Business Day Thursday: Getting Your Prices Right

Good Morning Everybody,

It was a long day yesterday, but everything is 99.999% ready to go –  with our “Captured By The Light” 2010 tour and I am really stoked.  I’ll be doing a separate post giving you all the details on it today – so stay tuned.

Are you ready for today’s post?  It’s a fairly long read, but I tried to really give you some insight as to how I set my pricing and what you need to consider to set yours.  This has been a HOT topic lately, so grab a cup of coffee or soda and enjoy the read.

Getting Your Prices Right

Over the last few weeks we've been discussing wedding photography during these Thursday posts. Two weeks ago I discussed how I shoot a wedding and why [link]. That post and it's comments precipitated last week's post about how I structure and sell my levels of wedding coverages [link]. The comments from that post clamored for additional info on my pricing. And that, dear DPT readers, is where we are going today.

When I first set up my pricing in the early days of my studio I was determined to offer the best value wedding services available. For my way of thinking back in those early days, that also meant being the cheapest guy in town. I also quickly learned that being the cheap guy was not going to let me pay the bills on time. Funny, we see a lot of that same kind of thinking today - just do a quick check on Craig's List for a city near you.  Here is what we see in Cincinnati, Ohio [link].

My Early Pricing Schedule

I still remember my first printed price list - I was so proud. I used graphics and everything. Things are so much easier now in our computer driven digital world. Anyway, I had three levels of pricing in my early beginnings.

Hit the “Read More…” link below for the rest of the story.

Here they are:

Level One:

36 4x5 color images in a nice TAP album. Heck, I even told my clients that they could use it as a parents' album. I was not very good selling my work back in those days. I was merely an "order taker". Ummmm... any of that going around our profession today?

Also included were 12 8x10's bound in an inexpensive TAP album. Total cost for everything - $ 119.00. Oh, and no time limitations on covering the event. I managed to crank through a whopping 60 images for the entire wedding, too. Things sure were different back then.

Level Two:

Level Two upped the ante slightly. It included 48 4x5's bound in the TAP album and 18 8x10's also bound in a Tap album. And, get this, even included "double lighting" on the job. Yes, I was using off camera flash as early as 1978 - 32 years ago! Where were you back then David Hobby? ;~)

Actually, I used the fact that I was using a more "dimensional" lighting technique to encourage the client to book into that level of coverage. Wow! That was my big attempt at up-selling. Most of my clients booked Level Two at the whopping cost of $179.00! I shot about 72 images for this coverage.

Level Three:

This was my "Big Kahuna" coverage - 72 4x5 images and 24 8x10 images bound in Tap albums. I did upgrade the large album to Tap's White Flower reversible album. looking back…I was such a classy act at the time - NOT!

With 72 4x5s, I even suggested that the couple could break those down into two collections of 36 each, buy another Tap album for $10  and have two parents' albums - what a deal! Total cost - $259.00 - truly a steal of a deal! Oh, and by the way, I shot about 120 images for the entire job.

Extra prints were $6.00 for an 8x10, $4.00 for a 5x7. and $2.50 for a 4x5 print. I did 20 weddings in 1978, over 50 the next year, hired additional shooters the next year, and was on my way to fame and fortune! Not really. The fact of the matter was that I was working my tush off, barely paying the bills, and definitely not putting any money in the bank.

Time To Get Smart

Thankfully I was encouraged to start attending PPA seminars and workshops of the most successful and notable wedding photographers shooting in those days. That list would include Monte Zucker, Rocky Gunn, Al Gilbert, and many, many others. I tell the story occasionally that I was spending more moony on seminars than most college kids were spending on tuition.

Thankfully, that was the right decision to make for me. It turned my photography and my business acumen around 180 degrees and I started making money. By 1984 we were shooting 80 weddings a year at a $2,600 average. Not bad in those early days. This was also about the time I was developing my 5 level pricing strategy which I discussed last week.

I was always told to price like Wendy's Hamburger chain. You know - single, double, and triple burgers. I basically was using that concept in my price list, but as I interviewed more and more clients, I saw the size and scope of the events was much broader than my near sighted early lack-of-experience had shown me. That’s when I decided to revamp my pricing schedule reviewing my levels of coverage and prices of those coverages.

Getting My Act Together

Last week I discussed those levels of coverages in great detail [link]. Now let's discuss how to set the prices for those levels of coverage. Your pricing needs to be determined by what your market will bear.

Back in the early days, I was the cheapest guy in town. Sure, the word got out that I was pretty cheap and did an adequate job shooting weddings. Notice I said "adequate" job. I was pretty much operating my business like the "low ball" wedding photographers advertising today.

As I advanced in my skills and talent I raised my prices accordingly. Hey, I was doing a better job so my work was worth more - better quality = higher price.

About the same time, I was learning from successful photographers how to understand my "cost of goods sold". Even today, this is one of the biggest mistakes most new business owners make, including wedding photographers. They just don't have any kind of grasp on the costs of gear, depreciation, marketing costs, overhead, staff, processing/lab fees, album fees - the list goes on and on.

Thankfully, I got my head around those numbers, and priced my coverages accordingly. If I was going to be in the wedding photography business, I was going to be profitable! That started happening in the mid-eighties. So, let's finally get down to brass tacks as they say and see if I can point you in the right direction in setting your wedding pricing.

