This is going to be one of my longer posts, but I couldn’t think of how to shorten it. Originally I had intended for this to be a course but recognised that it would be better for the industry to get it out to as many people as possible.
Also, a shout out to Dave Hewitt who’s lectures 19 years ago gave me the foundation for what I have put together here.
For some time I have wanted to write a post, several posts probably, about how to work out what you need to charge for any given job or shoot.
For as long as I can remember I, along with many others, have noticed how photography pricing has plummeted. This isn’t entirely down to poor pricing, some of it is attributed to technological advances, but a large part does seem as a result of new photographers not really knowing what working out your pricing entails.
Hopefully over the course of this blog post, along with the Google Spreadsheet at the end, I will point photographers, both new and old, in the right direction. The info in this post and the Google spreadsheet is based on my experience which I have built up over the last 20 years. It is by no means the only way to calculate what you should charge, but it is a robust method that has stood me in good stead.
You must note that whilst anyone can use the methods I describe, the tax calculations are based on the South African tax rates. Also, I am a firm believer in free markets and get annoyed every time price-fixing or any other such anticompetitive behaviour affects me personally. This is not trying to get photographers to fix their pricing. Rather it is a way to make sure that photographers are getting what they deserve.
Knowing What You Need To Earn
One of the first things you need to do as anyone starting out in photography, or any similar business, is to work out exactly what you need to earn to cover your immediate personal expenses/obligations. Many people do not give this more than 5 minutes of thought and just thumb suck a number, but if done properly this step should actually take a bit of time. Remember these are your personal expenses and not your business expenses. Business expenses will get covered in the next section.
As most photographers in my experience are self-employed it is one of the few advantages we have over many other salaried professionals. The ability to calculate what you need and add to that the nice things you would like, do give you the opportunity to work towards writing your own pay cheque. Many other professions get told what they will be earning – whether it covers the bills or not.
During this process, you will need to list all of your non-negotiable expenses, what they cost, and how many times a year you pay them. If you have lived on your own for a while this will not be too difficult as you will have a history of transactions built up that you can refer back to. However, if you are young and leaving home for the first time then you may need some help with listing these expenses. Chat with family and friends to see what sort of expenses they have each month to get a good idea of what you will need to budget for. Expenses you will need to list are things like rent, food, transport, insurance, school fees, etc… Essentially, they are all the items you can’t do without. Once you have done this you can now do the same but for the “nice to have” items. These are things like satellite TV, entertainment, movie/date night, etc…. Basically, these are all the items you would like to have but could do without.
It is nice to separate your expenses out into these two categories so that should you have to make some cutbacks you can do so by first removing/reducing your “nice to have” expenses.
Once done you now have a robust list of all your expenses, what they cost you, and how many times a year you pay them. By multiplying the amount (Rand value) by the No. of tames you pay it a year you will arrive at what you spend on that line item each year. If you now do this for every expense and add the totals together you will arrive at the figure you need to earn as a salary AFTER TAX.
All your expenses above need to come out of your Nett salary. This is what is left after the Tax Man has taken what is owing to him. Technically some of your expenses, like certain medical related expenses and retirement annuities are tax exempt up to a point so any money spent on these will mean you will get Tax back at the end of the Tax year in the form of a tax rebate. However, it is really difficult to know exactly what these will be in advance, especially medical expenses, so I tend to not factor this Tax rebate into my calculations. Any rebate I do receive can then almost be seen as a bonus.
So, knowing what you need after tax is no good as you really need to know how much you need including income tax. You will need to reverse calculate what you would then need to earn before tax (gross salary) so that your salary would be enough to cover not only your expenses but your income tax as well. If you don’t do this you will have to use money that has been earmarked for living expenses for your tax payment. This will then leave you out-of-pocket.
Any decent bookkeeper/accountant will be able to do this for you, but for your convenience, I have included a link to a Google Spreadsheet at the end of this post that you can use to list your expenses and have the spreadsheet work out what tax you will be liable to pay. If you would prefer to know exactly what you will need, factoring in all tax deductions/rebates, then it is probably best to chat with a tax practitioner.
