The cost of doing business – Do you know the cost of doing business?
By Julian Claxton
For many of us, working as a professional freelance photographer is a dream come true. It is something which we have aspired to throughout our lives and set our self the goal of working in this creative industry which offers huge benefits and an exciting way of life.
However, being a creative, it’s very easy to forget you’re in business and you are the business. It’s so much more than creating art, it’s also about engaging yourself as a business person.
Understanding the cost of doing business (CODB) is an imperative element in maintaining a living as a photographer. In fact I would suggest it is as important as getting that shot or completeing a shoot successfully.
Unfortunately it’s far too easy to neglect the business elements of your job, and while this mainly applies to freelancers who are new to the industry, it is important to remember that many of the established photographers can learn a thing or two as well. After all, you never stop learning.
For many, the thought of doing math related to costings and financial figures is pretty daunting, but rest assured, it’s remarkably simple once you get your head around it.
Making a living in photography is hard enough in this current climate, by undercharging you risk damaging your reputation, the industry and also your future earnings potential. Working as a professional means you need to make a living from your work, staying in business for the long term requires tough decisions and careful planning. It may be thrilling to be paid to do what you love, but do not let the buzz of getting published cloud your responsibilities to your business.
During the first few years of my freelance career I fell into the trap of just ticking along with the business side of things. Some of the most frightening elements of working as a professional was the prospect of judging what to charge and then ultimately asking for it. I was so wrapped up in what I was shooting and trying to get commissions and new clients on board, I neglected my actual cost of doing business. Preparing quotes from suggestions online and from unions, I failed to recognise my true costs. I learnt a lesson quickly, when an assignment I had quoted for came forward. Finishing the assignment cost me far too much and I ended up losing money on the work. It was an important lesson to learn. Even with my grounding in business from my time at college, I got wrapped up in the buzz of my images, excited about the possibilities a new client could offer.
At the end of the day, if you are not earning at least your CODB each day you are shooting, you are losing money.
Working out your cost of doing business is actually pretty simple and not half as daunting as it may seem. There are a number of fantastic online cost calculators which help provide accurate figures for you to work with. I always find it easier to work out the annual expenses that are incurred, rather than working on a monthly basis. One of the best online services is the NPPA Cost Calculator. Simply input the figures and click calculate. Your CODB will be worked out within seconds.
It is naturally just as easy to work on the figures yourself, making a list of all your business expenses, including items such as studio rent, pc equipment, photographic equipment, postage, repairs, phone, web hosting, travel, professional fees, desired salary, insurance etc.
Once the expenses have been accounted for, I would suggest leaving it for 24hours. No doubt there will be some extra expenses you have originally forgotten about.
With the final figures all sorted, simply add them together and divide by the expected number of shooting days you will have in a year. Now I realise this can be somewhat of a guess, but perhaps compare last year’s commissions/shooting days and work this figure from your history. The figure you will be left with is your CODB per shooting day.
The vast majority of photographers are amazed at just how high this figure can be!
Remember though, the figure will only be as accurate as the amounts you entered. Try and be as factual as possible when working out your expenses, after all this is business!
Now you have your CODB, it’s time to work out what you should be charging your Clients. This can be based on a variety of factors, with the three largest elements being, your CODB, what the images are being used for/what value the Client puts on the images and what the shoot actually involves. You will no doubt find that quoting for jobs or renegotiating fees is far easier now, you’re not guessing anymore, instead you have facts and figures of what you need to achieve.
Your confidence will grow and this will help when talking to potential clients, allowing them to feel a sense of reassurance that you actually know what you are doing and the fact you mean business.
Once I had worked out my expenses and CODB, almost overnight I became so much more confident in the quotes I was providing. I now quote for what I believe a job is worth based on the above factors and I either get the client for an amount of money which means I can stay in business, or I simply turn the work down.
Underselling yourself or doing the work for free does not help anyone. That’s not to say I do not shoot material for certain projects for discounted fees. In fact I have a large ongoing project with a Charity which means I shoot their material for a discounted fee, but it is work that is very close to my heart and also opens a certain number of doors for other work. It is all about weighing up the pros and cons of a job. A quote from a well known photographer rings very true “competing to be the lowest price is a miserable existence”
By working out the CODB and adjusting your pricing structure you will naturally lose some clients along the way, but the chances are, the ones that have disappeared are the ones which were using you because you were cheap. Eventually your books will hopefully show a core of quality clients who respect your work, your style and judge that you charge a fair price, which they are naturally willing to pay. Obviously much of this is easier said than done, however knowing your CODB is a crucial element of staying in business.
A few pretty crucial points to remember when quoting and charging for work.
1) Make sure you get the figures, terms and conditions in writing
2) Do not shoot for free
3) Have the confidence to ask your peers for advice
4) Do not be shy to challenge or negotiate on fees
5) Keep your overheads to a minimum (do you really need that new BMW estate?)
All of this will help with moving forward, growing your business and more importantly will enable you to stay in business, trading as a successful professional photographer. By charging a fair and accurate price, you will naturally move away from the cheap “my mate has a camera and will snap some pictures” market segment and hopefully start to pick up clients that appreciate your style and work.
Julian Claxton 2012