Will this business model work?

Hi all. It's been a while since I last posted here but I always find POTN to be the best resource on the web!

I've done a ton of research on commercial business/pricing models and it seems that there really isn't a specific "set it and forget it" model.

I live in Panama City, FL which is quite the small city but the beach is a tourist destination. One thing that I have noticed on this side of town is, nobody wants to pay my rates nor do they really understand licensing. It's very difficult knowing that everyone is price shopping and the value of photography isn't on par with larger, more modernized cities.

I'd like to ask you guys advice on what you think about my current pricing model which I revised for this year. I'll give you a scenario.

Client 'x' wants a head shot on location and would like to use the image for a brochure. It'll be fairly small so I regard it as spot use.

I charge an initial $150 for my 'production/creative fee' which covers my travel and the cost to produce the image. Afterwards, I won't charge hourly at all up until I hit the 4hr mark which I will charge $150 per hour.

I feel that if I remove the concern for time all together, the client will focus on what specific images they want and I will spend however long it takes getting that along with other images that I think they'll like. This instills the value in each photograph opposed to how long it'll take making the photos.

When I finish the shoot, I will upload proofs and the client will then license each image individually. If given a budget/details up front, we can plan ahead in terms of costs.

If my client likes the images that I decided to implement during the shoot and decides to license them as well, I will provide an additional 25% discount on the license fee after the first image.

I can see this model being a risk vs high reward but my client isn't paying for images that they don't want along with the time I spend doing the job. I won't be penalized for my efficiency as well.

Summary: I don't charge hourly but per image use.

Thoughts? Much appreciated!

You will definitely find that smaller businesses fight you tooth and nail and have zero understanding of licensing, but the big companies with the power to fight it completely understand it and are happy to play by the rules.

I think that is ridiculously cheap, even for your neck of the woods (we have a place in Santa Rosa Beach, so we are familiar with the area.)

I charge by half-day or full day. A half day is 60% of a full day.


License individual photos, but they may want to license a group of photos for work so be prepared for that as well.

Thomas Campbell wrote in post #15552872
You will definitely find that smaller businesses fight you tooth and nail and have zero understanding of licensing, but the big companies with the power to fight it completely understand it and are happy to play by the rules.

I think that is ridiculously cheap, even for your neck of the woods (we have a place in Santa Rosa Beach, so we are familiar with the area.)


I charge by half-day or full day. A half day is 60% of a full day.

Thanks a lot for your reply, Thomas!

So in this scenario, you'd charge the client a half-day rate + licensing? Do you license per image or handle in bulk?

[Edit] Just read your licensing response. D'oh. When licensing a group of photos, how would you apply a packaged discount? I use FotoQuote for my licensing and it doesn't provide much info in regards to batch licensing...

I appreciate your response and I'm glad you're located somewhat close by.

It really depends on what they want to license it for as to how I would handle it.

Thomas Campbell wrote in post #15552974
It really depends on what they want to license it for as to how I would handle it.

I see. As a general number, (commercially, general numbers aren't viable...) would adding a 25% discount after the first image license work?

Say the client wants to run 5k-10k brochure press prints at a 1/4 image use size which would = $373 on the lower end. If they wanted to use an additional photo on the same brochure, it would be $279.75. Would that work?

Sorry for sucking you into a lot of questions, ha! I just like to make sure I understand the ins and outs of the whole process. I suppose the client could benefit from a greater discount if they licensed a bunch of images but I don't like making up numbers unless I understand where the market stands and if those numbers actually apply in other regions.

Thanks again. If anything, hopefully someone will read this and learn something, too!

"I charge by half-day or full day. A half day is 60% of a full day."

last time i checked, wasnt 50% half of a full day?

rebel_mike wrote in post #15553016
"I charge by half-day or full day. A half day is 60% of a full day."

last time i checked, wasnt 50% half of a full day?

Most businesses have enticements to use their product more.

Frequent Flier Milage
My 6th Haircut is 50% off at Sport Clips
Better coupons at the grocery store the more I go
10th coffee is free at my local coffee shop

If they book me for two half days, it is more work for me than one full day. So I want them to book me for one full day. The less I have to clean, charge, prep and pack my gear and travel to the location, the better for me.

