💯💯💯 "If you are frustrated with how low you're pricing yourself, start here, start presenting yourself as an intellectual property business, and not just a contractor business."
Underpricing is rampant in the freelance economy, and there are way too many reasons to list in one episode. In fact, we could pretty much sum it up by saying everyone is to blame. The economy, the clients, and the creatives all take partial blame for lowering industry-standard rates, but for now, we're going to focus on photographers and how they can take the power back! In this episode, we identify a few red flags in your pricing strategy by breaking down an employee mindset and start building an entrepreneurial one.
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Michael Der 0:29
Hey, what's up everybody? Thank you so much for joining the show today. I want to jump right into this topic because there's a lot to go over. And truth be told, I think a lack of exposure to pricing strategy is plaguing our industry, you've probably noticed that there simply isn't enough qualified education on how this industry works and how to price oneself in the market. what's frustrating is that I've talked to so many college students who have lamented the fact that their photojournalism or photography classes are not teaching beyond the artistic process. And for those of us who have been out of school for a while and are cutting our teeth on the ground floor. freelancing have often been let down by the many professionals in this industry who are either incapable or even worse, unwilling to talk about how they operate their business. It's simply not enough to send creatives out in the world with just a portfolio and no background on pricing, negotiation or client language. And if that's all we're willing to give the photography community the ability to make a pretty picture, then really shame on us. We are training a generation of creatives to be financially dependent on staff jobs and full time employment, something we all know is shrinking in a rising gig economy. So in my opinion, we need to acknowledge that employee habits won't cut it in a world that is aggressively moving towards freelance, we need to develop entrepreneurial skills, even if we don't think of ourselves as entrepreneurs. And before I go any further, I need to clarify that in no way do I look down upon anyone being an employee and seeking out staff work? Not at all. The work I admire most often comes from staff photographers, my issues really lie with the way our culture trains employee mindset, so that that machine can always operate smoothly. You see, all my years as an employee, I always felt pressured to acquiesce to what my employer wanted, and ignore what would be in my own best interest. I never negotiated terms. I never raised rates. I ignored the rights inherent to me as a creator. And I did all of this based on the fear that if I didn't, I'd never be promoted, I'd never get that recommendation. And my reputation would be tarnished, because I'd be seen as a difficult employee to work with. And as I entered into full time, freelancing, I brought my employee baggage with me. I underpriced my work, I said yes to every unreasonable demand. And I never found for what I believed I was worth. It has taken me many years to feel confident in developing a stronger backbone. Now I can say that I'm no longer a yes, man. In fact, I find myself pushing back on clients more and more when it's necessary. Instead of running from negotiations, I actually welcome it. I don't wish for a Christmas bonus to come around. Instead, I just take control and I raise my rage when my work has proven to be in demand. And for the record, I do all of this respectfully and honorably jacking up rates without justification is wrong. And any desire to milk your clients dry should never enter your mind. So my hope is that today we can find justifications that permit you to start pricing your work more appropriately. Not only can these concepts increase your income, but it can also set terms and boundaries for your clients so that there's actually a better level of communication going forward. So in this episode, I'm going to be listing three red flags that I consistently see in poor pricing strategy among photographers. And hopefully by the end of this, you'll think twice about blindly accepting that next flat rate that hits your desk. Alright, so red flag number one is that you ignore the value of copyright. So when copyright is ignored, the monetary value that it inherently holds is not accounted for. And as a result, creators consistently under charge for their work, because basically, you're only pricing for labor. Copyright, simply put is the right to copy. It is the exclusive legal right to reproduce your work and grant others the ability to use it for a specific purpose. The value in owning copyright is numerous. And I could go on and on about that. But that's for another episode. This episode is about pricing. So I'm going to mainly focus on the financial value. When you're drafting a client estimate. owning the copyright is going to allow you to make money off your work beyond just a day rate or an assignment rate. That's just paying you for your labor. What about the intellectual property? In my opinion, photographers should acknowledge both as individual fees and when you start to separate labor and intellectual property, you start to see your rates naturally rise. Let me illustrate how easy it is to underprice. For an example, let's take a fictional magazine client who offers you $200 for an editorial day, right? The shoot might take about four hours, and they want to run two images and their next issue. You take the job because it's $200 more than you had to start your day. So why not? Well, if you take the time to break down your labor and your intellectual
