What is my real cost of doing business:
It is unbelievable that it took me literally 18 years in my business to quit ignoring what my business costs are, and compare it to what my business makes. This is the most important thing I wish someone would have helped me realize when I started this crazy journey. I ask my fellow photographers the question of what their business costs to run all the time, and the frazzled look in their eyes says it all. They have no idea…and that my friends is the reason for this blog post. If I can help one person come to the realization of the importance of this fact, then I am a happy guy.
The most common thing I see in the photography industry, is people undervaluing themselves and their work. Trust me…been there, done that, NEVER going back. Photography, while probably one of the easiest businesses to start, is quite possibly one of the hardest to make successful.
Every person that heads out to Costco or shops on Amazon thinks “I have a professional camera now, so I should be become a photographer!” But let me point out the obvious…there is the small problem, that there is so much more to running a photography business than just owning a camera. I mean, just because I have an oven in my house doesn’t mean I can become a world class baker. Trust me, no one wants that…although I make a mean chocolate chip cookie.
My first camera was a gift from my brother, and you better believe in my mind I was a pro from that day forward. If you asked 15 year old me, I had all the tools I needed to make millions. Little did I know what I was getting into for the rest of my life. Now, times are completely different and I know that every time I pick up my camera, if I don’t make at least $13 for just the use, I’m paying someone else to be their photographer. So here are a few little equations to help you understand the cost of your equipment and how $50 mini sessions really don’t cut the mustard, unless you’re selling prints after the session is over.
Here is a little math for you:
V = Equipment Value – what you paid for it or what it would cost to replace
S = How many sessions can you shoot before it needs replaced
(This is determined by the average shutter life divided by the number of shots you shoot in an average session. Example 200k shutter life divided by 500 image per session is 400 sessions)
CPS = Cost per session
V ÷ S = CPS
So I shoot with a 5d mk III and when I bought it I paid $4000. I typically shoot around 500 images per session and the 5d mk III is rated for about 150,000 actuations.
$4000 ÷ 300 = $13.33
This same concept will work for lenses and other equipment as well.
Now lets talk about some other numbers. The true cost of doing business. This is vitally important to know to be successful in this industry. The most important aspect is being aware of where your money is going and where it is best spent. Often as photographers we try to do everything on our own and we spend hours, even days, working on the smallest projects that we can buy for just a few dollars from many online resources.
The general idea here is you need to account for your own salary as well as all of your expenses. Now keep in mind if you use your home internet for your business, then that is really an expense that needs to be added in. Too many people think we already have internet so it doesn’t cost me anything. Same goes for cameras. I hear clients say your camera is paid for so it doesn’t cost anything. WRONG!
So how much would you like to make in a year? An extra $10k, $30k, $100k? Lets just say you wanna make an extra $20k to help with the family bills. Here is another equation
D = Desired Monthly Salary ($20K ÷ 12)
E = Expenses Monthly (This includes yearly expenses divided by 12)
H = The number of hours you want to work a week (x4 because there are 4 weeks in an normal month)
(D + E) ÷ H = Your Hourly Cost of doing business
My hourly Cost of Doing Business is $82/hr and I re-evaluate that often to make sure I am aware of my true cost. This really helps me to make decisions when I sit down to design something or build a website. I have to ask myself is it cheaper to pay someone to do it for me or to do it myself? Here is a perfect example. I can spend 3 hours trying to design a new graduation announcement that looks amateur at best, or I can just get one for $20 at Jamie Schultz website. By doing the latter of the two options, and not wasting 3 hours of my time x $82/hr, I just saved myself $220.
Once these numbers made more sense to me, and I realized it’s not worth it to effectively pay money to shoot someone’s pictures, I had the confidence to command a higher price.