Introduction to Pricing for Profit

Pricing yourself appropriately (and when I say appropriate what I really mean is profitably) can be one of the most daunting tasks for a photographer to undertake. COGS x A + B / mc² can leave us all remembering just how much we hated algebra, however it is still a very necessary task and I promise once you've found where you should be, it's also incredibly liberating!

Creativity... Passion... That most likely came as the easy part (it comes as pretty standard territory to us "artist" types) but operating a successful small business, well if you're like many you may not have put much thought into it. But the bottom line is this, there are 2 kinds of artists, those who define themselves and those who are defined and the reality is that those who starve have no choice but to be defined and those who thrive are able to define themselves! And it's not always about skill either! I have seen amazing photographers who lack the fundamentals in business and so find themselves trying to survive from job to job. I have also seen the flip side, photographer's who may not be as technically savvy or creatively inclined and yet their business is booming! Why is this? One gets the nuts and bolts of running and marketing a small business and the other does not.

Today, I'd like to try to help clarify just how you should and should not go about establishing your pricing. The most common price determiner is... Google (in some form or another) You know what I'm talking about, you Google a few photogs in your area check out the pricing and put yourself somewhere in the middle. While this may not be the very worst way to price yourself, it certainly isn't good either. Here are 3 reasons why:

1. You don't know the bottom line they are working from, and what (or even if) they established a profit margin on.
2. There is a really good chance that they came up with their pricing sheet exactly how you just did yours so now the circle of 'in the middle' pricing is growing but in actuality the pricing structure just keeps falling lower and lower.
3. Without knowing your numbers you can't know your profit and without knowing your profit (or loss) you won't know what adjustments need to be made until it's too late!

So, what should be considered when establishing your pricing? You need to know your Cost of Goods Sold or COGS (how much did it cost you to hand them that 8x10?) Are you considering the following:
1. Retouching time
2. Shipping
3. Packaging (Bag, Tag, Tissue, Box)
4. Time for assembling packaging (not just a bow)
5. Hourly wage for your time.
6. Cost of Print

Okay. Let say you have figured out all of that and you now know that your COGS is... Is there a special formula for marking up the product? I'd like you to think of 3 tiers for pricing...

Top end of market is 20% COGS

Midpoint would be 30% COGS

Low end of market 40% COGS

Should you ever go below 40%? No! Don't go below 40% {period!}

If you feel you have to be at 40% in order to sell your products you need to come up with a different solution. Either you need to cut down your cost by quicker retouching, cheaper packaging or a different print lab but one way or another you're going to want to find a way to drive down your bottom line.

I hope you have enjoyed this little bit of insight into pricing. I will be going into much greater detail on pricing for profit at the Seattle Building the Biz Workshop, August 20th and 21st.