Blog PostTom Zimberoff: Pricing Photographic Services - Part Three of Six
By Tom Zimberoff, © 2011 Tom Zimberoff - All Rights Reserved
A Wide Range of Fees Means a Wider Range of Clients
Each one of the many skills you have mastered corresponds to a discrete fee that should be billed to your clients, either directly or indirectly. Depending on the difficulty of an assignment, some clients will need to utilize many of your skills, while other clients will require fewer of them; hence the essentiality of devising various fees to accommodate various skills, so you don't have to bill everybody for everything when they have limited needs.
This sort of mix-and-match approach to fees and pricing is not haphazard. The practice of breaking down a price into a number of separate fees is designed to give buyers more choices. It also allows you to accept a broader range of assignments by giving you credibility with a broader range of buyers.
These choices are designed to fit buyers' budgets, in much the same way as assigning incremental value to usage rights makes it economically feasible for photographers and publishers to do business together. By offering various sets of skills at different price points, you remain attractive to buyers who require your production expertise and supervisory capabilities for major photo shoots, yet remain competitive enough to accept lower-paying assignments with fewer responsibilities.
Smaller assignments, while no less profitable, can often be billed at a lower price because they may demand less of your time, more modest usage rights, and may be less complex to produce overall. Variable pricing, in effect, means offering different "brands" of photographic services from which your clients may choose.
Explanation of All Fees
- The Creative Fee
Do not confuse the term creative fee with the use of a similar looking heading found on many billing documents (including the Worksheets in PhotoByte) called "Creative Fees" (note the plural).
It certainly is confusing that some photographers have traditionally used creative fee synonymously with day rate, assignment fee, and its other equivalent terms because it is common on estimates, confirmations, and invoices alike to see a section heading that is also called "Creative Fees." But the latter merely represents a convenient place to list any number of subordinate assignment fees plus usage fees and to give them a subtotal, so a buyer can more easily understand your bill. It does not represent a single fee.
Further confusing the issue is the fact that one of the line items listed under a "Creative Fees" heading might happen to read "Creative Fee" itself, instead of, say, "Assignment Fee." After all, it's your choice to call it whatever you wish. You simply have to decide which term you prefer and be consistent to avoid confusion (See Footnote 1).
Incidentally, while it's normal for a Creative Fees subtotal to include both an assignment fee and a usage fee, it may contain just a usage fee alone. Conversely, it should never include an assignment fee alone without a usage fee.
- The Usage Fee
In the photo business usage is synonymous with the words publication and reproduction, as in usage rights, publication rights, and reproduction rights. Payment for the combined duration, frequency, prevalence, size, and exclusivity pertaining to the use of an image is, indeed, called a usage fee. There, again, lies the direct correlation of usage to copyright licensing.
Usage is the dominant factor in pricing, but no single one of its five component parts has a dominant influence on the dollar amount of the usage fee as a whole. Each part must be considered in the context of - and together with - its four other parts. Incidentally, usage fees, too, have a number of synonyms (See Footnote 2).
Note: Only the usage fee line item subtotaled under Creative Fees should be reported as profit. (PhotoByte does this for you automatically.) Usage fees are considered profit because they are not a cost to your business. The reason that assignment fees are reported as profit is that they are a cost to your business. They are paid out as your personal salary.
- The Assignment Fee
An assignment fee corresponds to personal photographic expertise and the execution of primary services on the job. And it has to do with reputation. It may also be thought of as that fraction of an overall price that corresponds to your personal salary. To put that into perspective, think of an assignment fee as what you get paid to shoot each job, just as if you had to hire someone to shoot it for you.
It is both fair and appropriate to charge clients for what your business would have had to pay to hire another photographer of equal ability, whether a freelancer or full-time employee. Moreover, whether your business is a sole-proprietorship, a partnership or a corporation, it's your own salary we're talking about. And any way you look at it, an assignment fee is a cost to your business. That really matters insofar as bookkeeping is concerned. Therefore, the assignment fee is a billable expense to your client(See Footnote 3).
