It’s a $10K job so it’ll cost you (the client) $7K

I’m hearing that a lot of photographers are getting busy again. Huzzah! That’s fantastic! But pretty much every one of them has had to lower his/her prices. That sucks.

Sadly, the title of this post is a reality and not just in photography. In 2007 if you could get $10K for a project, you might be able to get $7K today. Ugh.

Architects and designers and illustrators and writers… well, pretty much every traditionally creative discipline has been forced into lowering prices. There are many causes for this but really, none of that matters now–leave that to the economists and instead focus on your business looking forward. What matters to you is how you can do a $10K project for $7K today, so that you can stay fiscally competitive.

You can’t just drop your rates. Unless you pulled your rates out of your butt in the first place, you need to make a certain amount of money in order to be profitable and you based your rates on that. That number should be a function of your cost of doing business plus profit. And, since profit is not an option (remember no profit = no business!), this means you need to look at your numbers and see what you can do in all areas.

Start with production costs, always. When you look at how you have been producing jobs, where can you cut back without sacrificing quality? This is tough to do often because many photographers are already shooting with too-small crews.

You also need to think about where you can cut back on shoot-related creature comforts, but without making your client or your crew suffer on set. For example, can you work out a deal with someone to provide craft services for your shoots–all your shoots, exclusively for a year–at a lower rate? Maybe they get to advertise on the set (signs like “craft services provided by Betty’s Eats 213-555-1212”) more than before? Buy your drinks in massive quantities at Costco if you aren’t already. Try to work out a deal on other rentals like tents, RVs, etc. like with the craft services.

Check also that you are billing for items that the client expects to pay for, like studio rental and pre-production costs like scouting fees and assistant travel days. Even if you own your studio, you should bill a fee for its use and you should never expect (or, worse, demand) that an assistant pay her/his own way for a project. Billing for these items is common practice and a place to make some income. These items on an initial estimate show that you are thinking like a professional who understands production and they also give the client a place to ask you to cut without harming your bottom line as much.

The last thing you should look at is your profit, unless it’s been really unreasonably huge. Your net profit, I mean after paying out everything including yourself, needs to be somewhere in the 6-10% range to have a company that sustains itself and has slow (sustainable) growth.

In order to know those numbers, you need to pay yourself a salary and I know many of you do not do that. But you need to. Figure out how much you need to live on and set your salary high enough to cover your personal nut but not so high as to force your company into bankruptcy. Live by that number.

By the way, if your business does great, you can always give yourself (and your best crew!) a bonus at the end of the fiscal year.