Not Sure How to set freelance photography rates? Start with knowing your costs and profit goals!
You’ve taken the leap and hung out your shingle as a freelance photographer. You are your own boss, set your own hours and name your own prices. But the problem is, you have no idea what to charge for your services. We’re here to teach you how to set freelance photography rates so you can start earning an income from your work.
Making Money – The Profit Equation
Profit=Revenue-Expenses or P=R-E
Profit is the money from your business that goes in your pocket. You can blow it on fancy chocolate or fast horses, or put toward your home mortgage. But it’s your money that you can use however you see fit. Earning a profit is the reason all of us are in business. If you aren’t trying to make a profit, then you are probably more of a hobbyist or have money to burn, in which case, want a new BFF? But I digress…
Here’s how the profit equation breaks down.
P=Profit, or how much money you want to make after all your expenses have been paid.
R=Revenue. Revenue is the money your business generates before you pay expenses.
E=Expenses. Expenses are the costs of doing business.
Keep this in mind as we talk more about how to set freelance photography rates.
Step One – Know Your Costs
Most photographers are just entering the market prices their services one of three ways:
- Research the market, look at prices on both ends of the spectrum and choose somewhere in the middle
- Research the market, choose a few photographers you feel your skill level is compatible with and price yourself just slightly under them
- Pick a number that sounds good to you and create your freelance photography rates
The first two approaches sound reasonable, right? But they aren’t any better than the third approach because all three criteria completely ignore one-half of the profit equation…expenses. Do you think Nikon picked a number out of thin air for the price of the D850? How about an Apple and the new iPhone X…did they look at a similar android phone and say “well, we are a little nicer so let’s be $25 more expensive?”
NO! Hell no! That makes no sense, right?
But that’s EXACTLY what too many photographers do when they begin pricing their services. Instead, we need to think like a successful company. And successful companies, big and small, use some version of the profit equation to calculate their pricing.
So rather than merely pulling a price out of thin air, you need to know your numbers. First, make a list your yearly business expenses.
Expenses include but are not limited to:
- License and fees (sales tax permit, LLC filing, etc.)
- Studio expenses (mortgage or rent, utilities, repairs)
- Insurance (studio, auto, business, and health)
- Auto expenses (maintenance, repairs, and gas)
- Retirement contributions
- Office expenses (Internet, phone and web hosting)
- Office equipment (computers, copiers, and printers)
- Camera equipment you need or want to purchase
- Photography equipment like backdrops, light stands, and props
- Marketing expenses
- Advertising expenses
- Educational expenses
- Related professional services like accounting fees, gallery hosting fees, graphic design fees, etc.
- Income taxes, sales tax
Don’t know exactly what your expenses will be? Ballpark it. Total all those up to see what your photography business will cost you over a year’s time. Write them down. That’s going to be the “Expenses” part of our profit equation. Don’t skip this step – it’s the first step in establishing your freelance photography rates.
Step Two – Decide How Much Profit You Want to Make
Next, you need to decide how much money you want to make from your photography business in a given year. This is the time to lay out a tangible, financial goal. Just saying I want to make some money isn’t good enough. You need a number to work toward. How much you want to make from your photography business is an entirely personal decision. Do you want to have a small side hustle that pays for a fun family vacation every year? Or does your business need to replace a full-time job? Maybe, you’re like me, and you fall somewhere in between that. What’s your number?
But before you put your pinky to your lips and give you your best Dr. Evil “One million dollars,” quote, keep in mind that the more you want to earn, the more you are going to have to work. You can’t pull in five or six figures sitting on the couch eating bonbons all day. Okay, NOW you can do the Dr. Evil thing.
Write down how much do you want to take home as your pay each year. This will be the big “P” in our profit equation. After all, it’s why we started a business…to make money.
Step Three – How Much Revenue Will I Need to Generate from my freelance photography rates?
Now we’re going to do some math.
We know how much profit we want to put in our pocket, or our “P.” For the sake of demonstration, we will say that I’m a part-time photographer who wants to earn $10,000 a year for her family through photography.
I’ve run my costs, and I think that I’ll have around $7,000 in expenses every year, including my insurance, equipment I need to buy, website hosting, etc.
So our profit equation looks like this:
Busting out those seventh-grade algebra skills, we will need to earn $17,000 in revenue throughout a year to cover our expenses AND take home $10,000.
Step Four- How to Price Freelance Photography To Generate that Revenue
Now we’re getting somewhere. In our example, I now know that I need to make $17,000 in a year to achieve my $10,000 profit goal. I have a specific goal in mind and can soon begin to price my work accordingly.
The next step is to decide what and how much business you want to and will be able to shoot in a year. Are you strictly a wedding photographer? Newborns? Families? What kinds of sessions you show and how many you want to shoot is entirely up to you. But for demonstration purposes, let’s go through two examples.