A Pessimistic Budget
One last point with regards to your personal budget. Most creatives seem to also be quite optimistic people by nature, not all mind you, but most. We often have a tendency to hope for the best in most situations, which isn’t a bad way to go about living, but our downfall is often in that we also plan for the best.
This is how I was doing things for many years and when all is working well life is fine. The problem is when things don’t go well as we tend to have under-budgeted which leads to all sorts of financial stress. My new motto when it comes to budgeting is to “plan for the worst whilst hoping for the best”. This is why I don’t factor in tax rebates (as noted above). In the past, I would have factored it in to bring my price down and then at the end of the year when the rebate wasn’t what I was expecting I would have been out-of-pocket. The key is not to get too carried away by loading your budget, but you will need to plan for unexpected costs.
Your business expenses are much the same as your personal expenses. Whilst your personal expenses are what you need to live your business expenses are those that your business needs to incur to run properly. The largest of your business expenses will probably be your own Gross Salary (before tax salary), but your business will incur all sorts of other expenses like rent, insurance, website costs, and many others.
In the Google Sheet below there is a tab labelled ‘Business Expenses’ and this is where you can list all of your businesses expenses. You can choose to list them as weekly, monthly, annual expenses and can also choose the currency of the expenses. This comes in handy when you pay for subscriptions in US Dollars, Pounds, or Euros.
Your salary will have been pulled across from you the ‘Personal Expenses’ tab so you will not need to enter this. There is also a row for ‘Travelling’ costs. This is the amount your business will reimburse you for the use of your own car for business travel. This is only for the travel that you can’t bill clients directly for. Do not fill this in as it is formula driven and the calculation will be done on the next tab.
Again, take your time with this and try to account for all reasonable expenses that your business will incur over the course of a year.
Basic Info Tab
Once you have calculated both your personal and business expenses you can move on to the ‘Basic Info’ tab where the last few bits of info you need to fill to come up with a cost price and retail price for any hour worked.
The five bits of info that you will need to fill in are the following:
- How many weeks we wish to work per year
- How many hours we wish to work a day
- How many hours a week you will spend upon non-billable administrative jobs
- Your rate per kilometre for the use of your vehicle
- How many kilometres you expect to travel a year for business trips you can’t bill clients for.
The second one is important to note for part-time photographers. If you only want to work mornings then you will need to adjust the 40 hours per week down to 20 hours per week.
Once you have filled in the above information you will notice that there is a are values calculated for the ‘Retail Per Hour’ and ‘Cost Per Hour’. The retail per hour is not the amount you will charge for a 1-hour shoot but is rather the retail per hour worked. Remember, whilst a 1-hour shoot is an hour in duration more often than not a lot more than an hour of your time will go into it.
Calculating the Time Spent on Any Given Shoot
If you have made it this far then well done. Most of the heavy lifting is done and you will be able to move through the remaining tabs fairly quickly.
The next 6 tabs have been included to help you calculate how much time you spend on Commercial, Wedding, and Portrait shoots. Each of those three categories is split into two tabs – one for working out your cost and the other for working out your retail price.
For the purpose of explaining how they work, I will chat about the two commercial tabs, but the same will apply to weddings and portraits.
In the ‘Commercial – Cost’ tab of the Spreadsheet, you will see the first column is populated with some different shoot types. If these don’t match what you offer then feel free to change them. Also, along with the top, you will see a row of headings that are the segments that most commercial shoots are broken into.
Once you have added your shoot types or used the ones supplied, you will need to go through each shoot and add the number MINUTES it takes you to complete these tasks. The ‘Total Time’ column to the right of these segments will add up all the minutes you spend on a shoot and convert it to hours.
I have auto-populated the first shoot type with values not far off what I experience on the average one-hour commercial shoot in the studio. This is to prove that you can’t only bill for one hour of your time for a ‘1 Hour Shoot’
Once you have done the above for all shoot types you can move over to the ‘Commercial – Retail’ tab. a lot of the time this will remain unchanged, however, there are spaces for you to add extra expenses you incur on any given shoot. This is where you can add assistant fees, 2nd Shooter fees, studio hire fees, and any other expenses that you incur on ALL shoots of this type. If you have once-off costs that aren’t usually incurred on a shoot then you invoice the client directly for that cost and don’t include it as part of your labour working.
