Setting your prices to match your competitors is not enough. Another photographer may have lower rent, older equipment, a second income or simply prices that do not cover their costs. Before you decide what to charge, you need to know what it costs you to stay in business. That figure is your operating cost, and it is the foundation of every sensible price list.
List Every Fixed and Variable Cost
Operating costs come in two kinds. Fixed costs are the ones you pay whether or not you have a single booking. Variable costs rise and fall with the amount of work you do. Your list should include everything you can think of:
- Cameras, lenses and other equipment costs
- Salaries (including your own!)
- Monthly rent for your photography studio, or your home office if applicable
- Utilities
- Internet
- Subscriptions for editing software, your website, email hosting and similar services
- Travel expenses
- Advertising costs
- Insurance
- Debt repayments
Do not leave your own salary off the list. A business that only covers its bills, and pays its owner whatever happens to be left, is not sustainable.
Do not forget equipment replacement
Cameras, lenses, computers and hard drives wear out or become outdated. Instead of treating a new camera as a surprise expense, spread the cost over the years you expect to use it and add that yearly amount to your costs. The same goes for repairs, sensor cleaning, memory cards, batteries and backup storage.
Count the Hours Behind Each Job
Besides your operating costs, look at how many hours you really invest in each job. The time spent with a camera in your hand is only a part of it. Include:
- Time communicating with clients before the shoot: emails, calls, quotes and contracts
- Location scouting and planning
- Commuting to and from the location
- Setting up and packing away equipment
- Selecting and editing photos after the shoot
- Delivering the images, invoicing and bookkeeping
A two-hour portrait session can easily turn into a full working day once everything is counted. If you price only for the two hours, you are working the rest of the day for free.
Account for Taxes
Finally, do not forget to account for taxes when setting your photography pricing. The percentage will vary based on where you live, so check your local and national tax rates. In the US, for example, there is a self-employment tax in addition to the standard income taxes. We recommend putting aside 25-30% of your income for tax purposes.
Your tax will also vary depending on your type of business, and sole proprietors are taxed differently from companies. To make sure you are clear on the requirements in your area, speak to an accountant or tax specialist.
Turn Your Costs Into a Minimum Rate
Once you have the numbers, the calculation is straightforward:
- Add up your yearly operating costs, including the salary you need to live on.
- Add the amount you need to set aside for taxes.
- Estimate realistically how many paid jobs, or paid days, you can do in a year. Remember quiet months, holidays, sick days and the time you spend on marketing and administration.
- Divide the first total by the number of paid jobs or days.
The result is the minimum you need to earn per job or per day just to break even. Anything below it means you are paying to work. Your actual prices should sit above this figure, to leave room for profit, savings and investment in the business.
Review the Numbers Regularly
Costs change. Rent goes up, software moves to a subscription, you buy a new lens or take on an assistant. Go through your operating costs at least once a year and adjust your prices when the numbers require it. Knowing your costs also makes conversations with clients easier, because you know exactly how far you can go when someone asks for a discount.