Example A – Your Wedding Photography Business
You want to shoot weddings and ONLY weddings. Forget sticky kid fingers and crying newborns. You want glam, glitz, and chintz all the way. This is a side hustle for you, and if you could get one wedding a month, you’d be thrilled.
Now, a little more math. $17,000 / 12 weddings = $1,417. If you want to make $17,000 shooting 12 weddings, you know you need to earn at least $1,417 per wedding to make your above profit margin work. Remember that if you haven’t already figured in your per wedding cost to your cost of doing businesses above, you’ll need to add those expenses to this figure so that your take home is at least $1,417.
Example B – Your Family Photography Business
Or, let’s say families are your jam. You love momma snuggles and love piles and coordinating outfits. You’d like to work two weekends a month and have the other weekends to off to spend with your own family, and you think you could shoot three sessions each of those two weekends. That’s six family sessions a month, or 72 family sessions a year.
Back to our math. $17,000 / 72 family sessions a year = $237. To generate $17,000 in revenue, you’ll need to earn an average of $237 in revenue for each session AND shoot 72 family sessions a year. Again, you want to take home at least $237 free and clear, so if you have any expenses associated with a specific shoot you haven’t already accounted for, you’d need to build those into your pricing as well.
Remember: There’s nothing to say that these prices are what you WOULD charge for your services, only that they are a minimum price based on your profit objective. You also get to decide how to structure pricing between session fees and products so that you are generating the revenue you need to hit your profit target.
Neither of these scenarios will fit you exactly. But give some thought to the kinds of sessions you want to shoot as well as how many sessions you want to book and can realistically accommodate in your schedule. Then plug in your numbers and see where you stand. If you offer multiple kinds of sessions, you’ll need to plug in your numbers for kind of service you provide.
Step Five – Research Your Market
Finally, we’ve come to the time the time where need you need to start researching your competition and decide if your prices are in line with your market. Are they reasonable considering your experience and education? Will you have enough clients in your market to sustain your business given the other competing photographers in the area? Using the numbers from your profit equation gives you the power to make a much more informed decision regarding your pricing. You aren’t pulling numbers from thin air or a competitor that may or may not have similar expenses. You are now making decisions based on your cost of doing business. Which is just good business.
You may realize that you need to make some micro adjustments to your numbers from Step Four after completing some market research. If your pricing is on the high end of the market, you may need to become a more savvy marketer to ensure you’re attracting clients in your price range. Or you may need to add additional sessions or a whole new revenue stream to make your equation work with your marketing pricing. But the numbers give you a starting point to make informed decisions.
Step Six – Be Flexible
Knowing your cost of doing business is an absolute must. Knowing how much your time and efforts are worth is a must. Understanding how much you want and need to make from a session to achieve your yearly profit goal is also a must.
Except that sometimes, you have to throw all those numbers out the window.
Don’t hang on to this profit equation with so much rigidity that you aren’t adapting to your current business climate. There will be times where you may need to lower your prices to get clients in the door. You may choose to lower your costs for non-profit organizations or schools. You may wish to offer promotional pricing to generate excitement about your business, reward repeat customers, honor military members or add value to multi-session packages.
Let’s think about our friends at in big business again. Does the price of a can of soup remain the same for an entire year at Walmart? How about an iPhone? A Nikon D750? Nope. Those prices will fluctuate for any number of reasons, including increased input costs or promotional purposes. Black Friday and Cyber Monday are great examples of when products are deeply discounted for promotional reasons.
On the flip side, you may choose to raise your prices on certain offerings based time, the time of year or increased inputs. For example, if the client has a special request and you need to rent additional gear or hire an assistant, you could raise your prices for that specific job. Or you may increase your rates for family portraits shot in the fall because demand is so high.
What’s important is to NOT lock yourself into thinking you can’t get creative with your offers and restructure your freelance photography rates for similar reasons. Using the profit equation is intended as a starting point to help you make more informed decisions regarding pricing your work. It is not the end-all-be-all method of how to set freelance photography rates.
The Bottom Line
The great thing about learning how to set your freelance photography rates using a traditional business profit equality approach is that it gives you a pretty good reality check from the very beginning. Do the numbers your profit equation generated match up with the price point you had in your head? The answers may by surprising.
Using real-world costs and expectations also help us avoid the trap of basing your price solely on your competition. A thoughtful market analysis is just one part of a solid pricing strategy, not the only part. Being a savvy business owner means having a plan in mind, knowing your financials and having the creativity and courage to deviate from that plan to capitalize on an opportunity.
And remember, while pricing is necessary, the real thing that will sell your business and keep customers coming back year after year is you. Be confident in your pricing structure and wow them with an outstanding product and service. That’s a model that should keep you in business well into the future.