Sunday, January 28, 2007

The Psychology of $1K & Pricing Your Work

If an image is worth a thousand words, what's $1K get you? Questions. How about $960? Fewer questions, for sure. $960, or $1,020 are figures that fall into a concept that is referred to as Odd Number Pricing. Now, to be specific, (as Wikipedia points out) "a 1997 research study published in the Marketing Bulletin, approximately 60% of prices in advertising material ended in the digit 9, 30% ended in the digit 5, 7% ended in the digit 0 and the remaining seven digits combined accounted for only slightly over 3% of prices evaluated." Thus, my examples that each end in zero, supposedly don't fall into this notion of Odd Number Pricing definitively. However, where this concept best applies to products sold at retail, here I am addressing the concept more than the specifics. In that, a photo fee that is $1,000 seems (to a prospective client) to be more negotiable than one you outline as $960, which seems less negotiable. I feel that if you fee was listed at $999, a client would find that silly.

I consider the quality of work I bring to an assignment, and the level of service that accompanies it, on par with the Nordstroms/Saks/Tiffany's of the retail world. There is a market for that level of quality and commitment to the client, yet there is also a market for the Macy's, Target's, and K-Mart's of the world, I just don't aspire to that segment of the market. As such, I see (and I hope too that my clients see) that the type of work I deliver is considered as "premium" or "prestige" pricing. If you too aspire to this level of work, then target that market. Past APA President Jeff Sedlik once recounted during a presentation at PhotoPlus a conversation he had with his accountant, where he outlined that he just wasn't earning enough money. His accountant's advice? Triple his prices. As Sedlik tells it, he's never regreted it, except that perhaps he regrets not doing it sooner.

Photographer's consultant, Debra Weiss, recounted at another PhotoPlus panel presentation that she moderated her experiences with Glenn Wexler about the time Wexler left Art Center in Los Angeles. Some of the more valuable advice Wexler got was "Find out what the most expensive photographer producing album covers is charing and charge the same, or more." Wexler, to his credit, followed the advice. Oftentimes, Premium Pricing applies when the risk of failure in the production of the photo (either once in a lifetime moments, costly re-shoots, and so on) means that it's worth it to pay the extra money to reduce the risk of failure.

Give great consideration to how you price your work, and position yourself in the market. Taking the right (and reasoned) approach will make all the difference in the world.

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.


Andrew Smith said...

I'm one of the higher-priced photographers around here and there was one deciding factor why I decided to operate at this price point: Someone cancelled a job because I was too expensive.

I had quoted someone for a job and, after several discussions about location and style etc, I gave them a written quote that was considerably less. The next day I got a call telling me that they were going with someone who quoted lower.

That's how I realised that I do not want to work for the cheap end of the market. When someone's deciding factor is price they will approach our business relationship with a different set of values than I will.

During the planning for that job we had gone from shooting on the staircase of a very exclusive hotel, to shooting on a beach, to shooting in someone's living room, to shooting in a village hall. It was only after a lot of persuasion that they agreed to back off from the village hall and go back to the person's living room. And then they went with the cheaper quote.

In my opinion there's no point trying to price yourself for that market. Instead I want the customer who will say: "Sure that beautiful staircase sounds good, but I want something more..."

Bill Harte said...

As a keen amateur photographer and a professional pricing expert there's a couple of things that might help with maximising your pricing.

First of all is to understand EXACTLY what your customer wants. Are they after a treasured memory of a special day that will take pride of place in their home? Or is it a functional photograph for a website? People have a way of establishing value by using something called a value equation, which basically divides the benefits of a product / service by the cost, and if the abstract equation represents value then they will purchase.

There are numerous tactics to consider as well, but here's just two...

Psychologically, people love choice, but not too much choice, as choice = work. The more choice I have the harder I have to work to find out what is the best. So offer some choice in your service, perhaps offering a finished album or framed print, or a short class for their new camera...

When you offer choice, ensure that there is a more expensive option available than your standard service as it helps customers understand the value they can have in your standard service.

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