The last two editions of Capture Magazine

[Longshots]

My thoughts. Either! It depends entirely on the individual photographer, their business plan etc. The one who shoots 20 houses, has then had exposure to 20 families. Those 20 families, if they are happy with the shots, and feel they got value for money are likely to recommend the photographer to their family/friends. Whereas the photographer who shot one property, has been exposed to one family, his/her networking ability and word-of-mouth marketing is restricted compared to the other photographer! BUT, the photographer who only shot the one house may have been aiming at a different market, in the mult-million dollar house range, and therefore the ongoing benefits of doing a good job for this shoot, meaning the owners are likely to associate with others in a similar financial demographic, thus the one single house shoot could lead to a lot more work of more value.

I don't believe there is a simple one size fits all answer to your question William!

Thanks Rick - this is all deliberate, and I'm aware of all of those options/scenarios.



OK lets simplify the point of the question further and suggest this scenario to you which I use in my lecture on the issue of the business of photography.

2 shops - both have same overheads, expenses etc etc etc.

Both sell a product, which for argument sake, we’ll call identical vases.

Shop sells the vase for $100

Shop B sells the vase for $50

How many vases does shop B have to sell to match or exceed Shop as profit?

And this is to illustrate the many points raised in the Capture interviews, which by my own personal way of reading this simply higlighted the often first choice of those entering the market to simply find out some prices and start off being cheaper.

So does anyone fancy a go at this question then ?

[tomtom1]

My thoughts. Either! It depends entirely on the individual photographer, their business plan etc. The one who shoots 20 houses, has then had exposure to 20 families. Those 20 families, if they are happy with the shots, and feel they got value for money are likely to recommend the photographer to their family/friends. Whereas the photographer who shot one property, has been exposed to one family, his/her networking ability and word-of-mouth marketing is restricted compared to the other photographer! BUT, the photographer who only shot the one house may have been aiming at a different market, in the mult-million dollar house range, and therefore the ongoing benefits of doing a good job for this shoot, meaning the owners are likely to associate with others in a similar financial demographic, thus the one single house shoot could lead to a lot more work of more value.

I don't believe there is a simple one size fits all answer to your question William!

Agreed, there are other factors such as different markets and target clients. There may be more people around looking for a quickie, cheap photoshoot. Does the $2000 shooter have enough business to keep them occupied?

However the question is referring to this specific situation, and I agree that the $2000 will make more profit. Profit = Gross Income - Cost. Their income is the same, however the single house shooter will have less travel costs (petrol, car depreciation), time dealing with different clients (phone bills etc.), possibly less processing time (less bulk of images)

[tomtom1]

Thanks Rick - this is all deliberate, and I'm aware of all of those options/scenarios.



OK lets simplify the point of the question further and suggest this scenario to you which I use in my lecture on the issue of the business of photography.

2 shops - both have same overheads, expenses etc etc etc.

Both sell a product, which for argument sake, we’ll call identical vases.

Shop sells the vase for $100

Shop B sells the vase for $50

How many vases does shop B have to sell to match or exceed Shop as profit?

And this is to illustrate the many points raised in the Capture interviews, which by my own personal way of reading this simply higlighted the often first choice of those entering the market to simply find out some prices and start off being cheaper.

So does anyone fancy a go at this question then ?

What's the cost price of the vase?

[ricktas]

Thanks Rick - this is all deliberate, and I'm aware of all of those options/scenarios.



OK lets simplify the point of the question further and suggest this scenario to you which I use in my lecture on the issue of the business of photography.

2 shops - both have same overheads, expenses etc etc etc.

Both sell a product, which for argument sake, we’ll call identical vases.

Shop sells the vase for $100

Shop B sells the vase for $50

How many vases does shop B have to sell to match or exceed Shop as profit?

And this is to illustrate the many points raised in the Capture interviews, which by my own personal way of reading this simply higlighted the often first choice of those entering the market to simply find out some prices and start off being cheaper.

So does anyone fancy a go at this question then ?

ONE. If shop B sells one vase, and shop A doesn't (cause it's price is way over-inflated for the same vase). Shop B wins! But this argument does not hold true for photographers, cause the quality of the vase (photographs) will not be exactly the same due to time constraints on the $200.00 photographer.

[Longshots]

What's the cost price of the vase?

$40

[Longshots]

ONE. If shop B sells one vase, and shop A doesn't (cause it's price is way over-inflated for the same vase). Shop B wins! But this argument does not hold true for photographers, cause the quality of the vase (photographs) will not be exactly the same due to time constraints on the $200.00 photographer.

Trust me, go with the flow on this Rick - assume that the vase is the same quality.......

[Longshots]

Okay - I'll bite!

From an economic point of view, all costs being equal, the second shooter charging $2000 makes the most profit by far!

OK, I'll just point out that exactly the same time is spent on the 1 house by the $2000 photographer, and the 20 houses by the $100 photographer.

Do you still think the same ?

While adding no further information, (as its not required, other than an obvious business premise) I'll admit that there is a slight catch to all of this !

[tomtom1]

$40

In that case, shop a is making $60 per sale, shop b $10

Shop B will need to outsell Shop A at a ratio of 6:1 to break even.

