yourself a way to say “Yes” to the question “Do I get digital files”, but you also make your printed products much more attractive. Combined with your enthusiasm and ongoing education about the importance of the printed product, you should have no client that wants only the digital files.