An assignment fee might alternatively be called a camera fee, a shoot fee, an editorial fee, a commercial fee, or a day rate. Pick whichever one you like; they all mean the same thing.
Note: If your usage fees are much greater than your assignment fees most of the time, there is no reason not to count both types of fees as profit. You may, in that case, allow the business to pay you a salary that is higher than the assignment fee.
Your salary does not have to equate on a 1:1 basis with your assignment fee. You may pay yourself as much as you want - as long as there is enough profit left over to sustain business operations.
While a photographer's primary source of revenue comes through maintaining control over the intellectual property he creates, it goes without saying that they should be additionally compensated for their knowledge about how to use all of the different kinds of cameras and lenses, film and digital formats, grip equipment, special effects paraphernalia, and lighting gear they maintain. On top of that, photographers have an administrative role to play for which they must be compensated. They secure and supervise independently contracted service providers, such as assistants, models, stylists, photo-lab technicians, etc. They work with retail and wholesale vendors to obtain the professional supplies requisite to complete their assignments too. These include film, digital accessories, rental props, special lenses, insurance binders, and making travel arrangements, etc. Even as a freelancer you are a business owner, and you should expect to be rewarded for utilizing your hard-won skills on behalf of clients.
Finally, in addition to the planning, preparation, execution, and delivery of each photo assignment, photographers are obliged to archive each frame of film and every digital image they shoot. They have to store them, catalog them, and protect them so that they are readily available to the buyer who commissioned them, in case subsequent demands for publication arise. You, the photographer, are responsible for providing that service. Its costs are a part of your overhead. This, too, must be factored into your bottom-line price.
As you can see, there is much going on behind the scenes of every photo shoot. Think of the movie business. A photo shoot can be just as complex as a day on the set of a movie, but without the "movie" part. A still photographer is often the producer, director, writer, and camera operator all rolled into one. It's obvious that professional photographers possess expertise in many areas that extend beyond f-stops and shutter speeds. Without exception your price should reflect that expertise, just as any doctor or lawyer expects to earn fees commensurate with - and to compensate for - the years of training it took to become a reliable expert. Therefore, as your reputation grows, so too should your assignment fee. Even early on, you should be well compensated for exercising the skills you have already mastered.
It's not as easy to take pictures as some people might think - at least not good ones. Not consistently. The singular difference between an amateur and a professional, aside from getting paid, is that a professional will always deliver a publishable photograph at the end of an assignment. An amateur may or may not get lucky. Luck is undependable. Clients pay for dependability. So the next time someone says, "You cost too much. I can get my nephew to shoot that picture," let him hire his nephew! He'll come back.
Note: If you are legitimately an employee of your own corporation, then assignment fees, insofar as they are paid to you as salary, are tax deductible to the corporation.
These four steps will determine a starting point for your assignment fee:
- Decide on a fiscal year
Usually 1 JAN to 31 DEC to correspond with filing your taxes
- Figure out how much money you want (or need) to earn annually in salary; i.e., "I want to earn $60,000 per year."
Consult with an accountant to ascertain your personal overhead costs (not your business overhead) on an annual basis and factor them into how much salary you require. Personal overhead includes what it costs to feed, clothe, house, educate, and entertain yourself and, perhaps, your family.
- Figure out how many assignments you anticipate shooting throughout the fiscal year.
Remember: some assignments last for a couple of hours, some last a whole day, and others last for several days or even weeks. Balance the number of these different kinds of jobs and make an educated guess. If you are just starting out, get some advice from a seasoned pro. A reasonable guess will suffice. You can't come up with a realistic number of assignments until you have some history.
- Divide the figure in step #2 by the number of assignments in step #3.
