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Pricing Strategy Q & A

I have a question. Do you ever negotiate on price? Never. Because, that is a precarious position to put yourself in. Once you start negotiating you have completely lost control of the sale. I know that if someone asks me that and I say no, I know that one of two things will happen. Either they'll say thank you very much I'm not interested. Or they'll say, okay, and they'll pay me my rate. Right? What happens if I say, oh, yeah, what did you have in mind? It's never gonna be in my best interest, and I'm the only person looking out for me, and my family, and my profit margin. This is my profession, you would never go to an attorney and say, you know much is it? And they'll say it's $1,000 to do whatever, and you would be like, well would you take $200? They'd be like no. Right? Anybody professional, a doctor, oh would you take this? No, I have a business to run here. So don't go down that road. And honestly, if you present yourself professionally, you have everything well laid out, you...

can hand them something tangible that has it officially written in ink, that says these are my prices, nobody's gonna question it. The only reason people question our prices is when we hem and haw and we're insecure and we give off that aura of, so what do you think? Right? If I walk in and say okay it's this, they'll be like, okay. So it's all in how you present it. If you're hearing questions about price, it's likely more an issue of your confidence going in and asking for that than it is actually what's printed on the paper. I have a background in graphic design and I have a creative interest in collage work. I'm kinda curious how I would fit that into pricing for that. Yeah absolutely. That can be a great way to distinguish yourself from your competitors. So if you have a great product that you are custom designing for people that's a great way to differentiate yourself. You can do it a couple of different ways. You can charge artwork by the hour. If you have a client that comes in and says, oh my gosh I have this great idea, I really want you to do this, by the hour is a great way to do it. Otherwise, the easier way to do it, is to predesign a product, put a name on it, put a price associated with it, and kind of automate it, so that you just drag the images in and then it's that custom piece but it is an automated production line, so you know how much time is involved so that you can charge a reasonable rate for it. So do all the orders go through you, or do you have any thoughts on online gallery stores? Oh I have very specific thoughts about that. (laughs) No, no, every single order that has ever happened in Holcombe Photography has either gone through Peter or myself because we create a lot of beautiful images, and if we put that in the hands of our clients they don't know what to do. Because nobody has room in their house for 50 different images that they all love. And so it's my job in the sales room to go through and walk them through exactly what we're aiming for to help them get to that goal, so that they have something beautiful in their home, that's the perfect fit, the perfect image, and the perfect product for their decor. So yeah. And when I talk to my clients like that they're like oh thank you so much I went to this photographer one time and I had to choose and I just ended up not buying anything because it was too hard to decide. It's service, I'm competing on service. Is there, this is from BeckyZ, is there a minimum order for a la carte orders, and what's to stop a budget shopper from getting a la carte only? Okay that is a great question. So the way that I handle a la carte versus packages, the whole reason that I have an a la carte menu is so that I can say my portraits start at $99. And so my eight by tens, my gift portraits, anything eight by ten or smaller start at $99. And then my wall art starts at $499, a la carte, that's for a 20 inch portrait, okay. So, between my a la carte packages, and my packages, my a la carte versus my packages, there's $200 difference. So my 20 inch portrait is $499 a la carte, my 20 inch portrait with a package is $699. Okay, $200 difference. The difference between a la carte is just a single image, the package comes framed, and it comes with five eight by tens. Eight by tens are $100 each. The a la carte, $100 each. So just the five gift portraits alone are worth $ a la carte, I know that my clients are gonna want at least five of my images, right cause I've done a good job creating beautiful images. So automatically it is a no brainer for my client who is value conscious, to spend that extra $ to get a custom framed piece for the wall and the five eight by tens that are worth $500. So I use that strategy of a la carte to get them in the door I have portraits that start at $99, but my best value starts at $699. And when they see what that is, they're like oh that is a great value, custom framing is at least $200, $300, and you get the five eight by tens? Of course I want that. Okay? And in the creating your ideal photography business class I walked through all of those strategies of exactly how and when to use a package, how and when to use a la carte, how to sell albums, all of that. But basically that's the gist, is that you use one tool to move into the next tool, to move into the next tool, so make sure that you're creating that perceived value as you build your prices, and one way to do that is to make your a la carte just super expensive so that people are like, I don't really wanna spend $ for an eight by ten but $700 for wall art and five eight by tens, that's a good value. You can use them to juxtapose each other. So some of the companies that I've recently worked with are looking for digital files for social media sharing or blog content, things like that, and so to figure out my pricing for them, would you do the same thing by adding up the total cost of the product, the product being the digital files, and just factor in the time it takes to take them and edit them, etc, and then multiply it by the markup? So this is for a commercial application, correct? Yes, so that's totally different. Because really, you're probably delivering your digital files electronically, I would think through email or download or something like that. So then is when your target