Recovering Capital for Photographers

Thinking about Capital, so you are ready to start charging clients for photographs. Easy you think, how long do they take, how much are other photographers charging, how much paper and ink are you using? Well as I mentioned before that is not all that is required to ensure a successful photography business. How much have you spent on your equipment? How long does that equipment last and how will you recover the cost of that from your clients?

Ok, so you are ready to work on how to make sure your photography business is recovering the capital invested in it for your equipment. You know this is important as equipment doesn’t last for ever and at some point you will need to replace items.  This is not the same as increasing your equipment. The example used may seem very small, but it is a good way to understand the principle and you will see when you start how large an amount you may have invested.

To start write down every piece of equipment you have and the price, write next to it when you bought it, next to that write how long you think it will last – or how long till you think you will want to replace it. I used Microsoft Excel to do this but you can do it on paper. You should have something like this.

Nikon D700 Jan 2013 £1400 5years
Prime lens Mar 2013 £ 190 5years
Canon Printer Mar 2013 £ 100 5years
Interfit lights Jun 2013 £ 300 5years

That is just an example, you will have probably a lot more, remember you can’t include memberships, consumables like ink, paper, bulbs.

Total your amounts up, on this example it comes to £1990 and I want to recover this in 5 years. This means that in 5 years time regardless of any profit or wage I take from the company there will be £1990 sitting in my bank classed as recovered capital that I can use to replace my equipment. Many people will want to include a vehicle but that is where it gets complex. If you include a vehicle you have to only use that vehicle for your photography business or have a way of verifying the miles that you use for business. At this stage I only put petrol receipts onto my accounts for travelling. I could at some point start to use a mileage allowance, say 50 pence per mile but that’s for another blog. Of course you could pay for an accountant or bookkeeper to do all this for you. But until I am making a few thousand with the business I don’t plan to do this.

So now you know how much you need to get and over how long, so for a newly started business it would be unwise to just divide this amount by five and say that is how much is required each year as it takes time to build up a business, it makes more sense to anticipate that the volume of work you can achieve will increase over the years.

To continue with the example of £1990 this could be broken down into
year 1 £250
year 2 £320
year 3 £390
year 4 £480
year 5 £550

So you have the yearly amounts you want to achieve. How are you going to attach these to the paying jobs you work on? I undertake three types of commission, weddings, portraits and commercial. I can charge a lot more for a wedding than a pet portrait, and for a commercial shot I am paid more than either of the others. Yet in expected work there is a clear connection between the type of work and the pay received for it. I find commercial work as high paid but low volume, weddings a good pay but not so many, and portraits being low pay but high volume. So in year one how will I achieve the £250 I want to recover for capital.

Each type of work I undertake has a capital rate I attach, this rate will change throughout the five years – achieving in the fifth year what it could stay for the following years unless additional equipment is purchased.
Wedding capital at £25, Commercial capital at £50 and Portrait capital at £10. I decided on these amounts due to the expected number of jobs per year, which in the first year is 4 weddings, 0 commercial and 15 portraits.

The number of jobs I achieve each year is forecast and you can amend these every three months throughout the year to see if you are on track or need to increase or could even decrease the amount of capital you are achieving. The secret to forecasting jobs here is to ensure you are honest, how many jobs do you think you are capable of achieving you are unlikely to be able to work on 100 weddings per year, and would you honestly be able to attract 100 wedding clients? So be realistic with what you can do and how many clients you can attract.

By year 5 in my plan I aim to be photographing 15 weddings per year, 3 commercial jobs per year and then the faithful portraits at 45 jobs – that is one a week for each working week!! Portraits being the main stay as they are varied, pets, babies, children, groups, couples, engagements, boudoir, and beauty. Don’t imagine you are going to be photographing London Fashion Week in two years unless you have an internship with a leading studio now! But plan your expectations, revisit them on a regular basis, play with your figures on a separate excel sheet to see how much you could be reinvesting in advertising, marketing, and always remember you need a take home wage.

I will at some point put a link to a possible Microsoft template for your photography accounts on this blog.

How much to charge?

So when you set up your website, your facebook page, your twitter page, you start a blog and have a domain so  you can have your emails sent to a professional sounding email account, you wonder why you are getting a few people viewing your info, reading you blogs and giving some comments on you photographs but no one is contacting you regarding a booking WHY, one reason could be…

… have you shown your charges, no!!! no of course not they are probably negotiable and even not worked out yet.  But would you contact someone to ask about a service when you don’t know if they will charge you £10 or £100.   So have you considered how you will work out your rates or charges?

Think about how much work is involved before working out your rates,  I recently spent an hour with someone taking portraits, twenty minutes were spent discussing their requirements, then I spent about 2 hours processing the images,  selecting the best 20 and then another hour with them showing them the images and discussing which they wanted and at what size.  I then spent about 30 minutes printing and mounting images and a further 30 minutes copying images to disk for the customer to have all 20 for further use.

This means I spent 5 hours working for this customer,  two images sold at A4 size and 3 at A5 size, 5 out of 20 sold and one memory stick of images. Do you want to work out an hourly rate or a price per photograph, what about a combination of both?

Do you want to do your own printing or do you want to use a third party,  getting a photo-book for a customer is a very simple way of giving a customer a good selection of images and some of the companies can give a phenomenally quick turnaround, but are you planning on spending the time with the customer to plan the layout of the photo-book because that would add to your time further.

Have you looked at the prices of other photographers in the area, are you offering anything different, anything unique or do you want to compete on the price aspect?

Do you put your rates on a separate page of your website, do you do special offers? after all after the work spent on the shoot, any further sales of photographs are almost a bonus for you.  Consider the aspects of putting up a package, showing a couple of photographs of different sizes, perhaps different mounts whatever you want to offer with prices. 

Having considered all of this, do you think you can make a profit at the prices you are going to charge.  Don’t forget any travelling, any consumables, inks, paper, mounts, covers, memory sticks, CDs, DVDs.  electricity, rent, studio costs.  Are you still making money? The cost of you camera, lenses, computer, software, lights, memberships of organisations, insurance? Still making a profit? 

In the coming weeks I will show you how to plan to recoup your capital outlay of equipment against each job, keeping a record so you can track all your finances.