Making Photography A Career: Run Your Numbers
Many who enjoy photography and have had some success at licensing rights to their images dream of quitting their “day job,” giving up a regular pay check and taking pictures full time.
Here are a few things to think about that apply both to photographers who hope to do commercial assignments and those who want to license rights to stock images.
Fortunately, with assignments the photographer is guaranteed a fixed fee for the job before undertaking the work. The only questions are “what to charge” and “is the amount the customer is willing to pay enough?” Nevertheless, the assignment strategy is much less risky than producing stock where the photographer does all the work and incurs all the expense, with no guarantee he will ever be paid anything.
I would like to recommend three resources for determining what to charge. They are: John Harrington’s “Best Business Practices For Photographers”, Chapters 6 thru 9; the NPPA “Cost Of Doing Business Calculator” and the PhotoShelter free book “Starting A Photography Business.”
The first thing you need to do is keep careful track of all your business and personal expenses for a period of time. I recommend at least a year. Some say, “Why track of personal expenses.” If you are going to be in business for yourself you need to know exactly what it costs you — not some hypothetical person — to live in the style to which you have become accustomed. What do you spend for room and board? on movies? lunches? Starbucks? All the little things add up and they may be things you don’t want to do without.
In addition, when you’re working for yourself many of the business expenses may also have personal applications. It is hard to figure how much of one category you might need to allocate to business and personal. Take a car for example. You might say, I must have a car for my personal life. Therefore, it is not a business expense. But chances are you’ll also use the car to some extent for non-reimbursed business purposes and you will need to figure how much to allocate to business expenses. If you live in New York or London maybe you only uses subways and taxis, but you ought to try to figure out what portion of those trips you make for business reasons. Eventually we will add personal and business expenses together to figure what you need to earn each year.
Here’s a list of some of the business expenses you should be tracking.
- Office or Studio
- Phone (Cell, Office, Fax)
- Photo Equipment and Supplies
- Computers (Hardware & Software)
- Internet Hookup and Email
- Personal Web Site
- Advertising & Promotion
- Office Supplies
- Postage and Shipping
- Professional Development/Seminars
- Subscriptions & Dues
- Business Insurance (Liability)
- Legal & Accounting Services
- Taxes & Licenses (Business Property & Self-Employment)
- Office Assistants (Payroll)
- Entertainment (meals with clients)
- Health Insurance
- Retirement Fund
Let’s look at a few more closely. You may work out of your home, and not need a studio. In fact, you may get a slight tax break for a home office. You may need to occasionally rent a studio. Think about that.
Photo and computer equipment and software are always difficult to estimate. You’ve already got a camera and a computer. The tendency is to think there will be no additional costs in this area. But, there will always be a need to upgrade to the next generation of hardware and software. Try to allow a generous budget in this area because you will spend it. If nothing else you will have to add storage capacity as you shoot more and more images.
What will you have to do to promote your business and reach out to customers? Will you use direct mail? What about an online portfolio, a print portfolio, one or more iPad portfolios?
Are you going to do everything yourself or will you need a part or full time assistant? Are you currently receiving health coverage through your employer? Will you need to get separate health coverage? What about retirement? You’re 25 years old. Do you really need to begin putting something away for retirement now? Yes. If you live in the U.S. you’ll get a tax deduction and you’ll definitely need some savings when it is time for retirement.
One little story. In the early 1990s when I was 55 and earning $175,000 a year from my stock photo collection I thought the revenue my stock photos would generate would be my retirement fund. Then came the Internet; dramatic technological changes in camera equipment, digital capture and an explosion of available imagery of every conceivable subject matter. Fortunately, I had the foresight to also put money into a retirement fund. If I had not, I would be in deep trouble today at age 75 if the revenue generated by my stock photography collection was my major source of retirement income.
Nobody knows how the photography business will change in the next 20 year, let alone 50 years. The only thing I can say for sure is that the imagery needs, and the way it is created will be very different from what is being produced today. Some may think, “I’ll adapt or I’ll try photography for a few years and if it doesn’t work out I’ll get into something else.” A lot of 40 and 50-year-olds will testify that making that transition isn’t all that easy.
Looking At The Numbers
Let’s get to the numbers. Assume you’re single. After you have totaled all the numbers in the above expense categories you get a figure of $30,000 in non-billable expenses. And your personal living expenses are $25,000. You need to earn at least $55,000 in the next year.
If you are aggressively seeking work every day of the year you’ll probably be lucky if you can bill 100 assignment days a year. That means you need to charge at least $550 for each assignment day billed. If you haven’t got a track record and experience, 50 days a year, or one billing day a week, is probably a good starting goal. That means you need to average a minimum of $1,100 a day. Some days you may work for less, but that means you must get a higher fee on other days in order to make your gross revenue number.
These numbers are a starting point for establishing fees. Photographers should remember that some jobs require more skill and creativity that others. With other jobs the photographers is required to take more risks – personal or financial. In these cases higher levels of compensation are justified. If your personal and business expenses are higher, or if the number of days per-year you can work are less, then your daily rate will need to be higher.
Photographers are often tempted to work for less than what they need to order to turn a profit. They will work to “get experience,” “build a portfolio” or for “non-profit organizations.” In such cases there are several things to remember. There are millions of non-profit organizations. Many have huge budgets and well paid employees. They often pay going rates for certain services. Why not photography? Choose carefully if you’re going to supply free pictures.
Photographers often do jobs for less than their costs believing that if they demonstrate their abilities the client will offer them work at higher prices in the future. This usually doesn’t work. That client you charge less than your costs will expect you to always work for the same low prices. The only way to get better paying jobs is find different customers and start them out at higher prices.
Some will say, “Great, I only have to work one day a week and I can earn that much.” No, you’re just getting paid for one day a week. You will be working at least 5 days, probably five long days, trying to get those jobs, marketing, lining up models, getting props, planning shoots, doing post-production computer work, delivering the end product and — worrying about where the next job will come from.
There may be some photographers with working spouses that brings in a good salary and, if they’re lucky, supply the health insurance. These photographers may be able to work for less. But there will also be people with living expenses of more than $25,000 a year who will need to earn much more.
Singles should also consider whether one day they will want to get married, have children, live in a larger house and have a better car. If so, finding a spouse with a good job may be much more important than improving their photography skills.
Stock Shooters can base their gross income calculations on what they are currently earning from stock. However, due to the huge growth in the number of images available for licensing, most shooters are finding that their number of units licensed is declining unless they are adding a huge number of new images annually. The more images you add each year the harder it is to outdo your numbers the next year. Anyone considering full time stock production needs to examine their individual trends very carefully and weight them against the averages..
Overall, RM and traditional RF shooters are seeing a decline in average license fees and a decline in the number of units licensed annually. On the other hand, many microstock shooters have seen their average price-per-image-licensed grow due to general price increases by the microstock distributors. But those prices may be reaching a level where they can’t be pushed up much more. Thus, if microstock shooters want future revenue growth they must have growth in units licensed.
Based on a July 2011 analysis of 196 of iStockphoto’s top contributors, there was an average decline of 5% to 7% in the number of images downloaded between July 1, 2010 and June 30, 2011. During this same period these same photographers added 18% more images to their collections.
Individuals committed to making photography a career may want to consider a combination of assignment work and licensing rights to stock images. In addition having skills in writing and/or graphic design don’t hurt. Being able to earn revenue in multiple ways has helped many photographers succeed.