Microstock’s Business Case: How Much Can You Earn?
It’s a valid question: Why shouldn’t he? Many of you have experienced how the industry has tightened and competition has grown fiercer. But does that mean the market is closed to newcomers?
As we set out to answer that question, we came up with a simple business plan calculator to help us define some goals and a strategy to achieve them. While playing around, we realised that it is indeed possible to get into microstock, and depending on your goals, there are a few ways to do so.
Let us explain this in some more detail and look at a few sample strategies.
Your Business Plan
Before you begin your microstock adventure, there are four important decisions you need to make:
- How many images can you produce each month?
- How much will it cost you to produce one image?
- What are your monthly fixed costs?
- For how many months do you want to commit to your production schedule?
How you answer these questions will define your strategy. Whether you have a team or not, whether you focus on people or still life and whether you rent a studio or not, are some of the points you need to think about.
Your Revenue per Image per Month (RPI/m)
The next most important parameter is how much you can expect to make from each file you produce on average each month. You might not be able to decide what this number will be, but believe it or not, you do have the ability to influence what your expected revenue per image will be.
The revenue per image per month is defined by the amount of money all your images produce each month, on average. For example, if you have 500 images online and they produce $1000 each month, then you have a revenue per image per month (RPI/m) of $2. You must take an average value, so if they produce $1200 one month and $800 the next, then you have $1000 average on those two months.
If you produce poor quality images, in huge quantities, with lots of similars, then you will most certainly have a low revenue per image per month. If, however, you focus on niche subjects or high demand subjects and produce unique high quality images, you will certainly have a high revenue per image per month.
And then there is everything in between.
The Business Plan Calculator
To work on these business plans, we created a Business Plan Calculator to quickly analyse what strategy options are available. Go ahead and play around with it! Try and find out how good your business is working for you:
Three Sample Strategies to get Started in Microstock
Let us use our new Business Plan Calculator to look at three main strategy profiles with which you can enter the microstock world today.
Our strategy examples all focus on producing lifestyle photography. These are:
- Setting up a microstock factory
- Solo photographer working full time
- Amateur photographer shooting in his/her free time
Strategy 1: Setting up a microstock factory
Setting up a microstock factory is expensive and time consuming, but you can produce large amounts of images. Let us look at what this strategy could look like:
- How many images will you produce: 800 per month
- How much will it cost you to produce each image? Photoshoots can be expensive due to equipment rental, buying clothes and props, location rentals, good models, etc. But thanks to the big team and preparation, it should be possible to produce lots of images per shoot. Let us assume a cost per image of $30.
- What are your monthly fixed costs: A microstock factory needs some fixed employees: Let us assume a producer who does all the organizing, an assistant producer and a full-time retoucher. Let us also assume a studio rental. These can sum up to $8000 fixed costs per month.
- For how many months do you want to commit to this production schedule: Setting up a microstock factory is expensive, so you will want to work for at least 5 years. Let us therefore assume a business plan for 60 months.
How high will the expected RPI/m be for a microstock factory? Our sample microstock factory invests a lot of money per shoot to get the highest quality. Good preparation ensures that high demand themes are produced. For our sample strategy let us expect a revenue per image per month of $2.
- With this strategy, our business plan calculator comes up with the following results:
- You will need to invest $304,000 before you start making any money!
- It is not until the start of the 4th year that you will have recovered your investment and start making money.
- After working 5 years, you will have made a total profit of $1,008,000! That is a 378% return on your investment!
Setting up a microstock factory is expensive and requires hard work, but if done properly there is still a lot of money to be made!
Strategy 2: A full time solo photographer
In our second strategy sample, imagine you are an individual photographer who organizes everything yourself and works full time. You ocasionally outsource some images for keywording and photoshopping
- How many images will you produce: 200 per month
- How much will it cost you to produce each image? Shoots are done as cheap as possible but with a focus on quality. Some images are outsourced for keywording and retouching. Let us assume a cost per image of $15
- What are your monthly fixed costs: Assume you work on your own and have no studio. You work full time, so you will need to earn enough to live off this. Let us assume you are happy with a simple life and only needs $2000 a month to pay all your bills.