sale is super important. So you're going to use that target sale number to come up with your pricing strategy because really what you're delivering to your client is completely service based. It's not an actual product, so you know, how much does a digital file cost? I don't know. It costs this right? So that's when you have to use that target sale number to get there, so if you know that when you created that image you spent 20 hours doing it, or however long it took you, that's how much you have to charge for that image. Because you don't have a hard cost associated with that digital file, unless you're delivering it on a fancy hard drive or jump drive or you know if you're delivering thousands of images, you would have that hard cost, but really when you're talking about a commercial application it's definitely more of your time. So use that target sale, or that per hour figure, to figure that out. That's a great question. Mohammed at Tabocali asked, did you mention whether you charge a session fee? I'm not sure if we talked about that yet. We didn't talk about a session fee, let's talk about that. So a session fee is your barrier to entry to your business. So, a session fee is a tool that you can use for a couple of things. The first thing is your session fee can limit the number of customers that are willing to book with you. If you have a $1,000 session fee, you're gonna have a lot less customers than if you have a $50 session fee, right? So if you have more business than you know what to do with and you are going crazy and you're up til 2 o'clock in the morning, raise your session fee. That will change, and that can be a good thing. If you are really struggling, you're brand new, you don't have a reputation, nobody knows who you are, a session fee can be a huge barrier to entry even if it's just $50 because people don't know you. They want to try it before they are willing to invest. So it might be something that you give away, and you can say okay my session fee has $100 value, but for the month of April, I am doing $25 session fees. Or they're free, with the purchase of an eight by ten, or whatever that is, that's how you use that strategy. So that's one way, is the barrier of entry. It's the gateway to say I need more business or I need less business. The higher your session fee, the less business you'll have, the lower your session fee, the more business you'll have. In general, if your marketing's working. Okay? The second way that you can use a session fee is to help offset your final sale. So if you are really scared about walking into the sales room and saying, your total will be $800, if that makes your heart pitter patter, then you can use a session fee to make that a little bit lower. You charge $100 up front, they pay it, they forget about it, then you only have to have a $700 sale, which might feel a little bit better. Okay? Or a $200 session fee if you're able to book people up front and you're really scared about asking for that dollar amount at the end, raise your session fee, lower your prices on the back end a little bit. It's like a teeter totter, either way you get to the same result, it just depends on the process that you're comfortable with in your business and when you ask for those dollars. Would you use a session fee for commercial stuff? Say you social media, or working with a company or an event? So that's a good question. Usually when you're working in a commercial arena it's called a day rate, and so that day rate, we break ours down we have a half day rate, a full day rate, and a multi day rate. So we have three different options. And so that day rate, when you're working in a commercial arena, it's for all of your time invested in whatever the project is, and at least for us, the projects are really varied. And so it might be that we go shoot kayakers for four hours on the side of a river, or it might be a week long photo shoot of a brand new Winnebago. And so they're two very different things that we're working on, and so that day rate is the only amount that you're gonna get from that company, because a company is not emotionally invested in your images. They've got a job to do, they've got a brand to convey to their consumers and they want you to get in, make their job easy, and give them beautiful quality images. And so the day rate you use your target sale or your per hour figure to come up with whatever that dollar amount needs to be, you adjust it based on demand, and then that's what you're gonna get from those commercial clients. So like, how many product, images, would they get. All of them. Like, everything you photograph? All the raw stuff? Do you edit it? Of course we edit. All of the useable images. That's a great question though a really great question. So we would never let an unacceptable image, like if I bumped the trigger and shoot my feet, I would never show anyone that. So when we deliver images to a commercial client, they are completely retouched, everything is perfect, they're ready to go into whatever they're using those images for. And they're the best images from the shoot. So we may have images that are similar in look and feel but they have a different composition, so it might have a product on this side of the frame, and a product on this side of the frame, at the top a the bottom, because they may need it for different layouts, so you know, it depends what you're shooting for. If you're shooting for a magazine it's gonna be a vertical image usually and you're gonna have some open space at the top, some negative space for the headers, so you just have to know what kind of output it is, but we're definitely gonna talk to them about how many images they expect, what they're gonna be using those images for, where they need the negative space, if they need help with printing anything for whatever application, those are all questions that we would ask up front. And if they're adding products on, so if we're making a banner for a trade show display or something like that, then it falls into our regular product pricing, but more often than not they're gonna have a company that they're already working with that they wanna have those things printed through. So usually it's just the files and it's our time. As you are portfolio building I know you said that you don't negotiate on price, and not to do anything for free, but, the