The resulting assignment fee can be pro-rated for assignments that last longer than a single day. For example, if you believe your reputation and personal overhead commands an annual salary of $60,000 and you believe you are capable of shooting fifty assignments per year, then your assignment fee will be $1,200 (exclusive of taxes, profit, usage fees, and line-item production charges). But if you can shoot one hundred assignments per year, then you can try to make yourself more competitive by billing, say, only $600 per assignment. You'll still reach your salary goal, assuming you can keep up the pace of work without letting its quality suffer. But if the quality of your work suffers from spreading yourself too thin, by not putting enough effort into each assignment, your customers will notice. You'll have to back off and shoot fewer jobs. They might not give you a choice in the matter; they won't hire you if they think the quality of your work has deteriorated.
If you can balance your work load successfully, then, obviously, the idea is to shoot one hundred assignments (or more) at the $1,200 figure (or higher). And that's how to give yourself, essentially, a raise. Alternatively, you may find it necessary to raise prices to compensate for shooting fewer assignments. But if you do, you may lose some of your competitiveness.
The seesaw effect of raising assignment fees and lowering competitiveness, and vice versa, illustrates how the natural forces of the marketplace operate. It is evident that you must find a balance to suit your own circumstances and reputation. If you have a wonderful reputation, the opposite end of the seesaw can handle higher assignment fees. If your stature in the competitive pecking order hasn't quite been established yet, you'll have to balance it with a lower assignment fee.
Note: To give yourself a raise without also raising your bottom-line prices you must shoot more assignments. If you pay yourself a higher salary without increasing either your volume of work or your prices, the difference has to come out of profit. That makes it harder to keep your business a going concern.
Consider how billing a separate assignment fee attributed to salary will affect your overall revenue:
- If you bill an assignment fee without marking up any expenses, you have made no profit.
- If you bill a usage fee without an assignment fee and without marking up expenses, your business has made a profit, albeit a smaller one than if you had billed a mark-up too. But you have made no salary.
- If you bill an assignment fee plus marked-up expenses, you have made a salary and your business has made a profit too.
- If you bill an assignment fee plus marked-up expenses plus a usage fee, you have earned a salary and your business has earned a bigger profit.
- You decide which is the smartest way to work!
- The Production Fee
In addition to a usage fee and an assignment fee, photographers often include a third kind of fee to cover the amount of time they spend planning, preparing, and performing activities in support of the actual shoot. This fee compensates you for time spent on the job in addition to your picture-taking duties.
Only ancillary services, those that are secondary to actually working behind the camera, whether creative in nature or administrative grunt work, have a financial connection to how much time is devoted to an assignment. Ancillary services include pre- and post-production activities. The corresponding fees are called production fees. They produce revenue in direct proportion to the complexity of execution for any given photo assignment.
Since each outside contractor who performs a secondary service will be marked up and billed as a line item expense, only those services performed directly by you, the photographer, will be billed directly as production fees. They will not be marked up, however, because they do not represent an outlay of cash by your business. They are not considered overhead.
- Production Fees and Their Relationship to Salary
Some photographers count production fees as part of their salaries when they perform ancillary services; i.e., when they do the work personally, instead of hiring an outside contractor or assistant. In that case, they will take a personal draw in addition to their assignment fee. It corresponds to whatever production fees are billed. Only when the principal owner of the business performs these services and pockets the revenue as personal income is a production fee not marked up and billed as an expense. If you follow this practice, make sure there is enough profit margin on each job to keep your business running on all cylinders in lieu of those production fees. The alternative is to treat production fees just like usage fees, to include them under the profit column that goes directly into your - separate - business bank account.
- When to Bill Production Fees
It is highly recommended that you include an additional line-item production fee for each task you perform during a shoot that requires your extra time or special ingenuity personally. That means you should bill discrete line items - in addition to your assignment fee - for scouting locations, acquiring props, hiring outside contractors, casting models, negotiating permissions and releases, traveling to and from remote locations, waiting through delays caused by weather conditions, and so on. Many photographers bill as much as their entire assignment fee (but not their entire price!) for each extra day required to do pre- and post-production work.
Some assignments might even involve an element of danger or difficulty that requires special expertise, such as shooting from an open aircraft or entering a war zone. All of these kinds of activities call for compensation in addition to both the assignment fee and the usage fee.