How To Determine Your Pricing Schedule:

1- Determine what the average cost of a wedding photography is in your area. Call a few of the prominent photographers in your area explain your situation and ask their prices. Most are nice and are willing to help. Others will never give you the time of day. I know, I've been through it before. It is what it is.

2- Do a Craig's list check just to see what the rock bottom prices are in your area. Now you have the knowledge of the range of pricing. Now decide where you fit in.

3- How good are you? Can your skills support the prices you want to charge? You'll discover this invaluable piece of the puzzle when prospective clients check your web site, blog, see sample images at wedding fares and make the decision to book you for their event or to pass.

4- How well are you at getting the word out about your products and services? If you are really good at it, then that means you should be able to create a lot more traffic to your business. And, more consistent traffic means more bookings.

When you get to the place that you have all the bookings you want or can handle, it's time to raise the prices to control the number of jobs you book. The bottom line is that effective marketing is super important if you want to be successful in your business.

This is the point most are striving to be in your business. Once you have this part figured out, you are on your way to bigger and better things. Don't think you've ever arrived though, there is ALWAYS somebody nipping at your heels that wants the business as much or even more than you do! You must never stop growing and learning.

Time To Set The Prices

I've always been happy with my 5 tier pricing system. It's worked well for me most of my career. If you want to use my pricing system as a model, this is how I would do it. Level 1 should always be the highest priced coverage and Level 5 should always be the lowest. And, always sell from high to low.

Let me give you an example of my pricing in the mid eighties just to give you an idea as to how I set up my levels of coverage. Remember those prices I shared with you earlier - $119, $179, and $259? Well, in the mid eighties those prices were $450 for 20 8x8 images in an album, $650 for 35 10x10 images in an album, and $850 for 50 10x10 images in an album. Proofs WERE NOT included at this point. Thankfully I learned that by giving away the proofs, I was killing my sale.

About that same time, 25 years ago, I met a photographer named Charles Lewis .  Chuck has been an inspiration to many, many photographers over the years. You can follow his blog right here. He quite literally turned my think/reasoning and my expectations around when it came to pricing. He told me I was giving my work away considering the quality of my images. He also told me I needed to offer some bigger coverages over what I was offering at the time.

More Lessons Learned

The Cincinnati wedding market was much grander than what I had imagined. A case in point is this. I got a call to do George Clooney's sister's wedding years ago. Yes, the real George Clooney. His family lived in Cincy at that time.  In fact he went to grade school about one mile from me. The bride and her mother came in to interview me and review my work. That's how we did things back in the pre-website, blogging days. Anyway, I didn't book the job because I didn't have a coverage available that they felt would adequately cover their event.

I learned that lesson the hard way and decide to revamp my levels of coverage once again. Taking Chuck Lewis' advice, I added two more coverages to the TOP tier of my pricing scheme - $1,150 for 75 10x10 images in an album, and finally $1,450 for 100 images in a top shelf leather album. My new Level One included a casual portrait session of the couple and a 20 image 10x10 leather album in addition to the 100 wedding day images in a leather album!

It was the best I could offer and included everything for the couple. And was the highest priced album plan in Cincinnati, Ohio at the time! I thought if anybody purchased it, I was on my way to early retirement ;~). The fact of the matter is that once I started showing my super big coverages, couples started to select them! I was thrilled.

Finally, Setting The Schedule

As my reputation grew in the area and my expertise increased, I continued to market like crazy, build my vendor relationship, nurture my reputation, and raise my prices about once a year. Every time I raised my prices, my mother who was normally always the optimist, told me I was not going to have any customers left - who in the world was going to pay those prices.

She didn't see the bigger picture, and the much BIGGER parties/ events/celebrations that were happening in the Cincinnati, Ohio market. Thankfully, with my eyes newly opened, the clients kept coming and my business began to thrive. I was doing less weddings but the price difference offset the revenue and made the business much more profitable - all good stuff.

Even today, my pricing structure, while much higher than the 1980's still follows the same general increase as I posted above. For those of you looking for the numbers, here they are.

Level One: 2.5x Level Five

Level Two: 2.0x Level Five

Level Three: 1.75x Level Five

Level Four: 1.4x Level Five

Level Five: 1.0x Level Five

There you have it. It's how I've been doing things for years and it's worked for me. What I ask you to do is re-read this rather lengthy post and and take in the nuances of what I've tried to share with you today. There just simply aren’t any hard and fast rules to follow.

As Michelangelo said, "The greater danger for most of us lies not in setting our aim too high and falling short, but in setting our aim too low and achieving our mark."

Also nothing is ever etched in stone. We each have to find our own way and what works for ourselves and our clients. There are other successful photographers that take a completely different approach from mine and it works for them. But my approach has worked for me and I see no reason to change, or do I;~)

I’m working on an upcoming post entitled, “Food For Thought Friday: Are Wedding Albums Dead?”  Um...........  I’ll keep you posted.

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Hey gang, that's it for me today. I am thrilled to have our Captured by the Light 2010 Tour launch today. A lot of work by a lot of people made it happen. My thanks to the great team at Marathon Press for getting the brochures, magazine ads, website designed up and running.

And my SPECIAL THANKS to my entire team around here that manage and coordinate the sometimes infinite number of issues, responsibilities, and arrangements that must be made when putting something like his together for all of you.

Be sure to check out all the latest "Captured By The Light" tour info right here. It's going to be a blast!

How about I see everyone tomorrow, same time, same place.

Make it a great day everybody, David