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Thread started 07 Aug 2017 (Monday) 02:39
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Gear payback point

 
inmybubble
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Aug 07, 2017 02:39 |  #1

Hi guys,

I have a question about new gear and how fast should it break even. For example: If I invest 2000€ into new gear, how fast should I earn the money back? Should it be in 1 month, 2 months, 6 months, 1 year? Even longer? At what point will it be profitable and just not another expense that will drain my bank account.

Are there some guidelines or good practises? Tried to google it but probably I'm not using correct terminology as I didn't find anything useful.

Would like to hear your thoughts on that.


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john ­ crossley
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Aug 07, 2017 05:37 |  #2

inmybubble wrote in post #18421017 (external link)
Hi guys,

I have a question about new gear and how fast should it break even. For example: If I invest 2000€ into new gear, how fast should I earn the money back? Should it be in 1 month, 2 months, 6 months, 1 year? Even longer? At what point will it be profitable and just not another expense that will drain my bank account.

Are there some guidelines or good practises? Tried to google it but probably I'm not using correct terminology as I didn't find anything useful.

Would like to hear your thoughts on that.

That's a bit like asking "How long's a piece of string?"

It all depends on how many paid jobs you do in any given timescale. How much you charge, and what your profit margin is. Only YOU know the answer to that.


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Naturalist
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Aug 07, 2017 05:40 |  #3

Yeah, you have to calculate your Return On Investment (ROI) based on sales that you anticipate with the equipment that you will need for the job. Each photographer will have a different ROI. Some may pay for their gear in 4 or 6 months while another may pay it off in 12 months, 18 months, etc.


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inmybubble
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Post edited 11 months ago by inmybubble.
     
Aug 07, 2017 07:26 |  #4

Naturalist wrote in post #18421043 (external link)
Yeah, you have to calculate your Return On Investment (ROI) based on sales that you anticipate with the equipment that you will need for the job. Each photographer will have a different ROI. Some may pay for their gear in 4 or 6 months while another may pay it off in 12 months, 18 months, etc.

Okay, that's what I was wondering about - is it totally different for everyone or are there some guidelines :D (like in investing, buying apartment etc.)
It's not like I was looking for an answer like "6 months and if it takes longer, you shouldn't invest". Quite often those technicalities are left without attention and there are almost no discussion about them. So it is interesting to see peoples thoughts about it.


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RDKirk
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Oct 25, 2017 11:20 |  #5

I calculate in ROI the factor of "income not lost" as well. For instance, if I'm suffering a bottleneck or operational failures for lack of certain equipment that have cost me money, then money not lost because of the acquisition of that equipment is part of the ROI.

These days, having settled on what kind of photography I want to do, ROI has become more a matter of maintaining capability.




  
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JacobPhoto
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Oct 25, 2017 12:38 |  #6

Different types of gear will have different payback periods, and different longevity.

Buying off-camera lighting might last you 4 to 8 years. But you may not use them on every shoot.
Buying a good quality lens will last you 5 to 10 years. Depending on the lens, these will probably get the most use.
Buying a good quality body will last you 2 to 3 years. You can't take a photo without a body, but whether this is your primary body or your secondary / backup will matter.

In each scenario, I would approach the purchase differently. By all means, don't put yourself into debt without having a plan to recoup the money. If you have one body and are committing to shoot a wedding, then you absolutely need to have a second body to cover your ass and protect the potential income. If you already have a short, medium, and long lens, and you want some sort of niche or artsy style lens because there's one shot that you want to try and get with that lens, then absolutely hold off on the purchase until you're in a better financial state.

When I bought my first DSLR, I got it at Best Buy and was given a 1 year same-as-cash financing plan. I paid $100 per month, every month, deducted from my freelance earnings, and paid it off on time. Some months I made $300, other months I made $1,500. But I made sure that the first $100 I made went straight to the camera. Other revenue went to some extra lenses, a flash, and some other accessories. 1 year later, I had a fully paid off kit, and continued to grow my revenue stream. I went into debt with a specific plan, stuck to that plan, and have been set ever since.

