How to Price for Profit

It’s that time of year again! Busy season is slowly coming to an end again, & it’s at this part of the year that I start reviewing all my profit/loss + pricing for the year so I can make any needed adjustments during the off season. I fully acknowledge knowing how to price for profit is the hardest, and least fun part of the job being a creative business owner.

Because for some reason, creatives especially, sell ourselves short. I have thought about this for years actually, ever since I started my photography business. While I went to school to be a professional artist, and my professors taught us market value and how to price for the services we offer, MANY creatives don’t get this info. Instead of training for it, they started their business as a hobby at first. And they’re trying to turn something they love to do into a career they can love too. The problem is, many of them never stop treating their business as a hobby, and have no idea how to actually price for profit.

Many creative business owners have no idea how to price for profit

So instead, they tend to do this little dance, of what they “think” people will pay, and what their competitors are charging. Rather than knowing what they actually need to charge to make a profit – and therefore a decent living wage. And here’s the harsh truth I’ve learned from talking to countless photographers, graphic designers, and illustrators over the years… deep down, they just don’t think people will pay them to have a living wage.

The term “starving artists” is a stereotype we do to ourselves people. The confidence, and imposter syndrome is strong with us creatives. Matt and I are planning to deep dive on how to price for profit and the psychology of all this in an upcoming episode of Couple Thoughts Podcast. I hope you’ll join in that conversation, but the real question is:

Why do creative entrepreneurs tend to sell themselves short?

Most creatives, especially photographer’s don’t know where to start. Like I said before, many (especially photographers) start their businesses because they love their hobby of photography so much, they’d much rather be doing it than their day job. But they never grow out of that perception that it’s a “side gig.” OR that their potential clients see the industry itself as anything other than a hobby. Because of that, they don’t treat it as a real, profitable business, and continue to treat is as a hobby themselves.

So how do you not treat your business as a “side gig”?

First up, you’ve gotta run your numbers. We’re going to use photographers fo the main examples here because it’s what I do most. Pricing for profit is something that I deep dive with my mentoring clients. So much goes into pricing correctly that many people aren’t taking into account. For example:

• They don’t take into account ALL their expenses. Cost of doing business is way more than just the price of your camera. It’s insurance, business licenses, equipment, websites, marketing, travel expenses, taxes. It’s also the expenses you need to live. You know, your mortgage, utilities, groceries… the list goes on.
• They don’t account for their time. This is a big one that I see overlooked time and time again. How long you take on each client (from emailing, to traveling back and forth, to the session itself, to the editing and designing of products). ALL of that needs to be included in your time. And think about it, what would you expect to get as an hourly wage if you worked for anyone else? Why is your time less valuable just because YOU are the boss?
• They don’t account for a salary. When figuring all these numbers, you also need to include how many clients you can feasibly take in a year. You also need to know what you want your take home salary to be. Knowing all that, will make a big impact of what you should charge based on YOUR needs.
  

So what are the dangers of not pricing for profit?

• You need to price for the worst to happen – meaning you can’t price like you’re relying on your spouse’s income. When I talk about people needing to stop treating their business as a hobby, this is what I mean. Pricing your business correctly means you shouldn’t assume a secondary income into the figures. You may not always be able to rely on another income to keep your business or lifestyle afloat. Having this state of mind is the biggest detriment to the creative industry as a whole. Because so many price themselves as a side gig, we are literally training our clients to undervalue our work and time as well.
• You will burn out big time – overworked and underpaid. I can’t tell you how many times I’ve talked to photographers that are on the verge of tears because they can’t keep up on the editing of their sessions. Or, when they finally DO run their numbers, and realize they are either losing money, or not even making minimum wage. We’ve got to do better as an industry friends, and stop pretending our time and talent aren’t worth a living wage.
  

So how do you price yourself correctly as a creative service?

• Run your numbers – you must sit down and figure out your Cost of Doing Business, but also, your monthly lifestyle expenses. You’re going to have to cover both and make profit on top of it. Your numbers may look different than your competition’s – everyone has slightly different benchmarks. What’s most important is knowing what YOU need to be successful by your own standards.
• Get over the guilt – don’t be afraid to price yourself what you are worth. You ARE worth it to the right clients (your target audience).
• Build a strong brand – perception is everything. If you don’t have confidence in yourself and your business, your potential clients will be able to spot it a mile away.
• Market to your target audience, and let the rest fall away. You don’t have to be in business for everyone or do every type of photography. In fact, some of the most successful in the business have a niche, and they are all in on that niche. Don’t feel bad about the ones that don’t appreciate you and your work, or tell you you’re too expensive. ESPECIALLY if you’ve run your numbers and know your worth. Focus all your energy on creating a wonderful experience and great products for your clients. That’s what most important (other than being profitable in your business) in the end.

I now offer mentoring to fellow creatives and photographers on how to price for profit, and how to create a strong brand image that will attract the clients that will appreciate you and your work. This is one of my passions, to build client’s confidence so that they can truly be successful in business. If you’re needing help in any of these areas, check out my mentoring services, I’d love to help!