Each individual production service should be itemized and billed as a separate line item; e.g., a casting fee, a location-scouting fee, a weather-postponement fee, a travel fee, or a consultation fee, etc. Sometimes a single line-item, itself labeled "Production Fee," is satisfactory to cover all of the disparate services you've performed without itemizing them. That's a matter between you and your clients. Work it out ahead of time to decide how much detail, or how little detail, you want to show on your estimates and invoices.
Production fees for ancillary services are not included in calculating usage fees. In fact, production fees have nothing to do with usage fees at all. Therefore, they are not grouped with, or subtotaled in, the Creative Fees section of an invoice. Instead, they should be itemized separately their own section.
- An Exception to Production Fees for Editorial Assignments
The complexity of a shoot and the amount of time it takes to prepare for it are not always factored into a price, especially if an assignment is accomplished quickly and without unforeseen delays. Most editorial assignments fall into such a category of simplicity. Therefore, it is not the norm to bill a separate production fee for editorial shoots. Magazine assignments, for instance, are often straightforward enough for you to bill just an assignment fee, leaving out production fees altogether. But a longer-lasting or more complex magazine assignment may indeed justify the billing of a production fee. Regardless, whether a shoot is brief and simple or long and complex, travel days and weather delays always warrant a line-item production fee on top of your assignment fee.
- Billing for Travel Time and Weather Delays
One reason to bill for your time, either spent traveling or whiling away the hours for Mother Nature to let you continue a shoot interrupted by rain, is that during your current commitment you are not free to accept work from other clients. Even if you had no real expectations for shooting another job during this interval, your time could be put to good use attending to marketing chores and scouting out new opportunities.
The only waiting periods for which you have no right to charge are those caused by your own mistakes. That includes entire reshoots. This principle must be understood up front with buyers. In fact, terms and conditions that define such understandings are routinely included in the terms and conditions printed on the reverse of all estimates, confirmations, and invoices.
The Pre- and Post-production Fee
Remember: It only takes about 1/125th of a second to snap the shutter; but a whole lot of work takes place before you even pick up a camera to make that "snapshot" possible. Much goes on after you put down the camera too.
Usually, when production support services are performed on a separate day, before or after the actual day of the shoot, such work is called pre-production and post-production respectively. Some photographers distinguish pre- and post-production from services performed on the day of the shoot by billing them as separate line items. Some do not. But that's basically the only difference. Any fees for these kinds of activities should be included and subtotaled in a specific Production Fees section on every Job Estimate, Job Confirmation, or Invoice/License of Rights, as they are indeed on the two Worksheets that accompany the aforementioned documents when created by PhotoByte.
Pre-production tasks might include purchasing props and wardrobe, or traipsing around town on errands to obtain special equipment rentals; everything from smoke machines and sand bags to arguably the most expensive tripod in existence: a helicopter. They also include telephone consultations and personal meetings with your client to discuss the assignment.
Post-production fees might include the time it takes to edit an extraordinarily large amount of shot film or digital images, to return props, tear down sets, or to repaint studio walls and cycloramas. You might be obliged to bill a travel fee for the time it took you to drive or fly to and from an assignment on location. Travel fees also fall under the rubric of production fees and should be itemized in that section.
Expenses and Mark-ups
When you receive an invoice from a freelance photo assistant, you pass that cost on to your client, naturally. It is a direct cost, so you itemize your assistant's fee (plus any additional expenses he might have billed to you) as an expense on your invoice. No doubt, if you work for corporate design firms and advertising agencies, your invoices will be passed along to their clients the same way. (Not so with magazines; they are end users.)
The total price you bill for an assignment, including all of your fees and marked- up costs, will be expensed as a single line-item cost on the invoice your client submits in turn to their client. They will not only re-bill the whole ball of wax, but you can depend on the fact that it will be marked up still further. After all, they are not in business just to recoup what they paid to hire you, but to make a profit themselves.
