A Photo Editor has been posting estimates lately. He has been doing this to try and help the industry–Rob is a good guy and means well. However, the estimates he has been posting are sort of working against their intention. I think he intended to show what real world pricing is like out there but, when you look at the estimates objectively, you can see how pricing is a total fiction. Some examples from the various estimates:
- 32 images for unlimited media for unlimited time in the US for $25K? That is $782.25/per image. Forever and in all media… including creative fee (because the photog used a combined fee)… Way too low.
- When you break down the number to per-image prices, you get one image for one-time use for $2500 in one estimate and one image for unlimited global use for $2500 in another. How is that possible?
We need to fix this. We need a system for pricing usage, particularly in the advertising & client-direct realms.
These days cost consultants reign supreme. They are numbers people. If we can find a system that is wholly logical, that works in the minds of the numbers people, we can still get appropriate fees. You can’t argue with facts, only the interpretation of facts. And math, well, that is the least arguable interpretation tool out there. So that is why devising some mathematical system will benefit everyone.
I have argued for tying the Usage Licensing Fee to the media costs–a percentage system and maybe even a sliding scale to take into account economies of size. The only significant downside to this is that agencies sometimes do not have these costs. Okay, that is a problem. Let’s find a solution.
Those costs are ballpark-able by anyone and that will get you closer than just guessing. For example, if the agency says the client is going to do OOH and print ads in one state, but they don’t know how much the client is spending on media, ask them if they know how much the client spent last year or what media the *do* know about.
Perfect? No. But better than wildly guessing. Better than underpricing which is what is happening far too often. Most of the estimates posted by APE are way too low.
And the License Fee needs to be separate. Other license-based industries do this–like software and music. Why? Again because it is logical and fair. A license for one year print in the US is worth $X no matter WHO the photographer is. And the next year that license will still be worth $X (plus inflation, maybe)–not some percentage of $X.
This whole thing about taking a percentage of fees for reuse came about BECAUSE the fees were combined. The clients did not want to pay for the act of creation again, so the percentage worked to take that out. Then it morphed into a way to get more for less. These aren’t stupid people, these agencies/clients! By separating fees we re-take control of our pricing and instead of defending our pricing can turn to the client and get them to explain why a license that is identical to a previous one should cost less (They can’t, not logically). One they “get” the logic, they can see it isn’t you against them, it is just math and logic. No good guys/bad guys. It just works.
Logic and rationalism and math can put us, creatives and clients, on the same page. It becomes an objective system that helps everyone achieve their goals.
Great info Leslie. So why is it that so many other consultants are recommending putting the usage and creative fee into a combined fee. Is it due to the fact that the usage fee will typically be higher than the creative fee, therefore, causing an upset reaction to the the client/agencies? Ex: Client says “why am I paying three times the price to use the image, compared to what I’m paying to create the image.”
Sure a lot of clients simply just don’t get it, then there’s a few that do. I’ve tried both methods in my estimate and I get less opposition or questioning from the client if I combine usage and creative. But then if they ask what usage would cost in the future to re-license, it’s harder for them to understand, because like you said, the client doesn’t want to pay for re-creating, thus a percentage figure is the way to go about it. But then what’s an accurate percentage of a combined fee for re-licensing? 60%? 75%? 80%? Who knows? I honestly don’t know.
Usage calculated as a % against the Media Buy is also difficult because like you also said, the agencies don’t always know of the Media Buy, and now some agencies aren’t even handling the Media Buy. Pricing photography still seems to be a grey area, and I wish that there was some standardization, but unfortunately it doesn’t look like it’ll ever be that way.
Have you talked to various Art Buyers to find out how they prefer to see the estimates? Creative / Usage combined vs. Broken out fees?
It would be great to get some more insight as to what is the preferred method from AB’s.
Great post Leslie
Matthew: I think that most people, including other consultants and even buyers, are not looking outside of what has been done to find solutions. It is very easy to say “We haven’t done it this way” as an excuse for not trying something new. What I am proposing would be a big change for the industry–both sides–but I think it will make things better in the long run.
As for my surveys of buyers, they are pretty equally split on preferring combined or split and many don’t care one way or the other as long as you can defend the pricing.
Best–
L
“So why is it that so many other consultants are recommending putting the usage and creative fee into a combined fee. Is it due to the fact that the usage fee will typically be higher than the creative fee”
It’s more likely to muddy the waters and have a higher starting point when talking about residuals, at least that is what I’ve heard…