Michael Der 5:00
property is two different entities, and then you assign a value to each, you may find that your new rate far exceeds that of the one the client set. Maybe you want $50 an hour for your labor. And after researching licensing prices, you determine that maybe each image should be valued at around $50 each based on the size and placement in the magazine. Just by thinking about it in these terms, you've quickly put together an estimate that totals $300, instead of $200. And you've articulated to your client, why your value is more appropriate. And keep in mind, I will go into deeper dive on copyrights and determining your licensing rates in future episodes. For now, the most important takeaway is to simply acknowledge your copyright value to break the mentality that an assignment fee or a day rate is more than enough compensation, I'm certainly not here to convince you to turn down work, sometimes you don't have leverage to say that's too low, the client may come to you and simply say, these are our terms, take it or leave it. And if it's the best decision for you and your family, I'll never criticize someone's choice on that merit. But if you are frustrated with how low you're pricing yourself, start here, start presenting yourself as an intellectual property business, and not just a contractor business. Alright, so we're moving on now to red flag number two, which is you don't account for profit. So when you're pricing yourself to a client, ask yourself, what percentage Am I building into account for profit? Is it 5%? Is it seven? Is it 10? Have you ever considered it at all? If you're like most of the creatives that I know, this is the first time you've even entertained profit margins. And guess what I'm guilty of it too. Sometimes we're not all given the option to set our rates. Sometimes we're offered a job with a fixed budget, and we just need to make a call on whether to take it or not. But when a client comes to me and asked me for an estimate, I do my best to at least account for how much profit really is kind of inconsequential. At this point, you can figure out the numbers later. What's important is the why. Why do you need to buffer your prices to account for profit? Well, in almost every other transaction in your day to day lives, profit is implied. When you pay for a coffee at Starbucks, they're not just charging you solely for the cost of that coffee. That would be ridiculous. When you get an oil change at your local auto mechanic, you're not just paying for the cost of that oil, and restaurants don't just allocate its revenue solely for food costs. Folks, if that's how it worked, these businesses would be well out of business. They need to take care of labor overhead expenses, like utilities rent taxes, and they have to account for marketing, scaling and emergencies. Building and profit into pricing is what allows individuals and companies to reinvest money back into their business. And if you only charge for the cost of your raw materials, which is your rent, salary taxes, you'll be paying for upgrades and replacements or emergency expenses with your personal money and not your earned money. I have a habit of putting money aside from every paycheck into different bank account buckets. This way I don't overspend or take money away from a bucket that's meant for something else like business. So as an example, it's very common for me to receive a paycheck, take 10% of that paycheck, and then transfer it to my photography emergency fund. The more I do that, the more I build up a nest egg, the next time my shutter blows, or my card corrupts, and I need a replacement. Additionally, I might take another 10% from the paycheck and then transfer that to a bank account that saves up for improvements or scaling. I use this for marketing expenses, educational services, like workshops, tutorials, anything that I think might improve my business. So with that 20% of my paycheck going to photography related things, the 80%, leftover covers regular life expenses, like insurance, taxes, groceries, utilities, transportation, retirement shelter. So for me, I'm making sure that my prices reflect that savings buffer, does it mean that every estimate is going to add on an extra 20% to compensate? No, sometimes it doesn't work out that when you have to work within a client budget, but it's always being considered. And that's going to allow me not to pull from my personal money. Red Flag number three, you don't consider brand equity. Now hopefully you don't go pulling out the financial textbooks on me here. I'm just using this term somewhat loosely. When I think of personal brand equity. As it relates to photographers, I'm thinking mostly about the perceived value that others attach to your brand, which can be influenced in many ways it can be the quality of your work, it can be the content of your work, or the amount of experience you have in this industry. It can also be directly related to price. If you price yourself as the $100 photographer, there's a very good chance that nobody's going to see you as good enough to be a $1,000 photographer. Conversely, if a photographer has a six figure business, you may perceive his or her skill to be elite, whether you've seen their work or not. So who sets brand equity? Is it the client, the art director, the consumers? Well, in my opinion, you set it you have to see the value of what you bring to the table, your uniqueness, your experience, your value needs to be evaluated and set