As far as you are concerned, it takes time and expertise to search for and, then, select the best freelance personnel, including photo assistants, for any assignment. Your business has a right to charge for that time and expertise. You should have no compunctions about adding a mark up of, say, 10 or 20 percent to the amounts that you were billed by your crew, and perhaps even a higher mark-up for other costs such as film and processing or digital post-production. Every roll of gaffers tape must be itemized, marked up, and re-billed. The fewer items you mark up, the less profit your business earns.
Buyers should expect a mark-up on all direct costs - in addition to what you've billed for creative fees - for every assignment. In fact, your mark up is a fee. It compensates your business for, among other things, "fronting the money" to pay your production costs. You are, in effect, functioning as a banker to help your client get the job done. If you have to wait for any length of time whatsoever to receive payment, you are entitled to a service fee. That's what a mark-up is.
If you receive an advance payment against billed expenses, you do not necessarily have to mark up the costs that correspond to the amount of the advance you received. But there is no rule that says you cannot. Even after having received an advance, you must be paid the balance of your final invoice promptly upon completion of the assignment. Not to receive immediate payment is reason enough to justify a mark-up on - in this case - your advanced costs.
Note: Make sure that an advance invoice gets paid before you begin the assignment! That includes any pre-production work.
- How to Apply a Mark Up
The client is expected to pay the entire cost of producing and shooting an assignment. (And you still own the copyright.) Each direct cost is represented on your billing documents as a line-item expense. A total of all costs billed to the client will include a percentage of those costs added on top as a mark-up.
For example, multiply the total of your costs by a percentage (e.g., 33%). If total costs come to $543.11, multiply 543.11 x .33, yielding a product of $179.23. Finally, you will add $543.11 + $179.23 to give you a total of $722.34. In this case, your profit on the billed expense equals $179.23. Just remember, though, that you may decide to itemize costs separately and mark them up at various rates.
- The Wrong Way to Bill Expenses
Because some photographers haven't yet learned about the relationship between pricing and profitability, they bill all of their expenses, except for film and processing or perhaps post production digital editing, back to their clients at cost. They bill exactly what they paid for everything else, but arbitrarily inflate their mark-up on film and processing or digital lab services by as much as three hundred percent! For some reason, they think that's normal. Finally, they take a fraction of their total revenue for any given assignment - also arbitrary - and apply it towards their personal living costs. In other words, without any kind of plan whatsoever, they just pocket any available cash they need for their own use whenever it suits them. Such a seat-of-your-pants approach to finance will inevitably lead to unpleasant results - like going broke and out of business.
Separate Billing of Assignment Fee and Usage Fee
Whenever a usage fee is billed as a line item for a photo assignment, it follows that an assignment fee must be billed too, and vice versa (See Footnote 4).
The issue of paying yourself a regular salary notwithstanding, if both a usage fee and an assignment fee are not broken out and billed as separate line items, you have little choice but to blow up your fees for digital post-production or film-and-processing mark-ups. That's the only way to compensate for not legitimately marking up your other costs. It means your only source of profit would be post-production. That would be really bad news.
The practice of blowing up post-production fees makes buyers intolerant and suspicious. It may make then demand receipts, to which they are not legally entitled. Inevitably, however, some photographers feel obliged to start forging phony ones.
Of course, you must try to prevent customer dissatisfaction by making your business as competitive as possible. If they don't like your bottom-line price, they are free to go elsewhere. But the practice of forging receipts is unprofessional, untenable, and just plain unnecessary.
To correct this situation it is only necessary to charge a more modest and realistic mark-up on post-production (and make sure, indeed, that you do), but, at the same time, include a modest mark-up on all of the rest of your billed expenses. If you do, the bottom-line price of an assignment will usually come out to be the same as the fudged version. But as the billing process becomes more legitimate, it allows you to account for genuine profit. And who's to say that, after adding a mark-up to all of your other costs, you can't leave post-production fees on the high side anyway? That's fine as long as buyers are willing to pay. At least it's an honest way to do business.