Not sure where you're going with this one, shop A would be quite lucky to get a sale with this competition depending on how close the shops are to each other!

edit: just thinking about it more, shop B -may- make up some or all of the difference as people coming in to the shop to buy the vase might also purchase other items - more traffic

[Longshots]

In that case, shop a is making $60 per sale, shop b $10

Shop B will need to outsell Shop A at a ratio of 6:1 to break even.

Not sure where you're going with this one, shop A would be quite lucky to get a sale with this competition depending on how close the shops are to each other!

edit: just thinking about it more, shop B -may- make up some or all of the difference as people coming in to the shop to buy the vase might also purchase other items - more traffic

Again, Ill just keep plodding on with the specific question (trust me, it will all be clear):

How many vases does shop B have to sell to match or exceed Shop A's profit?

[ricktas]

The problem is that the real world is not that simple William. Shop B though cheaper could be setup in Antarctica, shop A could be at the Chelsea Flower Show. I get what you are trying to do, but unfortunately business does not operate in such a simple manner.

[Longshots]

Um I did say that they both had the same overheads etc.

And this is a simplified demonstration of the economics of business Rick. Run with this for a moment as opposed to telling me its not real - many test scenarios are not real, but require an element of stretching ones imagination to allow a better comprehension - I know its not real - this is to highlight what some people see as exorbitant price differences (which occur in many areas, not just photography); I'm trying to highlight what was the basis for many of the comments in the Capture article. So its all on topic, and all of this has a distinct point.

I actually dont think you know where I'm going with this.

So let your imagination run wild and take away logic for a moment and give the question a go

[ricktas]

Shop B has to sell 6:1 to match shop A or 7:1 to better it's profit. This is based on your simplistic view, that you asked us to do.

[arthurking83]

I'm afraid that the question(from William) is a bit ambiguous for my tastes;

Is the question who makes the most profit for any length of time over a long period, or the most profit per shoot/session/single event?

obviously per event the $2000 per shoot photographer will do quite well, but if the market is more demanding of the $100 per shoot scenario the $100 dollar shooter may ultimately win in the long run.

your costs don't have to be set to a specific base, and the smarter operators(and I mean smarter in terms of acumen, not of the shark variety) will probably be booked to high heaven and then in making a small er profit per unit, then subsequently find that they also have enough profit to enlist the services of another assistant that can also do some of the work. this then has the snowballing effect whereby the $100tog then seeks out even more work at the same 4100 rate thus creating a large and well established firm that works on the basis of lean and efficient management.. and is probably raking in millions.. due to the much higher demand.. and there's no doubt thast the demand is there.

But the $2000Tog has loads of time to sit and contemplate life in a much more serene manner and may probably get a few jobs per year from those realtors in the affluent suburbs, for another few months or so, until the highly creative smart operator then realises that he too can also charge a more appropriate fee to those affluent suburb real estate agencies.. more like $500 per shoot.. thus leaving the well to do $2000tog nowhere to go, as they now don't have the million dollar resources behind themselves to compete against the $100tog.

The reality is that whoever makes the most profit(irrespective of whether on a per photo basis, or for the financial year) is not really an argument for this situation. As long as the pro respects the rights of the amateur to also exist, then they themselves will also get the same respect from others.

------------------------
As to the article:
If the article(which I haven't read) has been heavily one sided and based only on comments from those pros that only complain of the backyarders, then the readership has every right to consider the possibility that all pro photographer share the same negative perspective on the weekend warriors menace.

It's not our prerogative as the reader of the article to assume that this is only the mindset of only a few pros and that no other pros take that point of view.
That responsibility is with the creators of the article to declare, in the article.

I think it has something to do with balanced reporting, or some other BS.
If only one reader has now taken the view that all pros seem to have this anxiety towards and scornful outlook on the amateur portrait photography industry, then the author of the article and the magazine have failed as a source of balanced information.

Sounds like a fantastic quality magazine

NOTE:: I have not deliberately posted to deride the magazine itself. I'm only posting my thoughts based on what is being implied in this thread. I've read the entire thread a few times and no where has anyone mentioned that nay professional portrait photographers have countered the comments made by those mentioned by the OP.

Oh! and on the topic of profits, if I opened up a hamburger shop and sold hamburgers at $10 each, and I sold 1000 hamburgers per week, who makes the most profit?.. me or McDonalds?

[kiwi]

I pass, could be any number from 1x to 10x

totally depends on the profit ratio

profit = income - direct costs = gross margin - less expenses = profit - less tax = profit after tax

[I @ M]

Lost me a long time ago with the mathematics.

I am still trying to figure out how F/4 is 2x F/8

[tomtom1]

Again, Ill just keep plodding on with the specific question (trust me, it will all be clear):

How many vases does shop B have to sell to match or exceed Shop A's profit?

I've been trying to think around the subject, but have run out of ideas.

I'll go with 6

[Longshots]

Great.

OK the absolute standard for people to do when entering the photographic industry is to ask what to charge. Then the next step is to find out what other people around them are charging, and then charge less - a great deal less - generally (yep I'm generalising ) they start at half the price.


