For new and even more established photographers, one of the questions that is the most commonly asked is: how do I price my services? You may have some idea of how much you would like to earn, or perhaps you look at others in your local area and think that you should price yourself lower in order to beat the competition.
Actually, this is not the smartest way to do things. First of all, because you may not be attracting your ideal client, or any clients at all, by pricing low – but that’s a whole other article. Secondly, because you aren’t considering how much it costs you to actually provide the services – and you might end up making less than minimum wage if you get it wrong.
What is CODB pricing?
CODB, or cost of doing business, pricing makes you look at how much it actually costs you to stay in business, day in and day out. If this is your full-time job, then it should also include the living expenses you incur each day. Even if you have another job taking care of the daily bills, then you should still consider how much you have to spend in other areas of your business.
Here is a brief list of things you need to calculate in order to know your CODB, but which is by no means exhaustive:
- Rent for your studio space, or any other space you use, including storage; also, mortgage fees, property taxes, security fees, maintenance, and so on
- The value of your equipment – for example, if you replace your DSLR body every five years, you would divide the price of the body by five to get the annual cost. Remember to include equipment like your computer, graphics tablet, paper backdrops, and so on!
- The amount of money you invest in marketing, training and education for yourself, and other services such as an accountant
- Tax
- Travel expenses, including car insurance, maintenance, license fees, car payments, and so on
- The cost of props, costumes or wardrobe, and any other extras you provide for your clients
- Repairs to equipment and studio – this will be easier to calculate if you have been in business for a while and can look at previous averages
- Insurance
- Software subscription or purchase fees
- Any amenities provided to clients, such as tea and coffee
- Website hosting and domain name fees
- Email hosting fees
- Printing costs
- External hard drives or cloud storage
- Cell phone usage, from handset to monthly fees, or landline phone usage if you use that instead
- Internet connection service
- Office supplies (pens, notebooks, chair, desk, scissors, file cabinet, and everything else under the roof of your office)
- Postage and packing
- Subscriptions and dues for professional memberships and publications
- Legal services, such as contract reviews
- Licenses and filing fees
- Utilities such as heat, gas, electricity, and water
- Outsourcing or staff
How to use CODB to inform pricing
Just knowing your cost of doing business isn’t quite enough, because you might still make the mistake of pricing yourself too low. Let’s say, for example, that you have calculated that it costs you $15 an hour to keep your business running eight hours a day, five days a week. Of course, many of us will be working more than that, and your costs may be higher or lower, but this is just an example.
If you were to look at that and then create your prices, you might charge $115 for an hourly session ($100 being the amount that you want to make, with $15 covering your expenses). But this would be a big mistake, because as we all know, a one hour session does not mean one hour of work.
You have to have the initial consultation and booking with the client, set up your equipment ready for them, do the actual one-hour shoot, take your equipment back down, edit the photos, send the edits to your clients or maybe do a session with them to show them the results, and then order any prints they have purchased before making sure they get to the right destination. That’s a lot of work, and even more if you have to travel to and from the location where you shoot. It could be anywhere up to six hours of work to make that session happen.
Now, you see what went wrong? Six hours multiplied by $15 is $90. So, now, with your $115 price tag, you’re only making $25. You also have to factor in for downtime, because it’s unlikely you are going to be fully booked all day and every day, especially if you are a new photographer or trying to revitalise your business.
So, now you know why other photographers might charge $200 for that hour – although, if we’re being fair, most photographers should charge far more!
Remember that your CODB is not the price you should be charging. You need to factor in a salary for yourself, or you’re never going to make any money.
How to calculate easily
This might seem a bit overwhelming, especially if you’re no good at math. The good news is that there is an easier way to do things. Set up a spreadsheet, either on Google Docs or Excel, and you can use it to do the calculations easily.
Set up several columns for each of the following headings: name of the expense, yearly, monthly, weekly, daily, hourly. The formula is then simple: if you pay something annually, put it into the yearly box, then use the hourly box to create an equation which divides the yearly box by the number of hours you want to work per year. At the bottom of your sheet, create an autosum formula which adds up everything in the hourly column to give the hourly cost.
Switching to higher prices can seem daunting, but you may also be surprised to find a higher calibre of client attracted to your business. It’s essential to make sure your pricing will actually earn you money – because without it, your business will be heading for a fail.