This is a guest post by Andrew “Fundy” Funderburg, the creator of the Fundy Album Builder and Fundy Album Proofer. Please check out the free trials available at http://www.fundysos.com. If you were looking to design albums yourselves, I highly recommend Fundy's products.
I've seen many forum posts on pricing prints for photographers and they usually all end badly. There are those that defend the high price points due to labor, business costs and what the market will bear. And those defending the low end price points, focus on auto-fulfillment, and what the market is willing to pay.
So who's right? Well the answer is simple, both price points are correct?
How can this be? Well, ‘correct' pricing is based only on two things.
1. What the market is willing to pay for something.
2. That a price is profitable according to retail pricing rules.
Let's take a closer look. It's pretty easy to find out if people are willing to pay a certain price for something. You simply throw it out there in the marketplace and if people pay money for it, then it is a viable price. You can move the price point up and down. When it goes down, more people buy it, when it goes up fewer people buy it. Pretty soon, you find the happy price point, quite a few buyers at a profitable price point.
What is profitable? Well, according to the Professional Photographers Association of America, you'll want to have at least a 35% cost of goods mark up to be profitable – that is, pay your bills, run a profit and grow your business. A 35% cost of goods, simply means that for every $1.00 you make, it costs you 0.35¢. If you sell ice cream on the street corner, and you buy it for 0.35¢ and sell it for $1.00, then you have a 35% cost of goods.
To get retail pricing of goods, simply take your costs and divide by the percentage (35%=0.35). So, if something costs you $10 to create for your client:
$10 ÷ 0.35 = $28.50
We'll use this simple formula to prove both arguments are correct. We did this recently in a speaking engagement we had at ProDPI headquarters. We were using our new pricing program, Prosper™ during the demonstration.
Here in our settings, we have our cost of goods set at 25%, a good COG for an established photographer. We've also estimated our hourly rate in our studio for the work we do.
Now, let's look at two scenarios. The first being a photographer who is selling art prints for a portrait sitting or of the bride and groom in a posed shot. This is a special order, the photographer is going to retouch the print, have it shipped to the studio and the bride or groom (probably the bride) are going to come in and pick it up.
As you can see we've calculated that we spend 15 min. finding, opening and retouching the image. We've set aside 10 minutes contact time with the client on the phone and 10 minutes time meeting the client in the studio to chat and $5 for shipping to our studio. Prosper™ has done the math for us, and calculated all of our costs and divided by 0.25. The total is $57. I'm going to just round that off to $60. So, you can see that with this business scenario, $60 for a 4×6 is the proper amount. And if the photographer educates the client about the quality of the print, it should sell.
As you can see, quite a bit has changed here. In this scenario, we've used numbers for an auto-fulfillment. This photographer shoots the wedding, does minimal batch retouching with an action and uploads the whole wedding for anyone to buy. After that, they are done. We've added the price of the print to the calculation and allotted 5 minutes for a quick call or email if the client asks about the delivery of the print. As you can see, Prosper™ has done the math for us and come out to $7 for a retail price on this print. I've rounded down to $6 for the purpose of this discussion.
So, as you can see, depending on how your run your business, $6 or $60 can be the right price for a 4×6 print. It all depends on how much work you are putting into the final product. The only mistake you can make is creating a fine art print and pricing it like an automated fulfillment print.
The simple matter of fact is, if you know your cost of goods then calculating your pricing is easy Junior High School math.
Prosper™ is a product of Fundy Software. You can find out more here about a free trial and the limited time pricing special happening right now.
Seshu
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Since photographers also collect a service fee generally in advance of any proofing- they need to decide if part of that service fee covers part of the cost of delivering the product (such as time spent meeting client, proofing w/ client, editing images for proofing, uploading, etc), or if it is completely separate from product fulfillment.
Okay, this confuses me quite a bit. Imagine charging 60$ for every 4×6 print. People know that they can get a print for 15 cents. Yea you spent the time creating, calling, fulfilling, and everything leading up to the entire moment.
What doesn’t get covered here is a couple ordering 2 prints. What if they ordered 2 4×6 prints? Is it still $60 each? The print is ready, no extra time or anything is required to print 2 vs 1.
I don’t like the idea of trying to make so much cash off the prints. 10 mins to find load and retouch an image is probably close to running a batch action. The amount of retouching is pretty minimal. But that is besides the point.
Pricing could look totally different and this is something I have wanted to talk about and list on my site. For the sake of this post, I’ll use the same figures:
1 4×6 print: $60
5 4×6 prints of same image: $65
* for sessions do you process the set anyways to show the client? If so you could go behind the “same image” and just say 5 4×6 prints is $65.
10 4×6 prints: $70
20 4×6 prints $85
4×6 of all images $100
I Still want to think more about this but I’d love to hear if every 4×6 should cost 60$ – ie 10 4×6’s then costs $600.
I think we photographers can offer way more value than charging an arm and a leg for prints. It’s such an old model now?
Scott,
It depends on your goal. If I look at the pricing model you’ve laid out, that would encourage clients to order a package of 4×6’s and go on their way.
What if we made $100 per portrait client? How long would we be in business? Not very long.
The goal is to price what it takes to stay in business. My goal is that clients won’t order any 4x6s and move to larger wall prints and albums.
Again, this is my whole point. Pricing for profitability is essential. How can we stay in business at 20 4×6 prints for $85?
Fundy
I was using those numbers as something general.
It’s like creating an album that costs $1200 but the second album would only cost $400 because the massive amount of time is complete. If one print, again for example the 4×6, is 60$ and it’s now finished. The second print of that image shouldn’t be another $60.
Of course pricing for profitability is essential but what if you’re pricing provides no value for the customer any more? The goal of steering clients away from a print options is, of course manipulation. No manipulation in a full out negative way but you have to ask why 4×6’s are important. I believe they are.
Do you price the Toyota Yaris at 3x the cost because you really want the customer to buy the Lexus? The Yaris is so overpriced that it just makes sense to buy the Lexus? Profitability would be nicer.
In my response, I also didn’t say that 20 4×6 prints would be an ideal sale then. Like you, there would still be a desire to also provide the customer with something larger for home or office and a nice book/album.
Customer experience and adding immense value is essential. It leads to profitability. Charge for the first print to be profitable but add value with a few more copies of that same print for an “upsell.”
I’m still getting started but I’ve had such internal resistance. I don’t see the astronomical print costs for clients to flow in the direction things are going now.