More than 10 years later, I am still earning good side money from photography and freelance work. It's not my main gig, but it's enough to report to the tax guy.


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RDKirk
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Oct 25, 2017 12:50 |  #7

There have been two purchases in my history that had a dramatic impact on my income, essentially because they immediately and significantly increased my range of products.

The first was my first medium format film camera--a Yashicamat TLR--back in 1972. That enabled me to shoot weddings, which really couldn't be done seriously with 35mm at the time.

The second was the Canon 5D, which freed me from medium format film, and made it economical for me to offer large enlargements to a greater variety of customers for whom the process of carrying much more camera gear, developing film and producing proofs, and all that falderal (which had gotten worse as local film processors closed down) hadn't been worth it.

In both cases, the cameras paid for themselves within a couple of months, fastest of any other major equipment I've ever bought.




  
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MatrixBlackRock
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Oct 29, 2017 16:44 |  #8

inmybubble wrote in post #18421017 (external link)
Hi guys,

I have a question about new gear and how fast should it break even. For example: If I invest 2000€ into new gear, how fast should I earn the money back? Should it be in 1 month, 2 months, 6 months, 1 year? Even longer? At what point will it be profitable and just not another expense that will drain my bank account.

Are there some guidelines or good practises? Tried to google it but probably I'm not using correct terminology as I didn't find anything useful.

Would like to hear your thoughts on that.

Find out what the tax regulation in your country allow for deprecation of the gear you are working with, in order to stay in the black you breakeven of the cost of that equipment should be within 30 to 50% of the deprecation time.

Anything more than that and you are investing too much money for too little return.




  
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Tom ­ Reichner
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Oct 29, 2017 18:03 |  #9

inmybubble wrote in post #18421017 (external link)
I have a question about new gear and how fast should it break even. For example: If I invest 2000€ into new gear, how fast should I earn the money back? Should it be in 1 month, 2 months, 6 months, 1 year? Even longer?

It seems odd for the goal of a photography business to be paying off the photo gear.

Typically, there are so many more expenses to consider than just the gear. . Furthermore, a business's goal is normally to produce a steady, sustainable flow of income that results in a net profit, not to buy off one of the things that it had to buy to get started.

In fact, the whole way you asked the question seems to come from a hobbyist/"guy with camera" perspective, rather than from a business owner's perspective.

I don't think that you should worry about - or even think about - some "buyback point" for your camera and lens, because it is such a small, trivial thing. . Rather, think about all of the much more important things that photography business owners have to deal with, such as procuring and retaining steady revenue streams, developing a good working relationship with an accountant, a lawyer, and an insurance agent (or working directly with an insurance company, sans agent), branding, marketing, streamlining your workflow, sourcing additional help when needed, etc.

.


"Your" and "you're" are different words with completely different meanings - please use the correct one.
"They're", "their", and "there" are different words with completely different meanings - please use the correct one.
"Fare" and "fair" are different words with completely different meanings - please use the correct one. The proper expression is "moot point", NOT "mute point".

  
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Bassat
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Oct 29, 2017 18:29 |  #10

I've probably spent $20,000+ on gear in the last 10 years; most of it was used or refurbished. At least 1/2 of that has been re-sold. I'm never going to make a nickel from my photography. It's all good. That was never the point. I don't make any money off my golf game, or my piano playing, either.


Tom

  
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mikeinctown
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Oct 30, 2017 08:17 |  #11

Depending on tax laws in your country, I would be seeking the advice of a tax professional to see how business expenses can be deducted and or depreciated. Then I would probably view a purchase as mentioned by RDKirk. Don't buy something because you may need it, buy it because it is costing you money not having it.




  
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Wilt
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Post edited 8 months ago by Wilt.
     
Oct 30, 2017 13:06 |  #12

Return On Investment is a very different beast than Business Equipment Deduction period on tax returns.

You might have a 7 year write-off on business equipment on taxes, even though the stuff is totally OVERHEAD in having a business or even if the stuff did truly 'pay for itself' in 6 months ROI!


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