The Portal is coming!
Pricing.
I get a LOT of emails with questions about this, Hmmmm…
Wow. This is one you could really struggle with. You know I want to say ‘make a plan’, but you need to do more than that for pricing. I think people go about pricing a little backward. Let me explain what I mean, and then I want you to think about a few things before we actually go about pricing YOU.
I think what most people do, when starting in a new business venture, is look around and see what others charge. Good start, but JUST a start. I struggled with this, too. I looked around at different studios, and thought, ‘we’re as good at them, so we could charge that much.’ ‘we offer more than them, so we could charge a little more.’ Let me just say, that this worked for a while, but there is a HUGE problem with this.
I’m pretty sure that you are probably doing something similar… you see Studio A and you feel you are ‘better’ (offer more, have more experience) and so you feel you should charge more…. You see Studio B, and they are bigger, more experienced, and ‘better’, and so you feel you need to charge less. Well, I’m going to suggest that this may work, but it is too random. Pricing is not random, it’s math. There is no one magic formula, and prices can vary, and you can still be profitable, but you need to do some thinking.
While we priced ourselves with our competition in mind, at first, at the end of the year, when we balanced our ‘books’ there was very little left over in the form of profit. Bummer. (does this sound familiar?) Oh, and we had a rather high booking rate. (We must be really good, if people all want to book us!) This is great, at first. You need to build your confidence. But, once you know you’re good enough to get hired, you need pay the bills. And when there is low profit after lots of work, something needs to change.
Then we did something different…. And this is where you need to go off and think a little bit…
How much time do you spend on the ‘average’ wedding? Six hours? Eight hours? 12 hours? After all, a lot of you are pricing your coverage by the hour. May I suggest that you probably spend more like 40 hours? You need to now get out a piece of paper, or a napkin, and a pencil, or pen, or crayon, and write some things down….
How long is your first meeting with a ‘potential client’? an hour? (1)
How long do you consult with a new client – calling them, invoicing them, etc? (2)
Do you include an esession? How much time do you spend shooting it? (3)
How long do you spend editing it? (4)
Do you attend the rehearsal? (2)
How many hours do you spend shooting the wedding? (10)
How many hours proofing the wedding? (8)
How many hours to deliver the proofs? (2)
Do you include a pre-design? How long did it take to create? (10)
Did you invoice the client? Speak to them on the phone? Make any extra slide shows? Put their images on line? (5)
This is really short list and this is just your time…
(as an aside, this is why our 'coverage' is unlimited. The shooting takes a relatively small part of the whole pie.) There will be a lot more on this coming when I discuss adding value with out increasing your cost - totally different post!
If you just do the few things I listed, and it takes you the number of hours I estimated, that is 47 hours. For one wedding. If you are charging $1000, you will be earning $21/hour. Hmmmmm…. You might think, that’s pretty good! Unless you need to pay for ANYTHING. If you offer any tangibles, AT ALL, that number is about to get pretty small…
Do you include an album? What does that cost you? $200? ( this is a very conservative estimate)
Do you pay taxes? (you had better be, if you are a legitimate biz) 15% - right off the top.
Do you include printed proofs? $100
With those few things, you are now at $11.70/hour. Do you ‘give’ away anything else?
Did you buy any equipment, like a camera? Gas for your car? Insurance? Website? Advertising? (ok – now you’re loosing money)
In order to move on to the next step of actually pricing your worth – you need to go off and think about all the things that you are either spending time doing, or paying someone to do for you. AND WRITE IT DOWN!! ALL of it! Be honest about how long things take you, not how long they WISH they took. (That will be another post, too!)
I wanted you to get your feet wet here, so that you could see some actual numbers, and how quickly those profits get eaten up. It’s a SHOCK the first time you consider it all. Don’t be discouraged. Knowing how much it costs to be in biz isVERY powerful, and now you’re on the right track.
So, go do your homework… and the next time I will give you some more things to add to your formula. This is just one piece of the puzzle. You also need to consider a few other things, including what someone is willing to pay.
By the time you are finished with this homework, I hope to have the next PORTAL open. I’m thinking that this might take you a few weeks, but, I will get the BUSINESS PORTAL open as soon as I can, and will continue adding to it as we develop YOUR pricing structure.
BY THE WAY!!! We are having a Business Workshop immediately following the ONE LIGHT WORKSHOP!!! That’s right! We are hosting the one and only, Zack Arias – it will be in Pittsburgh on March 6th and 7th. Separate from that will be our Biz Workshop – more details to come on all that!!!
Oh! and challenge me! Questions? Comments?
Thank you for your patience while I get things up to speed here. I'm learning as I go!
Warmest Wishes,
~robin~
I get a LOT of emails with questions about this, Hmmmm…
Wow. This is one you could really struggle with. You know I want to say ‘make a plan’, but you need to do more than that for pricing. I think people go about pricing a little backward. Let me explain what I mean, and then I want you to think about a few things before we actually go about pricing YOU.