That could work. But if you give that automatically, you lose your leverage in giving them a discount when you want to and charging full price when they are trying to stick it to you.

Don't automatically discount. Give a discount when it benefits you to do so.

rebel_mike wrote in post #15553016
"I charge by half-day or full day. A half day is 60% of a full day." last time i checked, wasnt 50% half of a full day?

It sure is, however travel, setup and knock down time must be included in any pricing scheme and when multiplying it by having two of them in the same day, someone must pickup the additional costs and it will not be me…

Wayne

I don't license anything so for me these are just thoughts but intriguing ones.

If you are going to be dealing with lots of small business and you know getting small businesses to pay licensing is a pain in the rear then why wouldn't you create a model that catered to the population that makes up 70% of your business. You can save yourself a lot of heartaches and trouble by changing your model and considering up front "I want to make X per small business client so here's how I structure pricing to do that."

It saves you heartache and time and more importantly it up your conversion rate of opportunities to customers!

I am much more interested in profit than conversion rate.


By giving the licensing away, you have killed any ability to further profit from the images you have made. It is a big picture issue.

I have a client that asked for my bid. Big client. Asked for exclusive, unlimited. So I wrote up a bid with that. Oh wait... we really only need social media+internal. That is a different price completely. So I lower my price on that and if they want to keep it on their FB page next year, they pay for the useage again.

Once you have done this for years, you have built up a client base that is paying to use your artwork, and you have steady, continuous income rolling in all the time.

Or you could give it all away and that is the end of the story for those pics.

Thomas Campbell wrote in post #15556987
Once you have done this for years, you have built up a client base that is paying to use your artwork, and you have steady, continuous income rolling in all the time

One often overlooked advantage of that method is, by building up such a client base is you can leverage that base into a multiple, greatly increasing the amount you will be able to receive once the time comes to sell the business and retire.

Wayne

A couple things we have done vs. what we once did..

We no longer post any of our portrait sessions online. WHAT? How can you sell anything?

All of our clients, and we live in a town of 700 people, come to our studio in our home or we agree on an outdoor session. Session fee, you bet, but with that always comes print credit.

After the shoot we schedule a consultation, whether it be a business or individual, and take pictures of their walls or have them take cell phone photos of their walls. We then design portraits for those areas, everything framed and everything ready to hang. We don't sell any prints 8x10 or less unless they have also bought that image as a wall portrait. We don't sell any CDs, 4x6 prints of any image that has not been ordered in a larger size.

Here's the key....you must get your clients to view your portraits/their portraits, on their walls and their space. We use Preevu software to do this and ProSelect is also great for this.

Sorry for the delay but lots of good stuff in this thread! I do agree that the majority of inquiries from potential clients are small businesses who do not understand licensing.

In my defense, the reason why I charge an initial 'creative fee' and don't focus entirely on time is because I want my clients to focus on the individual usage of each photo. I do agree that this can be exploited but think about it from my perspective. If a client thinks they can take advantage of my time constraints, so be it. This method involves risk, no doubt. But with that risk, it can also provide reward.

Say I'm hired to shoot a few head shots and my client knows I don't necessarily charge by the hour, they then request me to shoot more compositions and knowing that there's still more time to spare, they then request me to shoot their facility as well. When it's time for my client to select photos to license, they end up licensing more than they expected because they had more to choose from and my time is then paid for. On the other hand, they can also decide to license exactly what they budgeted for and that time I spent photographing the additional photos will then be wasted but the option to license those photos is still there. I suppose I can offer this to small business as my personal leniency but provide a half-day/full-day rate to larger corporations with a bigger budget/usage needs.

@Glumpy, I do like how you mentioned creating an hourly based model for those who don't necessarily understand licensing. I could create several different models based off a specific scope of usage, ie., Digital production/usage rate would be $500hr and Print production/usage rate would be $700hr. (Just making these numbers up!) If they want unlimited print/digital usage for 1 year, I could then charge $1,000hr.

I'll have to do the research on this model but people like options.

Thanks a lot for the conversation everyone. I still have more researching to do but I'm glad we all got to pass this topic back and forth!