The Same can be done for both the Weddings and Portraits sections to get a really good idea of how much time you actually spend on any given shoot, as well as what you should be charging AS A MINIMUM!
The last tab in the spreadsheet is what I was missing for many years. It is where you bring all the above info together to make sure that you are a) Charging Enough b) Being realistic with the quantity of any given shoot type you will do c) Not working more hours than are available to you.
Most of the info on this sheet will be pulled across from the earlier sheets and this info is all coloured red. It is the green columns that you need to edit and I will discuss what each one does.
No. Of Shoots – This is how many shoots of any given type you reasonably expect to do for the year.
Selling Price – This is what you would like to retail that service for. You can use the column to the left of it to see what the calculated price is from your earlier workings. Actually, start with these calculated prices and adjust if necessary.
Up-Sells – This is the retail price of added up-sells you expect selling each client. Think parents albums, canvas prints, etc…
At the bottom of the table, you will see two important blocks. The first is the surplus/deficit and the second is the number of hours you have remaining in the year. If the Surplus/deficit box is coloured red then you will not have made enough money from your shoots to cover your expenses – including your salary. You will need to either do more shoots, increase your price per shoot, or commit to up-selling your customers. Again, be honest with yourself. If you have never shot more than 24 weddings in a year don’t suddenly up this figure to 40 weddings. Also, if you have no intention up-selling your clients then don’t think that you will. In this scenario, your only option will be to increase your price.
The second cell to watch is the is the one giving you a running total of how many hours are left in the year. If in the scenario above you genuinely feel that you can push for 40 weddings then that is great. However, there may not be enough hours in the year for you to do so along with meeting all your other shoot commitments. In this case, you may find you have to drop your weddings down to 35 whilst increasing your prices to slightly above the calculated prices.
This section of the spreadsheet is the one that is almost like an art form. You will constantly need to adjust the three variables above to make sure that you not only make enough money but that you so so without breaking your back working 80 hour weeks. Of course, there are times when you need to put in 80 hour weeks, but it doesn’t have to be every week all year around.
Lastly, this sheet can be used to help you set marketing goals and strategies. It is quite liberating looking at the final figures and seeing exactly what needs to be done for the year. If you know that you need to get in 30 weddings, 48 portrait sessions, 15 engagement shoots, and 30 corporate functions then you can set about putting into place the plans to make it happen.
There are a few things to note with regards to this Google Spreadsheet. This document can be viewed by anyone with the link (potentially the whole world) so you should not make any changes to the link directly. What you should first do is save a copy of the file to your own Google Drive and edit that new copy. That way the info on your Spreadsheet will only be viewable to you and anyone you choose to share the spreadsheet with. Here are the steps to save a copy to your Google Drive:
- Click on the below link to open the Google Sheet in a new Tab/Window.
- Once open, click on File > Make a Copy.
- Leave the file name the same or change it to something that makes more sense to you.
- Below the filename select where you want to save your copy. This needs to be somewhere in YOUR Google Drive.
- Click “OK”
Once you have saved a copy of the original file to your Google Drive you can now edit the values as you see fit, but please note the following:
- The red cells are all formula driven and should not be changed
- Try to only change the cells that are coloured green
- There should be no reason for you to change the values in the ‘Tax’ tab
- Try and watch the below video to see exactly how the sheet works
Over the course of the next few weeks, I will be adding tabs to the Google Sheet as I release new content. I will show you how to update your newly created sheet with the new information during those tutorials. For now, just concentrate on working out this first step.
To help people better understand how all of this works, and to create an area where other photographers can get involved in helping each other, I have set up a Facebook Group where questions can be asked and hopefully answered.
Please feel free to request access to the group. However, only people who earn a living, or a portion of their living from photography will be allowed to join.