by Jeff Brown Published 01/08/2022
So, what do you do when a potential client starts asking for big discounts or approaches you purely from a price only perspective?
Well, firstly did you know that around 80% of photography businesses fail in the first 2 years because they aren’t making a profit? It doesn’t matter how many customers you serve, how much turnover you make, if your business can’t sustain a profit it won’t be able to function for long. There’s an old saying in business, “Turnover is vanity, profit is sanity”, this is so very true.
Secondly the photography market is highly oversaturated at the cheap end of the scale, this can often lead to photographers trying to outbid each other on price in an attempt to work with the wrong sort of clients.
This is such an important subject, but we often don’t talk about how cutting your prices can severely impact more than just your bottom line. Believe it or not, if anything you need to be raising your prices right now not cutting them. You can adjust your packages and still offer great value, because you need to be protecting your profits. If something is cheap it doesn’t mean its good, cheap products can often be an expensive waste, whereas premium can represent value because of its quality.
It's also a good idea to reassess your businesses monthly breakeven figure too, this is the amount of money you have to make each month just to operate and cover your bills, as it has more than likely increased over the past 6 months.
1. Understanding the REAL rate of INFLATION
We are all feeling the effects from the increased cost of living. Energy prices have gone through the roof, petrol is at an all-time high, and many items in the photography supply chain have risen in price too. So, your cost of doing business will have no doubt increased, which means if you haven’t adjusted your prices or repackaged your services you’ll probably be making less money per shoot than you did this time last year.
Now add this to the fact that you’ll actually be able to purchase less with the wages that you draw for yourself from the business, because the real rate of inflation is sitting at around the 10-15% mark. You’ll of course see this in your weekly food shop, plus rent and mortgage rates are going up too, and the interest we are all getting on our savings and investments have gone down. You need to adjust to keep above inflation and the cost of living.
As a general rule you must increase your prices year on year regardless, I’ve always gone with a standard 10% increase across the board at the same time every year. So, if you haven’t raised your rates in the past few years then you must do it now. The last thing you should be doing is reducing your prices when you need more money to operate.
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