A few notes about how to use the
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.
Wrong. Wrong. Wrong.
Don’t misunderstand me. I think you should absolutely be familiar with what your market will bear. However, you should also know what your production 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 and within the first few years had earned enough to start pulling money out of my business.
But, was I making enough to feed my family or even myself?
Hardly. I was fortunate that for the first few years of starting my business I could focus solely on growing it as my family didn’t rely on me for income because my husband’s salary covered our 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’ll need to know what your monthly household expenses are. For me, I already had all our accounts setup in Quicken which made it easy to pull our category spending. Each month I set aside a day to sync all our accounts, make sure each transaction is correctly categorized and then reconcile. If you aren’t currently using software to track and manage your finances you can still use this workbook. It may take you a while to gather receipts and categorize them but don’t give up. I do suggest using a tracking system going forward to make things easier. There’s 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 I saw what our household expenses were, I could easily determine what we needed for income.
Once you know what your household spending is, you’ll know what you need to make for income but you also need to know how much of that income goes to taxes before going into your wallet. You may need to consult with your accountant to see what your tax rate is or depending on your familiarity you may be able to figure this yourself.
Next, you’ll need to figure out your business expenses. This was somewhat of an eye-opening exercise for me. Although I have tracked my business expenses before, I really never realized how much fat could be trimmed from this area.
Once you have all these hard numbers, you are ready to input how many clients you want to take on and how much you want to work. It’s helpful to know how much time you spend on each type of client work before hand. I pick a client each year for each genre of photography I offer and track my time from beginning to end, including emails, time spent shooting, etc.
Once you’ve put in all this information the workbook will show you what you should be charging to make a profit. If the amount seems far off from what you are currently charging or from what your market will bear, perhaps you should look at reducing your business expenses and play around with the amount of time spend on each client to get the number closer to what is in line with your market and with what you need to make a profit.