Almost all photographers start their businesses with a dream of making their living doing something they love: taking pictures. Most photographers quickly realize that running a small business involves a lot more than shooting, editing and delivering images to clients. If we aren’t careful, a lack of knowledge about the financial sides of our photography businesses can leave us overworked, exhausted and clearing a little more than minimum wage.
As a full-time photographer for over eight years now, one of the most common questions I receive in my inbox is, “What should I charge for weddings or portraits?” It would nice if I could reply with a simple answer like “Supply and demand! Charge what clients will pay!” (and this isn’t entirely bad advice…) however, the real answer for your unique business is going to take a bit of work.
1. What’s Your Break Even?
Every business has a break-even number: a specific amount of income you must generate every year to cover expenses. To help you find your ‘break even number’ let’s talk about two categories of expenses: fixed and variable.
Fixed costs include any expenses that do not change from month to month. Examples: Mortgage/Rent, Internet, Business Insurance, Software Subscriptions, Cell Phone, Car Insurance, Canon Professional Membership, Domain and Blog Hosting.
Variable costs fluctuate from month to month. Examples: Advertising, Packaging Supplies, Coffee/Restaurant Meetings, Independent Contractors/Office Assistants, Education/Conferences, Branding/Design, Car Maintenance, Gasoline.
On a piece of paper (or in a spreadsheet software) start a list of your fixed costs every month. If any costs are paid yearly (business insurance, for example) divide by 12 to get your monthly figure. This will make things simpler!
In the next column, write a list of your variable costs for the year. If you have previous data to compare (from your last year in business), estimate your total budget for each category for the upcoming year. Always overestimate your costs! Better safe than sorry.
Once you have your monthly fixed costs, multiply by 12 to find your yearly fixed costs. Add up the variable costs column to find your yearly variable costs. Add the two figures together and now we have your break even number.
Your photography business will need to bring in more money than this in one year’s time – just to stay out of the red.
2. What Is Every Job Costing You?
If you charge $3000 for a wedding, after paying your expenses, you’re not making $3000 a wedding. I’m not talking about your break even number (fixed + variable costs = break even) I’m talking about Cost of Goods Sold, or COS (Cost of Sale) for short.
For every wedding collection you offer, make a list of every included item: second shooter, online gallery, client gifts, wedding album, engagement guestbook. Beside each item, list your actual cost. If the wedding album costs you $500, make a note.
When you have your total COS for each wedding collection, subtract the COS from the retail price of the collection. If you photograph portraits in addition to weddings, follow the same pattern, carefully noting your hard costs in delivering the session.
Using the data you’ve calculated, establish the ‘average’ net income per wedding (essentially your most popular package) and ‘average’ net income per portrait session.
3. How Much Work Can You Handle?
It’s all great and wonderful to think, “How to make more money? Shoot more!” And yes, if you’re not yet at ‘full time’ in your business, that should absolutely be your goal through branding, marketing and active promoting of your business. However, we need to stop and ask ourselves realistically, “How much work can I handle in a year?”
In my personal experience, 20 weddings a year plus about 20 portrait sessions a year feels very ‘full time’ to me. For your lifestyle, you may be able to handle 30-40 weddings a year. (Commute time and the amount you travel is a huge deciding factor.)
On your piece of paper, write down how many weddings and/or portraits you want to shoot in a year.
4. What Is Your Desired Salary?
Maybe you’re thrilled with your salary based on the amount of weddings and portraits you photograph. But maybe you’re feeling a little helpless with the results of Step 3. Your salary is too low for the amount of time spent working in your business and you need a change.
A few important questions to ask:
– What is your inquiry to booking rate? Are you booking almost every bride that comes your way? It could be time to make a minimal price increase—you’ll be surprised how quickly a $300 increase x 20 weddings adds up!
– Is it possible to stretch yourself photograph more weddings and/or portraits? If you’re feeling overwhelmed, outsourcing your editing is an amazing way to increase your revenue. (I don’t have time to do the math. But trust me. You could pay for an entire wedding seasons outsourcing by shooting 2 more weddings. And what takes more time? Editing.)
– If you’re feeling burned out by shooting, what other streams of revenue can you increase? Do you have an amazing skill you could teach online or in-person for a profit? Can you run a headshot session for local business owners? When push comes to shove, get creative.
5. How Will You Save for Off Season?
The reality of being a wedding photographer is… the job is very seasonal in the majority of the world. I often have 4 month stretches in the winter without a wedding but can easily shoot 6-7 weddings in one summer month!
It’s very important to separate your business and personal finances. When I photograph 7 weddings in August, I’m not ‘having a really profitable month’ in my mind. I’m working hard because the harvest is ripe and in the off season I’m working hard in other ways to prepare my business for the busy, go-go-go season.
Separate your finances. Treat your business like a business and your own personal finances as if you were an employee of a company. (Even if you’re registered as a sole proprietor.) The easiest way to set consistent income is to estimate (once again, underestimate always) what you’ll make in a year’s time. (Using the tools outlined in this post.) If your salary looks like it will be $40,000 (before paying income tax of course) – divide this by 24 to find the paycheque amount you’ll pay yourself on the 1st and 15th of every month.
$40,000 / 24 = $1667
On the 1st and 15th of every month, whether you’re shooting 8 weddings in a month or zero, you’ll transfer $1667 from your business account to your personal bank account. Don’t forget to set aside income tax, depending on how you file taxes (I’m Canadian, so the systems are likely different.) You can set up quarterly income tax payments or set aside a percentage from every paycheque until the end of the business year. If your income tax was 25%, you’d set aside ($1667 x .25% =)$416.67 from each paycheque.