And its interesting that many response to my questions, have produce many of the reasons why there are such apparently large differences. Quality, location, different genres, different purposes, etc.

OK so back to the shop - the question was how many vases does Shop B have to sell to match or exceed Shop A's PROFIT.

I did say that the running costs of each shop were the same. And I did say that the cost of the vase was $40.

So I'm afraid that its certainly not 6 : 1 or more.

The cost of the Vase is for argument sake $40

And then again for argument sake there are the running costs of the shop, the staff, etc, etc.

First of all would, why assume that Shop A is making a profit ?

Many people look at other photographers costs, and instead of making a financial plan on the basis of their own individual costs, go out and base their business on someone else financial business plan.


So lets assume that Shop A is making a profit.

So back to the shops
Shop A - selling for $100
Vase $40 - plus usual business running costs - shop/elex/rates/insurance lets say $5 per vase total $45

So $55 profit for each Vase sale

Shop B selling for $50
Vase $40 - plus usual business running costs - shop/elex/rates/insurance lets say $5 per vase total $45

So $5 profit for each Vase sale

That would be 11 to 1 required
Shop A sells 2 Vases = Shop B needs to sell 22 vases - and so on......

But what if Shop A is instead of assuming that they're charging an exorbitant price, they are actually charging a realistic price which pays for the business expenses, the staff, and still allows a reasonable profit to ensure further development of the business, and give a small amount to be put away for capital expenditure in better equipment for the business.

If so the ratio changes quite dramatically.

Back to the shops again

So back to the shops - but now we're going to look at a different outcome - with different costs
Shop A - selling for $100
Vase $40 - plus usual business running costs - shop/elex/rates/insurance lets say $25 per vase total $65

So $55 profit for each Vase sale

Shop B selling for $50
Vase $40 - plus usual business running costs - shop/elex/rates/insurance lets say $5 per vase total $45

So $15 LOSS for each Vase sale

Now there isnt a ratio anymore as every vase sold is a "loss leader", which is fine if you have other products to sell. If not, it wont be long before two things happen, one the business cuts back on the costs, and takes short cuts, and two, the business is eventually out of business.


Now this is the message I would have given. That instead of people always, but always, asking what they should charge, they would be far better off to do a real business plan based on their individual costs and requirements. A family person, with a studio, staff, home mortgage, car payments, children at school, is going to need to charge a lot more than someone who has none of those things. And similarly, the reality is that someone who has a full time job doing something else, is going to charge a great deal less again, as they may simply be looking at the obvious costs of the materials they're purchasing, and dont need to be concerned about medical health cover, super payments, and insurance. Thats reality. So there are always going to be price differences and there's always going to be differences in quality. Best and Less may sell their lingerie for $5, and yet a boutique lingerie shop may sell something seemingly similar for over $100. Yes there will be difference. To some it wont be worth it and to others its obviously worth it. Market forces will always dictate. But being the cheapest doesnt always work, and the same thing goes for being the most expensive doesnt always work. What works is having a proper financial plan, with a realistic expectation of what is possible based on proper research, and proper planning. Sadly that is virtually always the number one problem for thos entering the industry.

This issue has been around for a very long long time, and after having a quick read of those interviewed in the magazine article, this is the message that I read from that.

Now that's my (sorry) long winded response to Jims post

So of course there will be price differences, that is business.

I have friends who are far busier than I am. Those friends do a great deal more turnover than me. And yet (disregarding the obvious claims that self employed people can claim more re taxable income) do they have more disposable income ? Do they own their house, or even their own car ? No. And the reason they dont is that many photographers out there, like some of my good friends, have never worked out that in some cases the cost of doing their business is not being replaced the income they are accomplishing for their work.

A well respected photographer was asked quite recently the secret of financial success for professional photographers in Australia. His response was quite serious - "Have a partner with a well paid full time job in anything other than photography".

[Longshots]

I pass, could be any number from 1x to 10x

totally depends on the profit ratio

profit = income - direct costs = gross margin - less expenses = profit - less tax = profit after tax

Yay - exactly - got that in as I just was typing my marathon

Shop A might not have even been making a profit at $100 per vase.

[ricktas]

Sorry William, but I and many others tried to include all that in our replies (that other issues and influences affect the outcome), yet you kept pushing for a SIMPLE answer. Your answer is not enlightening in any way to the SIMPLE answer you requested, and in fact belittles our previous replies where several of us tried to point out that other factors come into play.

[Longshots]

Sorry, how have I belittled anyone ? I've given many talks using this hypothetical situation. I'm genuinely puzzled, I'm explaining the issue and how many people go into business with a very simplistic attitude towards how they charge Rick. Yes I was giving a simple situation, the response was actually quite simple. Sorry, clearly I've annoyed you if you feel I've belittled you, which I'm not sure how you feel that.

I'm genuinely puzzled by that response. As I've given this analogy to many different groups, and students, absolutely no one has reacted like that before. I was trying to offer an opinion and a point of view.

And the very simple answer was how do know that Shop A is making a profit. Sorry that it wasnt enlightening. It was my opinion.