Why is understanding pricing an issue?

The main idea here is to be open and productive so I offer this insight. Baseing your companies pricing on someone elses pricing, is a recipe for financial disaster... pricing should be based on a business plan and market research if these two things are done properly most of the generic questions would have been addressed.

Why can't I base my pricing off the competition?

Easy! Let's presume they took a haphazard approach to building their business and never put together a P&L statement they have no idea how viable their business is and it then becomes a case of the blind leading the blind. Putting together a survey will tell you whether or not your potential clients will be more receptive to a la carte pricing or value added packages. An aside to this, are you comparing like services and products?

How many hats am I going to where in my business?

Will I be the photographer, sales team, marketing dept, book keeper, office manager, accountant, hairstylist, post production, designer, art director, etc? And how do all those hats get paid? Once confronted with the reality of the business, calculating pricing becomes a simple process. At least now it can be done with a clear understanding of what the numbers need to be.

Is this market saturated?

Can the market sustain another commercial, portrait, wedding, etc... photographer.

Can the market bear the cost of me doing business?

If not what adjustments do I need to make in order for it to be a viable solution. This is where creative pricing and crunching numbers comes into play, but you have to do the numbers. And by creative pricing I do not mean cheap.

Speaking of cost, how much does it cost for me to be in business?

It is pertinent that a business owner understands the real cost of doing business. If the end product is a print of sorts and one is under the impression that the cost of a print is the price paid to the lab you're in trouble. The cost of equipment, employees, location, advertising, transportation, shipping, etc. have to be factored into the cost of that individual print.

The reality of business

If one is truely attempting to make a go at photography as a business then then at minimal a course on writing a business plan should be at the top of the list. Number one reason most businesses fail? Under Capitalization! For a new venture unless the start up capital is in place. You are it! You are no longer the photographer, you are now the business, and the two must go hand in hand. There are only so many hours in a week... hence there's only so much one person can do. This means being proficient in many areas or paying someone else to do it.

Is a forum on photography the best place to learn how to run a business?

I'll have to answer no on this one. I have read too many times where the case is "it transformed from a hobby to a business". Now while ones photographic skills in that time period have multiplied (in all likelihood), the same persons business skills have not progressed along side the former. And it's this disparity that is the issue... while the photographic skill set is in place the same does not hold true for the business acumen. For quite a few I'm sure they woke up one morning and without realizing the transition, they found themselves in business. Which is not a bad thing it just needs to be addressed. And part of that process does involve having questions answered. And what might seem like the obvious course at first may not necessarily be so. If you want to learn about starting a business I would at minimal start with the SBA. http://www.sba.gov/smallbusinessplanner/index.html

With a business plan and a market survey in hand. One will be able to return here and ask questions that are specifically relevant to their situation. And when those question questions are answered you will be able to assess if that information will work for your given situation.

These are only a few of the questions that need to be addressed, it is my hope that this helps someone grasp the bigger picture and the committment that is required. Good planning.

-Wes

Bump! I'm sure this will be of a big help to a lot of newbies.

Very good info! Thanks for posting it.

Hope, thanks for the comment and the bump.

Becka-and-Nate, thank you I'm glad it's helping.

Yep, you are right on Wes...business plan, business plan, business plan! Write One!