Whether you know it or not, psychology plays a big role in successful pricing strategies for both products and services. Our brains are wired to pick up on subtle cues when it comes to weighing the value of something. So how do we successfully price our photography services? Here are a few tips to help you restructure your pricing for a successful year.
Your Cost of Doing Business
Pricing is a hard and often intimidating topic, particularly for photographers who are just starting out. Knowing our value, understanding our cost of doing business (aka CODB), and how to price effectively, competitively, and for-profit are all key to making successful pricing a possibility.
If you’re not sure where to start when it comes to setting good pricing, the first step should be figuring out your cost of doing business. Simply put, your CODB is what it costs you to perform a service or provide a product. It is every expense that you need in order to function both personally and professionally. This can be anything from your mortgage or rent of an office space or home office, to equipment expenses, travel fees, accounting and legal expenses, and even postage and shipping. If you want to do pricing right, your first step should be calculating all of your monthly and yearly expenses that are required in order for you to run your business. This is done by adding up all of your expenses plus what you’d like to make as your annual salary. The resulting number is the minimum that you’ll need to make in order to just run your business, without any additional profit. This is your annual CODB. Take that number and divide it by how many jobs you’d like to perform within a year, and you have your CODB per job. This gives you an idea of a base price that you need to be charging in order to make a living.
For example, if I’ve calculated my CODB as being $36,000 a year, and as a wedding photographer I’d like to shoot 30 weddings and make at least $60,000, my cost of doing business, per wedding, would be $3,200. This gives me a really good idea of what range my pricing needs to be in, in order to hit my monetary goal of $60,000.
Now, if you’re anything like me, and math and numbers turn your brain to mush, NPPA has put together a really great CODB calculator to help photographers understand their cost of doing business. Although the calculator is geared toward media photographers and photojournalists, it will still help to give you a good idea of where to start with your pricing.
A Tip for Discovering Your CODB
Be realistic with your numbers. If you’re just starting out in photography professionally, give yourself a realistic annual monetary goal as well as a realistic estimate of how many jobs you’ll get for the year. For some perspective, during my first year in business, I gave myself a goal of booking 10 weddings for the year. I ended up booking 30 weddings, but 10 was still a realistic expectation. Give yourself a number that you can exceed instead of a number that will be hard to achieve.
Once you know what your CODB is, the next step in your pricing journey will be doing local market research. What are your competitors charging? This will require you to network and make some connections, as well as research other local photographer’s websites. Lots of photographers will include pricing on their website, and this can give you a good idea of what range your local market is in regarding pricing. Having competitive pricing is important. It establishes your worth in the mind of potential clients, while still being realistic.
The Psychology of Pricing
Once you know the ballpark range of where you should be with your pricing after doing market research and understanding your CODB, the next step is to create a pricing list. No two photographers are alike with how they price products or bundle services. However, there are a few psychological cues that photographers can take advantage of that will help when a potential client is shopping around.
1. Clients Should Not Be Able to Easily Compare Your Pricing
What I mean by this is, if a client can easily calculate in their mind a price difference between two of your photography packages or product options, they’ll be able to easily decide which option has better value. To avoid this, make sure the intervals between your packages are not the same. For example, if you have three packages, all priced $200 apart from each other, clients will easily be able to decide if paying $200 for a higher option is worth it. Instead, make sure the intervals between your pricing options are different, and a bit harder to calculate on the fly. This will turn your client's attention from monetary value to the value of what you’re actually offering with each price option.
2. List Your Pricing From Highest to Lowest
This may seem counterintuitive, particularly if you’re nervous about scaring potential clients away with higher prices. However, listing your pricing from highest to lowest actually has the opposite effect on potential clients. To consumers, seeing the highest price first sets a mental bar for a higher, less attainable price. This makes the subsequently lower pricing seem much more attainable which in turn gives you a better chance at booking a client in whatever price range you’ve set for yourself.
3. Don’t Overwhelm Potential Clients With Too Many Options
Three or four pricing options seems to be the sweet spot, while enticing clients to book your middle pricing option is always a good strategy. Giving too many options, while seemingly a good idea because you think you’re being more flexible, will actually quickly overwhelm a potential client. Consumers, whether they know it or not, want to be told what to buy. By giving only a few options instead of many options, you’re still being flexible while also not overwhelming your client.
Like any good strategy, nailing down the ideal pricing for your photography business will take some time. If you intentionally devote time and effort to discovering your CODB, learning about your local market, and thoughtfully crafting your pricing options, you’ll have a much better chance at booking clients than if you’re just throwing up imaginary numbers that you think are satisfactory.
Lead image by pixabay.com via Pexels.