Example Assignment Calculation
Suppose you have completed a one-day corporate assignment to shoot an annual report. You have billed an assignment fee of $1,000 and a separate usage fee of $2,500 for a total of $3,500. If you acted wisely, your copyright license included only "one-time, first-exclusive" usage rights in exchange for that $2,500. (The $1,000 is basically just for showing up to shoot the job.) So what happens if the client wants to publish the same photos again in next year's annual report?
If you hadn't limited your copyright license you couldn't get any more money. Your client would be free to continue using the pictures without paying you any additional fees. But you did use the Copyright Composer (part of PhotoByte), and you did properly limit the client's reproduction rights to just what they were willing to pay for at the time. Moreover, if you hadn't separated your assignment fee and usage fee, it would be harder to justify billing subsequent and additional uses of the photos in the next year's annual report. Since your initial usage fee was $2,500, now you can easily stipulate that amount to the client when you bill again. You're on record, so to speak, for that amount. But here's something else to look out for.
What if you had billed $2,500 for your assignment fee and $1,000 for your usage fee, instead of the other way around? You would have earned the same amount of gross revenue for the initial assignment, but it might be harder to negotiate the higher usage rate for next year's annual report. The lesson here is to be aware of what you expect to bill as salary and what you need to bill for usage. You have to protect your prerogative to bill additional usage fees in the future.
- The Problem with So-called "Reimbursable" Expenses
It is unheard of for professionals in any other industry to be admonished by their clients for earning a profit. But the fact is that photographers are often denied a profit on costs that are billed as line-item expenses, including post-production services. This practice is insidious, unjustified, and maybe illegal.
It wouldn't matter if, say, American Airlines offered you worldwide free travel or your cousin edited all of your images for you in Lightroom (TM) for free; you are still entitled to charge a fair market price for those services and for every other kind of service or merchandise you bill to your clients. To be prevented from doing so might be considered a restraint of trade in legal parlance. No matter what your source happens to be for photo services and supplies, finding a way to pay less than other photographers and still bill as much as you can is a time-honored and legitimate competitive practice.
If you want to charge a 300-percent mark-up or even higher for film, and someone is willing pay your price, more power to you! But any client's demands for receipts, whether putatively for tax-auditing purposes or for any other reason, are mendacious. Buyers need only show their auditors and the IRS your final invoice to back up their own itemized deductions. Your invoice is their receipt. It is the only one they are entitled to. It is the only one they need.
Buyers do have a right, however, to take their business elsewhere if they feel your prices are too high. That's the nature of competition at work. Nevertheless, the point is that marking up expenses is a necessity. It can be done intelligently and reasonably. Mark-ups should be based on a reasonable profit margin; reasonable being determined by what the market will bear and in consideration of your actual costs of doing business. Only the market can impose limits on mark-ups. Mark up as much as the market will bear. But do mark up! The alternative is to forfeit making a profit.
- Getting a Late Start with Mark-ups
If you have been shooting professionally for a while and have not been marking up your billed expenses, and if you are afraid you might alienate your clients by starting now, there is a way to increase the likelihood that they will accept the practice gracefully. It involves a little benign subterfuge.
You can adjust your assignment fee down for the time being! Although it will be a lesser figure, it will be offset by marking up your expenses. The bottom-line prices on all your invoices will stay roughly the same. Eventually, your clients will get used to the idea of mark-ups, just as they are already used to marking up expenses to their own clients. As your reputation grows, you can gradually raise your assignment fee.
Finally, of course, the government takes a piece of the action.
All but five of the fifty states in the USA collect either a sales tax or a use tax (or both) for any commercial transaction involving an "end user." The end user always pays the tax. But it is your responsibility to collect it on behalf of the government. That's why you bill sales tax on invoices.
Note: An end user is the party that receives the product or service you have sold, and does not pass it along - does not resell it - to a third party.
Sales tax is normally billed only to clients whose businesses are situated in your own state and to clients to whom tangible goods have been delivered within your state. But the rules and regulations regarding what is taxable and what is not are often hard to understand. They also vary from state to state. Sometimes they seem arbitrary and open to dubious interpretations, depending upon which bureaucrat you ask for an opinion on any given day.
