Thursday, December 25, 2008

Seasons Greetings from Photo Business News

Seasons Greetings from Photo Business News. May your new year be prosperous and full of joy.

(Comments, if any, after the Jump)

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Monday, December 22, 2008

"I Forgot" Is Not Acceptable

At the core of the housing crisis right now is one simple fact - people were buying houses they could not afford. Now, you can lay the blame on the banks who told people what they could afford, or the elected officials who bent the bank executives over and got them to loosen credit requirements, or you can lay the blame on the people themselves.

Consumerist (Former Treasury Secretary Says He "Forgot" That People Had To "Afford Their House", 12/22/06) cites the New York Times article:

“The Bush administration took a lot of pride that homeownership had reached historic highs,” Mr. Snow said in an interview. “But what we forgot in the process was that it has to be done in the context of people being able to afford their house. We now realize there was a high cost.”
How does this apply to photography?
(Continued after the Jump)

Before you can know what to charge, you must know what it costs to be in business. If you are charging $X and you don't factor in costs like depreciation, or the fact that you will be paying between 40 and 50% of your profits to the government, the sentence "I forgot to include the cost of my cameras in my cost of doing business", or "I spent all the money that came in. I forgot that I had to pay half that to the government."

Forgetting these things is unacceptable. Here's a re-wording of the quote above:

“John Doe Photography took a lot of pride in his photography and how so many people were hiring him for assignments,” Mr. Doe said while in line for his welfare check. “But what I forgot in the process was that the business of being a full-time photographer has to be done in the context of charging more than it costs to be in business. I now realize there was a high cost that wasn't reflected in what I charged my clients.”

Do not be like a starry-eyed Doe in the headlights. Determine what it truly costs for you to be in business, and take that into consideration when setting your rates. Check out the NPPA Cost of Doing Business (CDB) Calculator to get a start.

Please post your comments by clicking the link below. If you've got questions, please pose them in our Photo Business Forum Flickr Group Discussion Threads.

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Sunday, December 21, 2008

When It Gets Slow

I spent a good portion of November being much slower than I wanted. In fact, I panicked a bit. Not the January/August panic that happens despite almost 20 years of photography that tells me that those are my slow months. It was a "oh my God the phone isn't ringing, I need new clients" panic. A scheduled rate increase set for January I was rethinking, and I gave serious thoughts to accepting lower paying assignments, and, I looked at my bank account to see how much longer the business would run if the phone didn't ring again.

(Continued after the Jump)

I started with an aggressive marketing campaign, directed at both short-term clients, as well as long term ones. I did A LOT of research (with all my spare time) on exactly the clients that fit those descriptions, and I began a targeted campaign to these prospects. (I have been espousing this solution at each of the places I have given presentations over the past few years). One of the things I haven't done a lot of in recent years is marketing, because we are at and exceeding our capacity to service our existing client base via word-of-mouth referrals.

One of the things that people in the know in marketing will tell you is that you should always be marketing, and I was concerned I'd fallen into that trap. Yet getting "cold" clients has a significant curve to it. Teaching the clients why you're worth what you are, explaining the rights issues, and otherwise just prooving yourself means a lot of effort for a potentially diminished return. This is why, for example, I wouldn't put myself in a pool of 10+ photographers a bride is considering, and when I get a client who wants me to do a site visit to the National Press Club days before the event (I have done hundreds of events there) I give pause to that assignment. These are among the downsides to "cold" clients. When you come via word-of-mouth, you're their photographer, if you're available, and when I get to an "exceeds capacity" situation, then that's not good.

As late November rolled around, a few calls came in for December, and now December assignments this year exceed our average, and last year as well. Further, January is booking up - unusual for a clientele that, 90% of the time, books a week or so out.

What I concluded as I considered why this happened, was that it was all about the election. No one wanted to do anything in DC until they knew what was happening, and the election din had died down a bit. I had thought of that when doing my research, and I looked back at the assignment data from 2000, and realized that that was bad data because that was right around when the dot-com crash was, so it wasn't really useful.

We are now back on track for a normal 2008 (overall), and, armed with many many prospects for 2009, I expect we will be growing our business once again, and we'll maintain the marketing outreach as well. Our rate increase is no longer a question mark, and January is filling up.

I know that people get this idea that doing it free or slashing rates is a solution, but I did not succumb to that. In looking at the bank account I concluded I had 3-4 months worth of operating revenue to sustain the business even if the phones never rang again, and that was before considering things like selling gear, getting a loan, or any of the other solutions. I was committed to maintaining my rates (which are a fair value) up until I shuttered the business. If you're a restaurant and you've determined that it costs $10 to make a dish that you serve for $16, just because you're slow you don't slash the price of the dish to $8 in order to get business. Doing so attracts the wrong clientele (i.e. a non-sustaining one) and then when it gets busy you can't raise your rates back to where they were. The old adage "we lose a little on each sale but make it up on volume" doesn't work for them, and it won't work for you.

One of the clients that came on during the pause was one who, for them, price wasn't a deciding factor, it was just a detail. They booked coverage of a one-hour press conference, wanted rush services and duplicate CD's and proofs, and the entire estimate exceeded $2k. Then, they added on a separate portrait session with lights for $2k+. There wasn't any debate about if the price was too high. When the call for that assignment came in, it was slow, and I thought about reducing the estimate, but I did not, thankfully.

Resist sliding backwards to a client base you might of once had but have now migrated upwards (price-wise) from. Re-group and re-think your marketing outreach. Reduce operating costs, and remain focused. Your business isn't a sprint, it's a marathon. Think long term.

Please post your comments by clicking the link below. If you've got questions, please pose them in our Photo Business Forum Flickr Group Discussion Threads.

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