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Tom Zimberoff: Pricing Photographic Services - Part Two of Six

By Tom Zimberoff, © 2011 Tom Zimberoff - All Rights Reserved

A Shift in the Dialog About Value

You have learned what a price is, if not - yet - how to come up with one. With that in mind, the first thing to understand about pricing photography is that you're not really pricing photographs at all. In fact, you should already know that a commercial photo business creates revenue by licensing the intellectual property rights it owns, not by selling photographs.

Indeed, insofar as photographers hope to maximize their revenues as much as possible, the dialog amongst all of you needs to shift away from the concept of "valuing your work" to concentrate instead on pricing for profit.

Sure, your work is valuable. There's no question about that. But while it's easy to assert a principled belief in the value of your work, it's not easy to put your finger on what that value is exactly. It's hard to put a value on value. More important and to the point, it's not up to you to determine the value of your work. That's for your clients to decide.

Value can be characterized only by what buyers are willing to pay for the use of your images, not by some ill-defined, personal notion of what you think they are worth.

Besides, you can increase the likelihood that your work will be valued more highly by your customers - and that they will be willing to pay higher prices - if you simply pay close attention to their needs and desires. That is a classic precept of marketing. There is no new disclosure in this way of thinking, no revelation or revolutionary theory. The topic of value should be relegated to a discussion of marketing. It does not belong in a discussion about pricing.

The Foremost Principle of Pricing Photography

Having put any misinterpretations of value out of the way, and now that you know not to rely on surveys, there has to be some other way to help you put a price on what you do for a living. But even if you consider the time it takes and what it actually costs to shoot a photo assignment, and if you include some less-than-precise measurement for your talent and experience, there must still be a fundamental, more economically sound criterion that equals, or even outweighs, all other factors for determining a total price. There must be some kind of yardstick for monetizing your pictures because it plays such a significant role in your business model. Conveniently, there is such a yardstick. It is, of course, copyright.

How other parties wish to use your intellectual property is the most important criterion for monetizing your work. Copyright allows you to control both the use of IP and its price by parceling out publication rights piece by piece in exchange for incremental payments. Copyright is the most significant tool you can use to put a dollar sign on your work. Therefore, usage, supported by copyright law, is the foremost principle of pricing for commercial photography. Everything else is frosting on the cake.

Billing in Increments of Value

The story suggests that the price you charge is hardly determined by how much time you spend behind a camera. Obviously, your time merits some degree of consideration. But it cannot be the most important criterion in pricing, let alone the only one. So what else determines the price of published photographs?

Again, only buyers can determine value; not sellers. Based on that principle, it is still the photographer who determines price. Since a copyright license defines the usage rights granted to a buyer, each license can be apportioned incrementally to correspond with a buyer's specific and actual licensing needs. Instead of a prix fixe dinner, offer them a menu à la carte. It will establish a relationship between appetite and budget. That means a separate fee may correspond to each separate use itemized on an invoice, just like the food and drink itemized on a restaurant check.

The same principle applies when miscellaneous uses for the same photo(s) are billed consecutively over an extended period, perhaps necessitating several subsequent invoices (See Footnote 1). Regardless of how many invoices a buyer receives, or when they are received, the principle of billing in increments of value (value to the buyer, that is) makes it possible for photographers to put a price on their work.

By separating out usage rights, it becomes clearer to see what else can be billed, such as the amount of production time spent on the job plus an assignment fee; the latter being predicated upon personal reputation. A separate fee for usage right points out the relative significance of one part of a price to another. In other words, if you can determine what the licensing component is worth to a buyer, you'll have a better handle on figuring out what to charge for the other parts. I refer to supplemental costs for services that have nothing to do with how your clients actually use your images. Moreover, billing for the incremental uses of photographs keeps costs down for the benefit of buyers without stifling your profitability. Because, if they had to pay up front for every conceivable use, the rice would be prohibitive. Fees predicated on the incremental apportionment of usage rights make bottom-line prices affordable. That's a positive fact you can bring up when delivering your own marketing message to buyers.

Value to the Buyer

The greater the extent of usage demanded by a buyer, the greater is the value of that usage to a buyer.

There are five criteria for determining the extent of usage (not to be confused with the five criteria used to determine competitiveness, described later):

1. Duration
   The length of time a license applies; e.g., the right to publish for one year, six months, or only for one-time, etc.
2. Frequency
   How many different times an image is published; e.g., one time in each of twelve separate issues of a single magazine, or up to seventy-five advertising inserts in eight completely different magazines, etc.
3. Prevalence
   How many different places, formats, or versions of media in which an image is published; e.g., in magazines and newspapers only, outdoor billboard display, exclusively on a Web site, broadcast on television, or all of the above, etc. The size of circulation, or number of printed pieces, determines prevalence too.
4. Size
   How large an image is published, relative to the size of the media in which it appears; e.g., it's logical to charge more for photos that dominate an ad on a printed page, computer screen, or billboard and to, perhaps, charge less for one that merely occupies a small percentage of space or shares that space with a number of other images. In the latter case, it may be merely supplemental to other pictures appearing in the same ad.
5. Exclusivity
   The rarity of an image

Now that you appreciate how pricing depends in large part upon usage, and how usage is arguably the biggest variable involved in pricing, do not lose sight of the fact that other criteria are involved.