Some states demand that sales and use taxes be billed as a percentage of your total invoice price, including each and every one of your billed expenses plus all of your fees. However, some states require a tax on only one total or the other (i.e., either total fees or total expenses, but not both). Some states make a distinction that excludes tax on expensed costs for hiring independent contractors, such as the re-billing of an assistant's fee or a stylist's fee on your invoice. Other states exclude all "services" from being taxed, relying solely on revenue from the sale of tangible goods, where physical property changes hands. Some states exclude the exchange of digital files altogether. The issue of transferring intangible intellectual property rights via the Internet has, therefore, opened up a few cans of worms. Therefore, for your own protection, it remains imperative that you consult an attorney or CPA to obtain a clarification of the rules in your own state.
The penalties for failing to collect sales taxes from your customers, whether accidentally or intentionally, can bode serious financial consequences. So make absolutely certain that you follow the experts' advice to the letter, and document everything you do to the point of being obsessive. Always be prepared to be audited by your state government's board of examiners.
- How to Apply Sales Tax
Whether or not you will include sales tax on an invoice depends upon the ordinances of the state, county, and municipality in which your business is located. Separate cities or counties within any given state may impose different rates. Sometimes they must be added together to obtain the final rate of sales tax to bill your clients. In other words, your state may impose a 6-percent sales tax, and your county an additional 1/2 percent, while your municipal government demands another 1/2 percent. Added together, you have a sales tax rate of 7 percent. An adjacent county may likely impose a higher or lower rate.
If you live in a non-sales-tax state, you probably already know it, or else your accountant will tell you. Your accountant will also inform you about what rate of sales tax, if any, applies to your specific location (see above paragraph). If he cannot provide that information, contact your state's sales tax office. They are bound to have a branch in your county.
- Non-taxable Invoices
If your clients are not end users, you may not be required to bill any sales tax at all; they will bill it to their own clients instead. Basically, the last guy in line is left holding the bag. For example, if you do a shoot for an ad agency, the agency is not the end user, so long as it represents a manufacturer who is ultimately responsible for publishing a product advertisement. Therefore, the manufacturer is the end user and must pay the sales tax.
If any of your clients wish to legitimately avoid paying sales tax, they must provide you with their reseller's permit number on a signed certificate before the tax is added onto your invoice. It is your responsibility to keep that card on file in your office and submit it to the state sales-tax authority in case of an audit.
To your clients you are a vendor. You have no choice but to charge sales tax unless they present you with proof that they are resellers, or unless you are transacting business in a non-sales-tax state.
If you cannot provide proof that your non-tax-paying customers are legitimate resellers, not tax evaders, the government may force you - not necessarily your clients - to pay the tax plus any applicable penalties and fines. You are therefore obliged to collect a resale card from each and every client who refuses to pay sales tax. Find out before you shoot the assignment and bill it.
Note: There are other exceptions to sales and use tax: make sure you retain proof of delivery for any tangible goods sent out of state (e.g., a Federal Express air-bill); because, even if you live in Louisiana and your client is based in Michigan, that delivery of prints he accepted from you personally in New Orleans obliges you to bill sales tax. You will be held responsible for paying it. It's up to you to prove that your client didn't accept delivery locally.
1) Using PhotoByte software will help you and every other photographer who uses it to develop clear and consistent communications with the people who buy your work.
2) i.e., reproduction fee, publication fee, copyright fee, etc.
3) It is not marked up like an assistant's fee, however, because there is no actual cash outlay to a third party.
4) Some magazines offer a so called flat "day rate" (synonymous with assignment fee) plus expenses. But you are expected to bill a single fee that, in effect, covers both the assignment and usage fees lumped together. The principle remains the same, however, as billing two separate fees, because the day rate is merely a guaranteed minimum payment for a correspondingly minimal use of whatever photos you produce. Additional usage rights may still apply if more than the minimum publication option is exercised.
A note from the Shakodo Team: This is the third 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: