Are you a wedding and portrait industry creative struggling with pricing your services? You’re not alone. I’m here to tell you that there is a systematic and strategic way to price yourself and be profitable.
When I first started my photography business I had no idea what to charge for my services. I did what most everyone else does in the creative industry. I scoured websites of fellow photographers to see what the range of pricing was and then set my prices based on what I valued my work and services to be.
I wasn’t considering what I needed to make for income or what my costs would be.
Don’t get me wrong. You absolutely need to know what your market will bear and what clients perceive as value. But, you should also know what your costs are for each client, make sure you are making enough to cover those costs, pay your taxes and at the end of the day pay yourself a livable wage.
During my first year in business, I was able to cover my costs, pay taxes and make a small amount of money. And because I am a spreadsheet nerd, I tracked my time spent with each type of client, my overall expenses but was I making enough to pay myself a livable wage and support my family?
Hardly. I was fortunate that for the first few years of starting my business I could focus solely on growing it as my husband’s salary covered our monthly household expenses. But, I quickly realized that I needed a more formal way to check in and make sure I was achieving my goals, not just waiting until the end of the year, seeing whether it was a good year or not and then paying myself if I had anything left over. With this in mind, I developed the Profitable Pricing Workbook to keep me on track. There are a few steps involved in using the workbook and I will outline them briefly below.
First, you need to know what your household needs are for income. If you don’t already know this information, you can track your monthly expenses for a month and get an idea of what is needed then adjust as needed. I use financial software to track all our accounts and spending so I could easily pull this information. There are many options for financial software such as Quicken, Quick Books, Mint, You Need a Budget, Fresh Books and even free excel spreadsheets although you’re going to have to do a bit more work with a spreadsheet.
Once you know what your household expenses are, you can now see what you need for income. This spreadsheet takes into account tax rates so you’ll need to figure out what those are too. This will work nicely for Sole Proprietor Limited Liability Companies that make less than $118,500 annually. The IRS taxes amounts above $118.500 differently and also different types of Limited Liability Companies. It is best to check with your accountant to for an accurate tax rate.
Figuring out how much of your gross pay goes to taxes and setting it aside will also help when tax time comes because you have been fiscally responsible in your planning. The worksheet takes your gross income, tax rate and figures out what you should be charging to make enough to cover your household expenses.
The final step of the worksheet once you have gathered all the numbers and input them, allows you to play around with how much you want to work, how many bookings do you anticipate and will adjust according to what your household needs are. Perhaps you only want to work part-time but realize after doing the numbers you aren’t covering your business expenses, let alone your household expenses. You would need to make some decisions to either cut out some business expenses or increase the amount of time you work and/or your bookings.
Obviously, if your end results show you should be charging an amount that is outside what your market can bear, then you need to evaluate and make some adjustments so that you’re in line with what your market can bear.
I hope you find the Profitable Pricing Workbook to be helpful and please reach out if you have any questions along the way![et_bloom_locked optin_id=optin_2]
Download the FREE Profitable Pricing Workbook!
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