The Criteria for Pricing Photo Assignments

Price is influenced by eleven factors, broken out into four groups:

Group One: Usage Fees

1. Duration

2. Frequency

3. Prevalence

4. Size

5. Exclusivity

Group Two: Creative and Production Fees

6. Reputation
The photographer's experience, the degree of responsibility accompanying an assignment (its importance to the buyer), unusual or special skills required, a unique style of execution, perception of exclusivity

7. Complexity
Ancillary services and production time necessitated by client for reshoots, consultations, location scouting, casting models, travel, postponements, editing, set construction, etc., and, perhaps, an unusual level of anticipated difficulty in execution, even the dangerousness of an assignment

Group Three: Expenses

8. Direct Costs
Job-related, billable expenses, or what the photographer pays for freelance assistant and stylist fees, messengers and shipping, film and processing, permits, travel, props, studio or location rental fees, insurance, and photo- equipment rentals, etc. Don't forget your own salary!

9. Mark-up
An additional fee, not always singled out for the client's perusal, but sometimes merely included, or imbedded, within each line-item expense; derived by multiplying each separate production cost by a percentage rate you and your accountant determine will sustain the profitable operation of your business

10. Overhead
The indirect cost of doing business; while not itemized, it influences both creative and production fees; a constituent factor of each fee, determined by pro-rating annual operating costs into each assignment

Group Four: Taxes

11. Sales and Use Tax
Percentage rate imposed by municipal, county, and state governments; applied to fees or expenses or both, as applicable

Note: The total of items 1 – 7 are often represented simply as an aggregate "Creative Fee" on the face of an invoice.

The Responsibilities of a Photographer on Assignment

This is what you get paid for:

• Strategic Planning
  • Working with Clients
  • Administrative Oversight
    • Hiring and Supervising Contractors, Vendors, Models, etc.
    • Scouting and Booking Locations or Studios
    • Securing Insurance, Supplies, and Travel Accommodations

• Execution

• Creative Problem-solving
  • Directorial Expertise
    • Working with People
  • Technical Expertise
    • Lighting & Camera Gear
    • Special Effects
• Delivery of Digital Images
  • Editing and Archiving

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Footnote:
1) In this example there is not much difference from the way you would invoice a client for a stock photo, except in this case the client also happens to have commissioned the photos in the first place.

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A note from the Shakodo Team: This is the second installment of six guest posts by Tom Zimberoff, the fifth guest blogger in our series of industry experts sharing valuable advice with the photographers community.

Bio: BIO: Tom Zimberoff, is a classically-trained clarinetist (USC School of Performing Arts) who nevertheless began a career as a photojournalist covering the Rock music scene in the 70s. Subsequently, he turned his attention to other topics and, for twenty-six years, traveled throughout the world on assignment for many popular magazines as a member of the Sygma photo agency and, later, Gamma-Liaison. His images of celebrities, scholars, artists, scientists, business leaders, and politicians, including two sitting American Presidents, were published regularly worldwide, including covers for Time, Fortune, Money, People, and other periodicals. Later, as an accomplished commercial photographer, his work was featured in the annual reports and advertising campaigns of many Fortune 500 companies.

Zimberoff is known for his portraiture, with examples collected by the National Portrait Gallery in London, the Los Angeles County Museum of Art, the San Francisco Performing Arts Library & Museum, the Eretz Israel Museum in Tel-Aviv, and the Corcoran Gallery of Art in Washington, DC, among other institutions. His first two subjects were Marx and Lennon - Groucho and John, that is.

Zimberoff is an authority on the topic of applied business administration in commercial photography. He is the author of "Photography: Focus on Profit" (Allworth Press), the first college textbook about the business side of photography. He has also contributed articles to the leading photo-industry trade journals. Zimberoff also created PhotoByte®, the leading business-management software application for commercial photographers.

Zimberoff was born in Los Angeles in 1951. He was raised there and in Las Vegas, Nevada. "Portrait photography," he says, "is a predatory sport. I stalk my prey like a big-game hunter, look for a good clean shot, and try to avoid unnecessary wounds. I hang their heads on a wall to admire like trophies."

After a ten-year-long hiatus from shooting pictures to pursue other business interests, Zimberoff picked up his cameras once again to illustrate his best-selling two-volume work entitled "Art of the Chopper" (Bulfinch Press) as a tribute to his decades-long affinity for custom motorcycles. He has most recently curated several exhibitions of the motorcycles featured in his books along with his portraits and documentary photographs of the artists who created them. Installations include the William J. Clinton Presidential Library, the Appleton Museum of Art, and the Kansas City Museum at Union Station.

Zimberoff lives in San Francisco, California.

Tom Zimberoff's Web Site:
http://www.zimberoff.com