I think what most people do, when starting in a new business venture, is look around and see what others charge. Good start, but JUST a start. I struggled with this, too. I looked around at different studios, and thought, ‘we’re as good at them, so we could charge that much.’ ‘we offer more than them, so we could charge a little more.’ Let me just say, that this worked for a while, but there is a HUGE problem with this.
I’m pretty sure that you are probably doing something similar… you see Studio A and you feel you are ‘better’ (offer more, have more experience) and so you feel you should charge more…. You see Studio B, and they are bigger, more experienced, and ‘better’, and so you feel you need to charge less. Well, I’m going to suggest that this may work, but it is too random. Pricing is not random, it’s math. There is no one magic formula, and prices can vary, and you can still be profitable, but you need to do some thinking.
While we priced ourselves with our competition in mind, at first, at the end of the year, when we balanced our ‘books’ there was very little left over in the form of profit. Bummer. (does this sound familiar?) Oh, and we had a rather high booking rate. (We must be really good, if people all want to book us!) This is great, at first. You need to build your confidence. But, once you know you’re good enough to get hired, you need pay the bills. And when there is low profit after lots of work, something needs to change.
Then we did something different…. And this is where you need to go off and think a little bit…
How much time do you spend on the ‘average’ wedding? Six hours? Eight hours? 12 hours? After all, a lot of you are pricing your coverage by the hour. May I suggest that you probably spend more like 40 hours? You need to now get out a piece of paper, or a napkin, and a pencil, or pen, or crayon, and write some things down….
How long is your first meeting with a ‘potential client’? an hour? (1)
How long do you consult with a new client – calling them, invoicing them, etc? (2)
Do you include an esession? How much time do you spend shooting it? (3)
How long do you spend editing it? (4)
Do you attend the rehearsal? (2)
How many hours do you spend shooting the wedding? (10)
How many hours proofing the wedding? (8)
How many hours to deliver the proofs? (2)
Do you include a pre-design? How long did it take to create? (10)
Did you invoice the client? Speak to them on the phone? Make any extra slide shows? Put their images on line? (5)
This is really short list and this is just your time…
(as an aside, this is why our 'coverage' is unlimited. The shooting takes a relatively small part of the whole pie.) There will be a lot more on this coming when I discuss adding value with out increasing your cost - totally different post!
If you just do the few things I listed, and it takes you the number of hours I estimated, that is 47 hours. For one wedding. If you are charging $1000, you will be earning $21/hour. Hmmmmm…. You might think, that’s pretty good! Unless you need to pay for ANYTHING. If you offer any tangibles, AT ALL, that number is about to get pretty small…
Do you include an album? What does that cost you? $200? ( this is a very conservative estimate)
Do you pay taxes? (you had better be, if you are a legitimate biz) 15% - right off the top.
Do you include printed proofs? $100
With those few things, you are now at $11.70/hour. Do you ‘give’ away anything else?
Did you buy any equipment, like a camera? Gas for your car? Insurance? Website? Advertising? (ok – now you’re loosing money)
In order to move on to the next step of actually pricing your worth – you need to go off and think about all the things that you are either spending time doing, or paying someone to do for you. AND WRITE IT DOWN!! ALL of it! Be honest about how long things take you, not how long they WISH they took. (That will be another post, too!)
I wanted you to get your feet wet here, so that you could see some actual numbers, and how quickly those profits get eaten up. It’s a SHOCK the first time you consider it all. Don’t be discouraged. Knowing how much it costs to be in biz isVERY powerful, and now you’re on the right track.
So, go do your homework… and the next time I will give you some more things to add to your formula. This is just one piece of the puzzle. You also need to consider a few other things, including what someone is willing to pay.
By the time you are finished with this homework, I hope to have the next PORTAL open. I’m thinking that this might take you a few weeks, but, I will get the BUSINESS PORTAL open as soon as I can, and will continue adding to it as we develop YOUR pricing structure.
BY THE WAY!!! We are having a Business Workshop immediately following the ONE LIGHT WORKSHOP!!! That’s right! We are hosting the one and only, Zack Arias – it will be in Pittsburgh on March 6th and 7th. Separate from that will be our Biz Workshop – more details to come on all that!!!
Oh! and challenge me! Questions? Comments?
Thank you for your patience while I get things up to speed here. I'm learning as I go!
Warmest Wishes,
~robin~
posted by Busy Bee at 7:55 AM
4 Comments:
Robin,
You totally ROCK!!!!!
Thank you for doing this! I am looking forward to other entries!
- Neal (OSP)
As always Robin, thank you for sharing your advice and wisdom so freely. I really appreciate it!
Amen! We just did this a couple months back and we're still in our first year! Good thing we figured this out early. I just wish more people understood the amount of real time it takes to fully work a wedding. Preach On Sister!
Wow! You are amazing. Thanks for spelling all this out for the rest of us!
Post a Comment
<< Home