question still came in. TinaVion, as you're building your portfolio, is it good to discount for visibility, photo credits and publications or an opportunity to add a new style to your portfolio? Does that ultimately work against you in the end? Does it count? What about getting that article published in a magazine? Or things that people don't pay for? I think that's a really good question, and I believe that's probably a question in all of our hearts, because it is so scary to charge for your art, and before I answer the question I wanna share a story with you. Because Peter always sold his own photography at the beginning, and he would walk out of the sales meeting and I would be standing on the other side of the door and be like how'd you do? And he's like well I gave away an eight by ten, and I did this, and I'm like what? You did what? That doesn't work in our pricing structure. And so there came a time in our business when Peter was like, you know what, you go do the sales. And I was like, I got this. I walk in the sales room, and I walk out, Peter's standing on the other side of the door, and he's like how'd it go? Well I gave away an eight by ten. And he's like ha I knew it! It's hard, and it's scary. And that was when I was selling Peter's work. I can't even imagine, well actually I can, because part two of the story is, we decided that I was gonna start photographing newborns. Peter didn't want to have anything to do with it, I thought it was a brilliant business decision, I was like okay I can do this. You just help, you just set up the lights, I'll be fine, I got this. He's like okay, have fun. So I went in I shot it I was so excited about the images, I wanted them to love it, I walked into the sales room, I gave away $800 worth of product. Because they were my images, and I couldn't even walk through the sales room door, I was like, what have I done? And it was because it was my personal work. So after I beat myself up a little bit for that because that was super stupid, I was like alright, this is a real thing, and it's super hard to sell your own work. So I get it, but to answer the question, discounting your work for promotion is very dangerous. Anytime you discount your work, you're taking away from the perceived value. And that's the thing that you have to hold onto, the perceived value, is what allows you to charge more. Think about it this way, a law student coming out of law school, they go in, they have their suit, they're ready, their first client walks in the door, they're like okay I need this done. Okay, here's your bill. Did they say oh this is my first contract I don't know I think it's okay but I don't know. Of course not they're gonna walk in with confidence and they're gonna fake it and they're gonna do it, right? So a professional is going to charge appropriately from the moment they open the door, even if it's through a learning process, okay. Now, if for whatever reason, you totally butchered the shoot that's a different story. But you're not gonna do that cause you're all great photographers, right? But why would you discount it? You're good photographers, you've been through all of these things, you know about your products, you know about your pricing, you know about your target sale you know you have to make this amount of money. How does it serve you to give something away for a photo credit? It doesn't help you. It helps the person that you're giving the image to. And if that person can truly help you get ahead, then you need to sit down and have a brainstorming meeting with that person and say I am so excited to work with you. Let's work together so that this helps both of our businesses instead of me giving you a free image, why don't I give your client free sessions and let them come in the door, and I can create art as a service to your clients for you. And then you have an opportunity to sell the portraits at full price. Wouldn't that be a better start to your business? That helps the person you're partnering with, it helps the person that is you needing to make a living at this, and you get samples in the process. You have an opportunity to sell. That's a win win. It doesn't do photographers any good, oh I'll give you a photo credit. My logo's already on the picture, right, I'll sell it to you, or we can collaborate in a way that benefits both of us, but a photo credit doesn't help. If you are charging that minimum or that $199 per file, what happens when it comes to weddings? You're clearly not charging $199 per file for 900 images, so is that working to a minimum, or how does that work? That's a great question. So for weddings there are a few commodities that you have to include in your packages. So the time that you're at the wedding is one of the commodities, the digital files is another commodity, and the album or product that they choose, those are the three things that brides want. And so for us, there was a time when we didn't include digital files and then we started loosing business, and so we raised our prices so that we could include the digital files in our package. So it was included in the base rate and we also included a product credit at the same time. And the product credit encouraged them to get a real, tangible item that we produced. So when a bride calls and says what's included in your package do you include the digital files? Yes of course I include those, but we also include a $1,500 credit that you can use towards purchasing one of our beautiful heirloom albums. So we're still driving them back to that physical purchase that still aligns with everything else that we're telling them, but it's a question that we found we had to say yes to to include the digital files and people weren't willing to pay much for them. Again it's a product everybody wants but doesn't want to pay for. So that's how we addressed those in the wedding realm. And then the other question was how do we do that $199. So for our portrait sessions the $199 digital file is if someone just needs a headshot, or something like that and they want that one file. Then they might also want to make holiday cards or something like that. But really what we found is that almost all of our clients purchase the digital files from the entire session and we sell those for $399, with a $1,500 minimum purchase. So that bumps our target sale to about $2,000.