- For how many months do you want to commit to this production schedule: As a solo photographer you can only risk 3 years of your life on this.
Let us assume you are quite talented and with limited resources can achieve a revenue per image of $1.50.
With this strategy our business plan calculator comes up with the following results:
- You will need to invest $39,200 before you start making any money
- It is not until the end of the third year that you will have recovered your investment and start making money.
- After working 3 years, you will have made a total profit of $19,800 and will be earning $5,800 per month!
With this strategy, you will need to struggle for the first years, but if you persevere, you can expect to enjoy a comfortable $5,800 monthly salary from microstock!
Strategy 3: Amateur photographer shooting in his/her free time
Everybody knows an amateur who uploads holiday and family pictures to a few agencies. Is that a viable strategy or just a waste of time? Let us check that out with the calculator:
- How many images will you produce: 100 per month. Just upload everything on the card!
- How much will it cost you to produce each image? Our amateur photographer only shoots holiday pics, family and pets, so the cost per image is very low. Let us assume $0.
- What are your monthly fixed costs: Our amateur photographer already has a job so its not necessary to cover any bills. So the fixed costs are $0.
- For how many months do you want to commit to this production schedule: To compare this strategy to the second one, let us also assume 36 months.
- Amateur images do not sell well in today’s market. So you can expect a poor revenue per image per month of about 20 cents.
With this strategy our business plan calculator comes up with the following results:
- Our amateur photographer doesn’t need to invest anything and starts making money immediately.
- After uploading images for 3 years, our amateur photographer will have made a total of $12,240 and will be earning about $600 per month!
If you don’t have too many expectations, have some free time and would like to earn some extra pocket money, then being an amateur microstocker certainly can make some nice money!
Our advice to help you be successful
All three business plans prove that with hard work and patience, you can achieve a good income in today’s microstock market. The Business Plan Calculator shows the different variables that affect the level of success you can achieve.
But it also shows that one variable has by far the highest impact on your profits: revenue per image per month (RPI/m). No matter how much you reduce your costs or increase your production output, a bad RPI will almost always destroy those efforts. On the other hand, focussing on increasing your RPI can make a microstock career a very lucrative one. Go ahead and experiment with the Business Plan Calculator yourself!
At Stock Performer, one of our main goals is to help our customers increase their Revenue per Image per Month and maximize their profits. Some of our most important advice:
- Focus on agencies who are good at selling the type of content you produce.
- Use analytics tools, such as Stock Performer, to focus on your strong images and produce more such imagery. Stop producing images that do not sell well.
- Again, use analytics tools to identify images which sell well on one agency but not on others and then offer them exclusively on that agency to increase their revenue return.
- Identify niches which are accessible to you.
- Keep an eye on the market and what themes and styles are on high demand. Stock Performer easily helps you pick up trends as they come so you can ride the wave before every one else does.
About the Authors
Luis Alvarez and Oliver Rivo are founders of Stock Performer. They want to offer you the best microstock analytics around and invest a lot of time giving users great advice on understanding their numbers.
Oliver Rivo, M.Sc. Computer Science, has more than a decade of professional experience in software development. His major projects include mission critical software for airlines and numerous web services – and a few-year stint as a full-time touring musician in Germany. While not a microstock contributor, Oliver Rivo enjoys photography. It was therefore a natural fit to team up with his long-time friend Luis Alvarez to create Stock Performer, the market leader in analytics for microstock photographers.
Luis Alvarez, M.Sc. Computer Science, spent many years working at a large German IT company before discovering the joys of stock photography. After many years contributing as a diamond exclusive for iStockphoto he teamed up with Oliver Rivo with the aim to produce the best analytics solution for microstock, giving birth to Stock Perfomer. Without analytics it is impossible to manage your stock business efficiently.
If you haven’t tried Stock Performer yet, sign up now for the one month free trial and see it for yourself!