Michael Der 10:00
by you. There are way too many publications that like to group all photographers at the same valuation. I think it's ridiculous, of course, but it's not as ridiculous as our willingness to accept it. If I get hired to shoot a football game for a wire service, you're telling me that I could potentially get the same day rate as the person who has photographed 100, NFL games and 10 Super Bowls. Listen, if you have any leverage, use it. No client is going to offer you more money. Because you've won a Pulitzer Prize, you have to set that. That's your leverage. It's your most of us don't have that resume I'm describing here. But if I'm being honest, I don't think it has to be that severe. I don't have many covers to my name. I don't have any celebrity portraits or Olympic Games in my book. Hell, most of my big clients don't even have a lot of name recognition, to get me in the door. The truth of the matter is my work and resume wouldn't get me into a lot of publications. I know that. But you know what else is also true? Many of them couldn't afford me even if I were good enough. And I'm definitely not saying that as a defense mechanism, you know, where I say, Oh, I didn't like you anyways, when I really actually did. I believe in setting your value. Now the market is going to respond in some way, it's going to be the ultimate decider here. If you're not getting any bites, then you may have to either lower your price, or improve the quality of your images and or the services you provide just to justify your rate. But my point to all of this is that it starts with you. No client has ever come back to me and said, Mike, we're going to start paying you more that doesn't happen, and has always been up to me to determine now's the time to start increasing my pricing, now is the time for me to set my pricing at x. And I'll say it again, folks, my resume isn't overly impressive. My work doesn't compare to some of the colleagues that I have compared to the guests that I'm going to be bringing on this show. But you have to find your worth. I've been a full time Freelancer for five plus years. I believe I work well with people, I believe I make my clients jobs easier. I believe I've over delivered on most projects. And because of all of these things, I don't see myself as $100 photographer or even a $500, photographer, or $1,000 photographer, I see my value is higher. And maybe that's delusional to some of you. But in the end, my brand equity starts with me. If I don't see it, nobody else will either. So as we round this out, let's recap. Number one. Don't ignore the monetary value your copyright holds. You're not in the business of physical labor, you are in the business of intellectual property. Number two, don't forget about profit and how it's a part of every transactional business out there. You want to reinvest into your business, and cover emergency expenses with non personal money. And lastly, don't leave your brand equity up to your clients because they will always set it as low as possible. This episode is not an attack on employees. It is a critical introspection into how we have adopted a mindset that is really unsuitable for our industry. I want you to start thinking like a business owner and an entrepreneur whether you are one or not.
Michael Der 13:04
Okay folks, as I bring this episode to a close I want to say a huge thank you to the entrepreneurs community for showing this podcast some serious love over the last few weeks, you have gone above and beyond with your five star reviews sharing the episodes. DM me with the incredibly kind words about the show is just an honor to get to do this each week. And I thank you for joining me on this journey. Entrepreneurs season one continues next week launching new episodes every Friday. My name is Michael Der I am out for now. Have a great rest of your week everybody and see you next time.
Michael Der 13:43
Hey everybody, this is Michael Der thank you so much for making it all the way to the end of the episode. I hope you'll follow tag and engage with us on our Instagram account at entrepreneurs pod. We've also launched our website entrepreneurs pod Comm. It is the central hub where you can sign up for our newsletter, read our blog posts, send us voicemails, and even access discounts from our amazing affiliates. It's also the perfect spot to shout out entrepreneurs with what would be an immensely appreciated five star rating and review. And if you're feeling extra generous, you can even make a small donation that's really going to help accelerate the growth of this podcast. But no matter what you do, folks, I just want to say thank you so much for supporting this program. There are a lot of great photography podcasts out there and I am just grateful to have gained your trust even for a moment to take care of you one. See you next week.