FRED’S STUDIO PRICING. by Walt Carlson
OK hold on tight, here we go!
The main types of Wedding Photography business are:
Part time to subsidise your full-time income, help pay bills, buy photography equipment and/or to start a new photography business, to buy nice toy’s.
Full time, photography is your only income, to put food on the table, pay the mortgage, pay insurances, buy clothes for the family and put the kids through school, etc..
The following discussion will work for both photography businesses, the bottom line figures may be different but the process is the same.
Let us make a few assumptions for Fred’s Studio. Fred owns a very, very, very small but full service office studio with minimum furniture borrowed from home. He is married with no children and rents a condominium. Since he is a new business he is working six days a week, opening at ten in the morning and closing at nine at night, he takes 10 holidays a year and this comes out to 290 days a year x 11 hours or 3190 hours a year.
Point one: a dollar earned is not a dollar in your pocket, hate to tell you this but it is true. You probably understand this simple theory if you have ever been in business for yourself before, but this blog is also directed at new folks. For every dollar earned a certain portion of that dollar goes towards,
OVERHEAD COSTS PLUS COST TO PRODUCE PRODUCTS=TOTAL COST
1: Overhead is the amount you pay whether you have a customer or not. Example: You have no weddings for the month of December but you must still pay rent.
rent ……………………… $ 800 per mo
telephone ……………. 100 Two business lines.
Internet……………….. 60 Standard Cable
lights……………………. 180 Studio lights
garbage………………… 50 Tenant charge
cleaning supplies…. 50
security system……… 40
insurance………………. 100 Studio/equipment.
owners salary………… 2500 Fred’s take home salary.
equipment ……………. 450 (See equipment explanation below.)
——-
total……………………… $ 4330 per month x 12 months = $51960 per year. (GULP!)
Example Monthly equipment credit payments:
Two dslr’s ……………………………………….. $2400 ………………………………………. $100.00 per mo.
lighting, two strobes and hot shoe…… 1200 ……………………………………….. 50.00
Lenses ……………………………………………. 3000 ……………………………………….. 120.00
carrying cases………………………………….. 120 ……………………………………….. 10.00
computer ………………………………………… 1200 ……………………………………….. 50.00
printer …………………………………………….. 360 ……………………………………….. 20.00
Misc. filters, light meters, tripod……… 1000 ………………………………………. 100.00
total ……………………………………… 450 per mo. x 12 mo = $5400 per year
The problem is that this data would lead you to think that all we would need to do is sell 52 weddings a year at $ 1,000 dollars a week to make $52,000 dollars a year and break even. This bring us to the next problem that new folks miss. Fred does not get to keep all that thousand dollars either, because it costs money to do a wedding.
Cost to do one wedding: Package include: 8 hours, 1 assistant, 1 album with 20 8in by 10in photographs. high-resolution dvds with pictures.
gas……………………………………. 30
Assistant………………………….. 150
albums……………………………. 170 includes inserts.
dvd…………………………………… 30
food on road…………………….. 20 (Assistants get hungry early in the morning.)
advertisement…………………… 40
prints…………………………………… 30
dues and insurance/bond……. 30
total……………….. $ 500 cost to produce one wedding.
So that means that if Fred charged $1000 for this wedding package he would only make $500 per wedding. His overhead is $51,960 that means he would have to do $51,960 overhead per year/$500 = 104 weddings per yer to break even.
What can be realistic, (Example only, first few years will not be this high. Maybe after a few years with a lot of hard work?):
Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec.
1 2 3 5 8 8 8 8 4 3 2 2 = 53 weddings a year.
In comes the management part of pricing. Most successful wedding businesses run at 30% or less cost to produce product. That means cost to produce the product is 30 cents on the dollar. So how does Fred figure how to charge the proper amount to charge for his product make his cost of producing 30%. Here is formula you can use: 100% divided by cost of producing product 30% or 100/30= 3 multiply this times the cost of producing goods.
Fred’s Studio example: Fred wants his cost of product to be at 30% of his total sales,
He divides 30 into 100 and gets 3 (rounded off.)
He then takes cost to produce the example wedding $500 and multiplies it times 3 or $1500. He then charges $1500 for each package. If he does the 53 weddings as shown above then he makes $1500 x 53= $79,000 a year for wedding photography. Fred not only pays his cost to produce goods and his overhead but he makes $79,000 – $51,960 = $27,040 profit, to invest in the business and a small raise.
Disclaimer: This was a fun example, but beginning photographers should be planning on allot less than 53 weddings a year. How much less? Talk to your friends in your area, see if there is an information survey bureau in your area. My first year was 16, which was considered high. I had to assist at $300 a day, work at Sears in the morning doing portraits, do rent-a-photographer weddings, do portraits and I also had a layoff package and health insurance from my old job, and most of my equipment. I say most because equipment purchasing goes on forever, (Hope my wife is not reading this.). This is my method of doing pricing and the example is just that, there are many other methods and a lot of other things involved and they are differ from studio to studio. You need to pay careful attention to your costs and income and keep excellent records at all times. Computers make this easy but accountants make it even easier, hire one.
The other issue (Excuse the ramble.) is the amount you charge is also effected by the pricing of the other wedding photographers in the area. When a couple comes to you they have probably have seen a lot of pricing before they got to your place. You may not want to offer a package for $1500 that a 10 year professional in your area is offering at the same price or less. This is what I did; I surfed the web for days and days noting pricing and packages. I tried to see where other photographers were as far as quality of work, packages, pricing and time in the business. I focused on folks that were close to my talent and situation. As the list grew I found that there were trends in what were charging in the area. Allot of folks were putting packages that cost way to low and they were trying to buy weddings for their portfolios, I discarded these. I was lucky enough that I had some portfolios from my assistant job and other jobs, so I did not go this route. Others, were way to high and it was obvious to me that I could not charge the same as established photographers. I then came across a group of photographers who were just below the established by enough to make a difference. An example would be their entry-level package was $250 dollars less than the established photographer and the rest were about the same. This made some sense to me and I followed this trend and it worked. Later I found out why, most photographers raise their prices as their businesses grows to cover additional charges and raise their profit margin. I will go into package creation, a-la-carte sales in another blog.
Please feel free to comment and ask questions. Please feel free to write your own post on this topic and send it to wgcphoto@gmail.com, I will add it and put your name as author.
Thanks, Walt Carlson
Let the light in.
Very good